Greensill dished out a taxpayer backed Covid loan to neighbour
Collapsed lender Greensill Capital gave a government backed Covid loan to the neighbour of founder Lex Greensill.
Greensill is already under investigation for allegedly abusing its position while in charge of lending money under the Coronavirus Business Loan Interruption Scheme to dish out £400m to businesses linked to Sanjeev Gupta.
It has now emerged that the company also lent out £5m to Special Needs Group, a company which provides services for people with learning disabilities that is owned by Lex Greensill’s neighbour Barnabas Borbely, the FT first reported.
Company filings show that Barnabas Borbely lives near to Lex Greensill in the Cheshire village of Saughall. Both Borbely and Greensill are solicitors and had previously lobbied the local council together to encourage it to use financial services products offered by Greensill.
Special Needs Group is small enough to qualify for an exemption that means it does not have to file audited accounts.
The government has come under scrutiny for failing to do its due diligence on companies selected to lend out money to businesses under emergency Covid loan schemes. The National Audit Office recently slammed government failures to crack down on an estimated £5bn of loan fraud during the pandemic.
Over £130m was given to questionable companies according to an investigation by Bloomberg which found that 60 companies which accessed government funds under the Coronavirus Business Interruption Loan Scheme were reported as being dormant whilst 85 had been created within weeks of submitting an application.
Loans were doled out by third party lenders, including Greensill, which were given a state guarantee to cover between 80 and 100 per cent of losses if companies were unable to repay emergency funding.
Read more: Millions dished out to inactive or new companies under covid loan scheme