Tokio Marine accuses Greensill Capital of fraud

Japanese insurer Tokio Marine stated on Monday the insurance policies that enabled billions of {dollars} in lending by Greensill Capital, the provision chain financing group that collapsed final yr, had been “fraudulently obtained”.

The assertion marked the primary time because the March 2021 insolvency of the Anglo-Australian monetary companies firm that the Japanese insurer had formally accused Greensill of fraud.

It additionally offered affirmation that Greensill’s insurers would use allegations of misrepresentation as a essential defence in opposition to paying out on cowl offered to the finance group, as reported by the Monetary Instances in July.

Tokio Marine stated investigations into insurance policies written at subsidiary The Bond & Credit score Co, the Australian unit on the coronary heart of the Greensill relationship, had discovered that “matters material to the underwriting of the policies were fraudulently misrepresented to BCC by Greensill”. 

It added there was a “fraudulent failure” to reveal “material matters” earlier than insurance policies had been agreed and prolonged and that the misrepresentations continued after Tokio Marine purchased the BCC operation in 2019.

“In light of those fraudulent misrepresentations and fraudulent breaches of an [insured party’s] duty of disclosure, Tokio Marine has today advised counterparties that these policies and related obligations are void from inception,” the insurer stated.

The assertion will come as a blow to Greensill buyers, who see insurance coverage claims as a method of recovering their losses.

The fallout from the Greensill scandal has highlighted practices at BCC, the underwriting enterprise that offered it with the essential insurance coverage cowl that allowed buyers to deal with money owed originated by the finance group as nearly risk-free.

BCC’s Sydney workplace was as soon as visited by former UK prime minister David Cameron, then an adviser to Greensill, underlining its significance to the corporate. When a BCC government was fired in 2020 for exceeding his underwriting authority, Greensill’s foremost insurers pulled again and it failed to seek out cowl elsewhere, triggering the group’s demise.

Tokio Marine, which first publicly questioned the validity of the insurance coverage in March 2021, continued to say it could defend itself in opposition to any claims, together with Greensill-related proceedings in Australia in opposition to Insurance coverage Australia Group. Folks near the Japanese insurer stated the Greensill insolvency course of created a probable “pipeline of claims” in coming months and years.

IAG stated on Monday it was persevering with to “work together” with Tokio Marine to defend the claims and it “maintains its position that it has no net insurance exposure to trade credit policies sold through BCC”.

IAG has beforehand stated it handed any publicity to Tokio Marine as a part of the BCC sale.

Greensill’s administrator declined to remark.

Credit score Suisse declined to touch upon the Tokio Marine assertion.

In a separate disclosure on Monday, the Swiss lender stated the method of launching authorized motion in opposition to insurers and firms that borrowed from its Greensill-linked fund might take “around five years”.

Credit score Suisse additionally disclosed it had clawed again $43mn in pay from workers concerned within the supply-chain funds, 10 of whom had been fired.

The financial institution was responding to questions from shareholders, led by Swiss basis Ethos, who had been demanding a particular audit into the financial institution’s failings on Greensill. The buyers efficiently campaigned to have Credit score Suisse amend a vote at its annual assembly this month that may have absolved administrators and executives for the Greensill scandal.

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