- Lex Greensill has accepted a nine-year ban from serving as a UK company director.
- His firm, Greensill Capital, collapsed after making risky loans against future transactions.
- The company failed with liabilities exceeding £1.6 billion, following breaches of directors’ duties under UK law.
Lex Greensill, a former financier who fell from grace in 2021 following a high-profile financial scandal, has been banned from directing a company in the UK for nine years.
Ahead of a six-week trial that was supposed to start next week, Greensill signed a ‘disqualification undertaking’, agreeing to the ban to end court action, announced the UK government’s Insolvency Service on Thursday, 4 June.
The 49-year-old is the founder of the now-collapsed Greensill Capital, a factoring and supply chain financing company. Factoring is a financial service where a business sells its unpaid invoices to a financial institution at a discount, in exchange for immediate capital.
It was found that Greensill’s company was growing through lending not just against invoices for existing transactions, but also for “prospective receivables” – also known as transactions that hadn’t happened, nor may ever happen.
Once the insurers covering many of these loans withdrew, Greensill Capital crumbled, with liabilities of over £1.6 billion.
The financial scandal evolved into a political one as former UK Prime Minister David Cameron had worked for Greensill’s company and lobbied the government to support it during the COVID-19 pandemic.
Greensill’s activities were found to breach UK corporate law’s Companies Act 2006, which requires to “exercise reasonable care, skill, and diligence as a company director.”
In the UK, the average length for the disqualification of directors was seven years and four months in the 2022-2023 fiscal year. For the previous 10 fiscal years, the average length had been from five years and five months to six years, reflecting an increase attributed to the exploitation of the COVID-19 financial support scheme.
“A nine-year ban is a significant period – above the average for director disqualifications – and reflects the serious nature of Lex Greensill’s conduct,” said Duncan Beach, Chief Executive of the Insolvency Service.
Greensill’s disqualification is due to come into effect on Tuesday, 23 June.
