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A Credit Suisse unit blacklisted Gupta when another funded him

(Bloomberg) – Credit Suisse Group AG executives ignored warnings from colleagues about troubled steel magnate Sanjeev Gupta as they provided $ 1.2 billion in client funds to clients familiar with Guptas Liberty Commodities Ltd. in 2016 because they suspected some of its stores were illegitimate, people said. When they learned about two years later that the bank was providing loans to its companies through a number of mutual funds that eventually rose to $ 10 billion, they reported their concerns to leading compliance firms and the department that hosted the loans , one of the respondents Disclosing that Credit Suisse may have endangered clients despite internal concerns about Gupta’s businesses adds to the debacle resulting from the March implosion of Greensill Capital, the finance firm at the center of the three-way relationship, Reveals a New Twist The UK Serious Fraud Office is currently investigating the Gupta group of companies for suspected fraud, including its funding agreement with Greensill, according to a May 14 statement. Credit Suisse sued to force Gupta’s Liberty Commodities into bankruptcy and has since closed the funds that issued the loans and opened an internal investigation. Investors stare at losses as the bank faces embarrassing litigation: “We are currently focused on getting our investors’ money back,” said Will Bowen, a Credit Suisse spokesman in London, in a statement emailed and added that the bank was conducting an internal investigation that will focus on “all issues related to the funds”. “We are determined to learn the lessons and will share the relevant lessons when the time is right.” Andrew Mitchell, a spokesman for the Gupta Family Group Alliance or the GFG Alliance, a corporate collective associated with Gupta, including Liberty Commodities, denied any Die Greensill Saga is just one of the two disasters that rocked Credit Suisse in the first half of 2021. Since Greensill began to unravel, the bank has announced a $ 5.5 billion hit from the explosion at Archegos Capital Management, shareholders and his successor Antonio Horta-Osorio, who arrived in late April, have a full review of the deal Strategy promised. Chief Executive Officer Thomas Gottstein, head of trade finance, was unaware of internal concerns about Gupta, which led the bank to cut him off, according to a person familiar with the matter. Trade finance department employee who is lent money for buying and selling goods broke ties with Gupta in 2016 after becoming skeptical of its Liberty Commodities. They mistrusted the documents provided by the company and raised doubts about the transactions. In an example reported by Bloomberg, the company presented what appeared to be duplicate shipping receipts to another bank. Credit Suisse’s merchandise team stopped working with Gupta after identifying suspicious shipments while the bank’s credit structuring team cracked down on the Greensill funds, the Wall Street Journal reported in April. A spokesman for Gupta denied any wrongdoing. Banking TiesLiberty Commodities pledged assets to Credit Suisse as collateral for borrowing in 2013, but by early 2016 all such obligations were extinguished, indicating that the financing relationship has ended, as the UK Companies House records show. And while Gupta’s company listed the Swiss bank as one of its lenders in its 2014 annual report, it did not in the following year’s report, which according to records is dated May 2016. Your colleagues at other banks, including Macquarie Group Ltd. . and Sberbank PJSC ceased trading Liberty Commodities at about the same time because of similar concerns; According to Bloomberg, Goldman Sachs Group Inc. was also discontinued in 2016. Nonetheless, executives at Credit Suisse’s wealth management division, which creates investment products for clients and charges a fee to monitor them, began organizing a number of funds focused on the -chain finance offering in 2017. The companies bought securitized loans made by Greensill, a company founded by Australian businessman Lex Greensill. Much of the debt was related to Gupta’s business. WarningsOfficials of the commodities trade finance department were concerned when they learned of the funds’ links with Gupta and passed their concerns on to Thomas Grotzer, General Counsel of the bank’s Swiss division. They also warned Luc Mathys and Lukas Haas, the bankers who helped oversee the affairs of the asset management unit. Grotzer was promoted to Interim Global Head of Compliance at Credit Suisse last month. He did not respond to requests for comment. Mathys, Head of Fixed Income in Asset Management, and Haas, Portfolio Manager, were given temporary leave in March. Neither of them responded to requests for comment. The bank drove the funds forward and marketed them to investors because they consisted of short-term debt that was collateralized on bills. These assets were considered so safe that Credit Suisse gave the largest vehicle the lowest risk rating. However, some of the loans were tied to possible future income. Other parts of the bank continued to work with Gupta. Credit Suisse investment bankers were supposed to lead an IPO for Liberty’s US steel arm, which the company said was eventually shut down. Gupta also announced that the Swiss bank would fund its proposed acquisition of Thyssenkrupp AG’s steel unit, which fell apart earlier this year. Credit Suisse has recouped roughly $ 5.9 billion of the $ 10 billion in this supply chain fund to date, but it remains unclear how much will ultimately be returned to investors. Loans to Gupta’s company are one of a number of debts that are the “leading sources of valuation uncertainty,” the bank said earlier this month. Liberty Commodities’ outside legal advisors were investigating “alleged rumors of the paperwork” it used in 2019, according to Mitchell. the spokesman for the GFG Alliance. They did not find any evidence to support the rumors, nor was the company “ever exposed to any further complaints or legal proceedings,” he said. “LCL has ongoing banking relationships with separate financial institutions,” said Mitchell, referring to Liberty Commodities. “The trade finance market has been an enormous challenge for everyone but the largest commodity traders in recent years. Even so, no financial institution was left out of its pocket due to the lending to LCL. On the contrary, they have made significant commercial returns. “More articles like this are available on bloomberg.com. Sign up now to stay up to date with the most trusted business news source. © 2021 Bloomberg LP

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