Tokio Marine accuses Greensill Capital of fraud

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

The statement marked the first time since the Anglo-Australian financial services company’s bankruptcy in March 2021 that Japanese insurer Greensill had officially accused it of fraud.

It also confirmed that Greensill’s insurers would use allegations of misstatement as a key defense against paying out coverage provided to the financial group, as reported the Financial Times in July.

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

It added that there had been a “fraudulent failure” to disclose “material matters” before policies were agreed and renewed, and that the misrepresentations continued after Tokio Marine bought the BCC operation in 2019.

“Given these fraudulent misrepresentations and fraudulent violations of a [insured party’s] Due to disclosure requirements, Tokyo Marine today advised counterparties that these policies and the associated obligations are invalid from the outset,” the insurer said.

The statement will come as a blow to greensill investors who see insurance claims as a way out to make up for their losses.

The aftermath of the Greensill scandal has exposed the practices of BCC, the insurance company that provided it with the critical coverage that enabled investors to treat debt issued by the financial group as near risk-free.

BCC’s Sydney office was once visited by former British Prime Minister David Cameron, then a Advisor to Greensill, underscoring its importance to the company. When a BCC manager was fired in 2020 for exceeding his underwriting authority, Greensill’s main insurers withdrew and he was unable to find cover elsewhere, sparking the group’s demise.

Tokyo Navy, the first publicly questioned the insurance’s validity in March 2021, said it would defend against any claims, including Greensill-related proceedings in Australia against Insurance Australia Group. People close to the Japanese insurer said the Greensill bankruptcy proceedings have created a likely “pipeline of claims” in the coming months and years.

IAG said Monday it continues to work with Tokio Marine to defend the claims and it “remains its position that it has no net insurance exposure for trade credit policies sold through BCC.”

IAG has previously said it passed on any exposure to Tokio Marine as part of the BCC sale.

Greensill’s administrator declined to comment.

Credit Suisse declined to comment on Tokio Marine’s statement.

In a separate disclosure on Monday, the Swiss lender said the process of taking legal action against insurers and companies that borrowed from its Greensill-linked fund could take “around five years”.

Credit Suisse also announced it had reclaimed $43 million in salaries from employees involved in the supply chain funds, 10 of whom were laid off.

The bank was responding to questions from shareholders, led by the Swiss foundation Ethos, who called for a special audit of the bank’s failings in Greensill. The investors have successfully campaigned for Credit Suisse change a vote at its annual meeting earlier this month, which would have acquitted directors and executives in the Greensill scandal. Tokio Marine accuses Greensill Capital of fraud

Adam Bradshaw

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