Lex Greensill likes to tell his story. He boasts regularly about how he rose from a watermelon, sugar cane and sweet potato farmer in northern Queensland to become a billionaire banker traversing the world by private jet, and employing some of the world’s most powerful former politicians including the ex-UK prime minister David Cameron and the former Australian foreign minister Julie Bishop.
He refuses, however, to talk about his current predicament, as Greensill Capital, the controversial bank he founded in 2011 with his brother Peter, a farmer, teeters on the brink of collapse.
The mostly London-based bank – which he had last year hoped to float on the stock market with a $7bn (£5.8bn) valuation – is preparing to file for insolvency in the UK. Its remaining viable assets are expected to be picked out of the collapse by the US private equity firm Apollo Global Management for just $100m.
Shareholders including the Greensill brothers and the Japanese billionaire Masayoshi Son, whose SoftBank investment fund had pumped $1.5bn into the business, will probably be wiped out.
It is a sudden drop to earth for Greensill, who was lauded by Cameron for revolutionising the financing of small businesses and brought into the heart of government tasked with performing the same magic for the public finances.
Greensill reportedly had an office in No 10 where he worked as a “crown representative” to the government on supply chain finance, and was awarded a CBE for services to the economy in the Queen’s 2017 birthday honours.
The government’s “supply chain finance” initiative, devised by Greensill and promoted by Cameron, appeared to work at the time and was used by the NHS in its supply of thousands of chemists. However, an investigation by MPs into the collapse of the government outsourcing company Carillion found the scheme allowed it to “prop up its failing business model”, leading to an even greater toll of job losses.
After leaving office, Cameron was signed up as a senior adviser to Greensill and flew around the world promoting the business. In December 2019, Cameron said: “From its UK foundations, Greensill has taken on the world, upending traditional financing models and democratising capital to give businesses, including many SMEs and small traders, access to low-cost funding.”
Bishop also joined as an adviser. She said the bank offered “great potential to transform relationships throughout the world’s complex supply chains”. Greensill also claims to have advised the White House on supply chain finance.
Greensill says his idea for supply chain financing – in which companies borrow money to pay bills while they wait to be paid by their customers (and his bank takes a cut) – came to him one day while working on the family farm in Bundaberg, north of Brisbane.
“My parents couldn’t afford to send me to university because we had to wait a long time for big retailers to pay us,” he told the Sunday Times in an interview at his office overlooking the Savoy hotel in London. “That caused me early on to have a focus on how that could be fixed.”
Before he set up Greensill, he worked in supply chain financing at global banks Morgan Stanley and Citibank, where he is remembered for his extravagance. In one incident he is said to have submitted an expense claim for new clothes for about £4,000 after being stranded in Copenhagen overnight due to a cancelled flight.
Greensill says his bank’s driving mission is to help small businesses. His customers, however, include large companies: Vodafone, the retail group Very, owned by the billionaire Barclay brothers, and the “saviour of steel” Sanjeev Gupta, whose Liberty Group bought up struggling UK steel businesses.
A spokesperson for the steel union Community warned that a collapse of Greensill could trigger the loss of thousands of UK steel and engineering jobs if funding ground to a halt.
Greensill is still regularly seen in Whitehall – transparency records show the company held six meetings with the second permanent secretary to the Treasury last year, before Greensill was accredited as a lender under the coronavirus large business interruption loan scheme. A Treasury spokesperson said: “Treasury officials regularly meet with a range of stakeholders to discuss our economic response to the Covid pandemic.”