Grant Thornton builds ‘Chinese walls’ to prevent conflict of interest in Greensill fallout

Grant Thornton, the firm running the administration of Greensill, has in the past acted as a corporate adviser to Sanjeev Gupta’s GFG Alliance.

GFG Alliance executive chairman Sanjeev Gupta.

Grant Thornton, the firm charged with running the administration of Greensill, acted as a corporate adviser on at least three Australian deals with the collapsed financier’s biggest debtor: Sanjeev Gupta’s GFG Alliance.

The accounting firm has now created “Chinese walls” separating the arm that advised GFG from its administration of Greensill to avoid potentially messy conflicts of interest as creditor claims soar to almost $5bn.

Already, British politicians have called for a “transparent” administration process for Greensill with “no question of conflict of interest”, with Grant Thornton UK also playing a key role in the expansion of Mr Gupta’s $US20bn ($26bn) metals empire.

The isolation of parts of Grant Thornton’s business and calls for transparency come as Mr Gupta’s group is negotiating directly with Greensill in an attempt to strike a standstill on a $US5bn debt owed to the financier’s UK arm — money which creditors are desperate to see returned so they can also receive some of what they owed from Greensill.

As administrator, Grant Thornton has final sign-off on any standstill agreement. A source familiar with the matter told The Australian the mid-tier accountancy firm had created “Chinese walls”, banning the advisers who worked on the GFG deals with the Greensill administration team in line with standard practice.

The biggest Australian deal that Grant Thornton advised GFG on was acquiring the Whyalla steelworks and other assets from Arrium in 2017 after it fell into administration. Grant Thornton also advised GFG on acquiring Glencore’s Tahmoor coking coal mine in 2018 and Tasmania’s manganese smelter from South32 last year.

In regard to the Whyalla steelworks, Grant Thornton went from being Arrium’s administrator — before creditors terminated the appointment in favour of KordaMentha — to advising GFG on acquiring its assets.

Lex Greensill. Picture: Annabel Moeller

There is nothing unusual in this move, given separate parts of the business advise on insolvency and M&A, and in this case Grant Thornton also sought permission from Arrium to work with GFG.

It also again — to ensure no conflicts of interest — isolated the teams working on Arrium’s administration and advising Mr Gupta’s group.

GFG declined to comment, while Grant Thornton confirmed a Chinese wall had been put in place.

“Despite the fact that GFG is neither a debtor nor a creditor in the administration of Greensill Capital Pty Ltd (Australia) given our dealings, we instigated information barriers around GFG-related files and associated personnel,” it said.

Greensill fell into administration two weeks ago after it failed to strike a deal to renew its policies with its insurers, and Credit Suisse froze $US10bn of investment funds, which Greensill relied on as buyers of the debt securities it issued.

The financier had called in Grant Thornton UK as early as December 31 last year to provide contingency advice — ranging from restructuring to insolvency — after it had been negotiating with its insurers since September.

In documents lodged with the Australian Securities and Investments Commission, Grant Thornton Australia’s Matt Byrnes said Greensill engaging Grant Thornton UK did not result in a conflict of interest or duty for the voluntary administrators in Australia.

He said he and co-administrators had “undertaken a proper assessment of the risks to our independence prior to accepting the appointment as administrators of Greensill Capital Pty Limited in accordance with the law and applicable professional standards”.
“This assessment identified no real or potential risks to our independence. We are not aware of any reasons that would prevent us from accepting this appointment.”
But British shadow chancellor Anneliese Dodds said: “In the week that the government launched what it called a major overhaul of the UK’s audit regime, it is important that the administration of Greensill Capital takes place transparently and that there is no question of any conflict of interest.”
The call follows Lex Greensill, who founded the financier, becoming embroiled in a political scandal in the UK after his close friend, former prime minister David Cameron, was revealed to have personally lobbied the chancellor Rishi Sunak for Greensill Capital to be awarded lucrative taxpayer funded loans.