Source · Select Committees · Public Accounts Committee
Recommendation 25
25
We asked the Treasury and the Bank whether they had undertaken any analysis of how...
Conclusion
We asked the Treasury and the Bank whether they had undertaken any analysis of how the £350 million loaned to GFG Alliance companies was used, or in which country the money was spent. The Bank told us it was aware that the loans were transferred to a “central treasury function within the GFG Alliance,” but it did not know where this was based. The Bank noted that it “would imagine that the whole tracking of that money through the administration would be something being looked at” but provided no further details.73 The Bank suggested that, if the money had left the UK, this could be a relevant factor in whether the guarantee holds as this may constitute a breach of the scheme rules.74 We asked the Bank whether, at any point, it considered that Greensill might have acted fraudulently. The Bank told us there was not proven fraud at the time Greensill was accredited, although several parties raised concerns later in 2020.75 It confirmed that it was “absolutely looking” into its fraud protocols to determine whether it needed to make any changes before lending money to business in the future.76 Learning lessons from Greensill’s failure
Government Response
Not Addressed
HM Government
Not Addressed
4.1 The government agrees with the Committee’s recommendation. Recommendation implemented 4.2 The Bank has written to the Committee on this matter on 17 December 2021. 4.3 Both the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme (CLBILS) were designed with the intention of supporting a wide range of businesses, including those not wholly domiciled in the UK, as well as importers, so long as the loans are used in part to the benefit of the UK operations. Under scheme rules, a loan made will not be guaranteed if the borrower does not meet a range of eligibility criteria which determine if they are UK based. 4.4 As delegated schemes, lenders are required to have their own processes and controls in place to ensure that funds are used in accordance with the scheme rules. The Bank’s lender audit assurance programme includes testing to verify that UK eligibility criteria are being met. Experience from the first round of audits, which was focussed on loan application processes (including application of scheme eligibility criteria), showed it was effective in remedying identified issues and ensuring lenders took action to improve compliance under the scheme. 4.5 If a lender is found to have failed to properly apply scheme eligibility criteria, the Bank has a range of measures at its disposal to remedy the situation, including the removal of the guarantee.