Nadhim Zahawi was ‘instrumental’ in securing Greensill loans approval, says Gupta

Sanjeev Gupta wrote to senior government minister Nadhim Zahawi thanking him for his “personally instrumental” role in facilitating taxpayer-backed loans from Greensill Capital that are now subject to a fraud investigation.

Greensill, a financial firm whose collapse last year sparked a lobbying scandal that ensnared former prime minister David Cameron, provided £400m of government-backed loans to entities linked to GFG Alliance, the metals group run by Gupta. GFG is now being investigated by the Serious Fraud Office.

Greensill was able to provide these loans because it won approval from the British Business Bank in 2020. The state-owned bank has now suspended the government guarantees backing the loans, amid concerns they breached the terms of the Covid-relief programme, which forbade Greensill from lending more than £50m to any single company.

On October 5 2020, Gupta sent a letter to Zahawi, a Conservative politician who at the time was a minister in the business department (BEIS), thanking him for his “support” helping Greensill secure the loans.

“Since you were personally instrumental in getting the BBB’s approval for Greensill Capital to provide financial assistance under the CLBILS programme, it would be very fitting if you could join us to mark this special moment that provides relief to thousands of workers,” Gupta wrote to Zahawi, inviting him to a “small gathering” at his company’s Rotherham steelworks.

Zahawi, who was promoted to education secretary in an autumn reshuffle, is thought likely to run for the Tory leadership if prime minister Boris Johnson is forced out by MPs over “partygate”.

The letter was sent days before the Financial Times revealed that several entities linked to Gupta were drawing on multiple taxpayer-backed loans through Greensill. A formal investigation was launched days later into the loans, most of which had been provided in September 2020.

BEIS said: “The Department does not recognise the assertion made in Mr Gupta’s letter that Nadhim Zahawi played a role in securing the Bank’s approval to accredit Greensill Capital.”

GFG declined to comment.

The letter was disclosed in response to a Freedom Of Information request lodged by the FT last summer. The FOI response from BEIS stated that Zahawi “did not respond to the letter, nor did he make any subsequent visit to a GFG Alliance site”.

The FOI also revealed that “a text exchange or phone call between Sanjeev Gupta and Nadhim Zahawi took place at an unknown date” in relation to “Covid assistance”. In the FOI response, BEIS disclosed that there “was no longer an electronic record of the communication stored on the device used by Nadhim Zahawi, which was his personal mobile phone”.

However, according to “information held about the communication” at BEIS, the minister explained to the steel baron that “requests would need to be directed through BEIS officials.”

Cameron earned millions of pounds as a boardroom adviser to Greensill, the lending start-up founded by Australian banker Lex Greensill. Cameron last year disclosed a series of text messages lobbying ministers and civil servants across government to give his employer approval to hand out Covid loans.

In June 2020, Cameron texted Zahawi: “Lex Greensill . . . says you are being v helpful over HMT and CBILS programme”, according to the former prime minister’s disclosures to the Treasury select committee, which did not include a response from Zahawi.

BEIS in April last year told the FT it did not hold any information about the text exchange between Zahawi and Cameron. The department later admitted to The Times newspaper that it considered deleted communications as not held.

A report from a parliamentary committee published last year revealed that when the BBB challenged Greensill over its excessive lending to Gupta’s metals empire, the finance firm said it had received “political steers” that its support for the steel industry was welcome. The report noted that BEIS was “unable to explain the source of this perceived support”. 

The UK’s SFO last year launched an investigation into suspected fraud, fraudulent trading and money laundering at Gupta’s metals empire, causing talks over a rescue financing deal to collapse.

GFG has previously denied wrongdoing and pledged to co-operate fully with the SFO probe.

Zahawi did not immediately respond to a request for comment.

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