June 25, 2022

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Tokio Marine accuses Greensill Capital of fraud

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Japanese insurer Tokio Marine said on Monday the policies that enabled billions of dollars in lending by Greensill Capital, the supply chain financing group that collapsed last year, were “fraudulently obtained”.

The statement marked the first time since the March 2021 insolvency of the Anglo-Australian financial services company that the Japanese insurer had formally accused Greensill of fraud.

It also provided confirmation that Greensill’s insurers would use allegations of misrepresentation as a critical defence against paying out on cover provided to the finance group, as reported by the Financial Times in July.

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

It added there was a “fraudulent failure” to disclose “material matters” before policies were agreed and extended and that the misrepresentations continued after Tokio Marine bought 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 said.

The statement will come as a blow to Greensill investors, who see insurance claims as a way of recovering their losses.

The fallout from the Greensill scandal has highlighted practices at BCC, the underwriting business that provided it with the crucial insurance cover that allowed investors to treat debts originated by the finance group as almost risk-free.

BCC’s Sydney office was once visited by former UK prime minister David Cameron, then an adviser to Greensill, underlining its importance to the company. When a BCC executive was fired in 2020 for exceeding his underwriting authority,…

2022-04-04 04:12:53

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