'Simply Fake': The Dossier That Warned Credit Suisse About Sanjeev Gupta

The report that landed on the desks of Credit Suisse executives was a bombshell: Sanjeev Gupta, a global steel tycoon and one of the bank’s key borrowers, was a “clear participant” in a multi-billion-dollar fraud, it claimed.

It was November 2018 and a small group of bankers at Credit Suisse, who had long mistrusted Gupta and his group of companies known as Liberty House, had hired a private-intelligence firm to probe his dealings. Now they were flagging its eye-popping conclusion to their superiors: he was, the report claimed, a central player in a web of companies that had made many trades that were “simply fake.”

“Liberty and Sanjeev Gupta were a clear participant in the fraud,” according to the report, a copy of which has been reviewed by Bloomberg. The alleged wrongdoing, which included fake documents and hidden related-party deals, had cost banks in the United Arab Emirates some 16 billion dirhams ($4.4 billion), the report claimed.

What happened next is well known. Credit Suisse officials dismissed the warnings and pushed ahead, lending large amounts of clients’ money to Gupta’s companies through a suite of investment funds they created with Greensill Capital. The arrangement ended in ignominy: Greensill imploded in 2021 and Credit Suisse was sold to UBS Group AG to avoid collapse two years later. Gupta and his companies have yet to repay most of the loans, which amounted to $1.2 billion at the time of Greensill’s failure, and are being pursued by creditors around the world.

Yet the contents of the report, carried out by private-intelligence firm Diligence, show in new detail the warnings that executives at Credit Suisse’s asset management division saw and dismissed. The allegations remain relevant as Gupta’s sprawling empire remains enmeshed in fraud and money-laundering investigations. His companies still own important steel-making assets across the world from northern England to Australia, and employ more than 10,000 people. 

A lawyer for GFG said that the group “categorically” denied any wrongdoing. 

“It is wholly unclear how Diligence, an investigations firm, could possibly have felt in a position to state definitively, and in such generic terms, that Liberty House Group and Sanjeev Gupta were “a clear participant” in a “multibillion-dollar fraud”, or that there were trades that were “simply fake”,” GFG’s lawyer said. 

“Diligence did not speak to Mr Gupta or Liberty, nor are they a law enforcement agency with formal powers of investigation. There is no indication of the evidence relied upon by Diligence in reaching such serious conclusions, so one can only speculate,” he said. “However, the clear position is that, almost 7 years after the apparent date of the Diligence Report, no such findings have been made by any law enforcement agency or regulator nor have the claims in the Diligence Report ever been put to GFG.”

A spokesperson for UBS declined to comment. A spokesperson for Diligence, a Geneva-based firm that now operates as DGBI, also didn’t comment.

The existence of the report emerged last month in a London legal battle between Credit Suisse and SoftBank Group Corp. 

As part of the London case, the Swiss financial regulator Finma’s investigation into Credit Suisse’s relationship with Greensill was made public. That investigation cited the report produced by Diligence, including the allegation that Gupta “carried out undeclared transactions with related parties” and that Liberty was involved in a “carousel fraud.”

The Diligence report described the alleged “carousel fraud” as dating back to 2015. A set of companies based mainly in the UAE — including some from Gupta’s group — “engaged in fraudulent practices, such as, but not limited to, fake bill of ladings, undeclared related parties transactions, carousel of funds, undeclared use of proxy companies, multiple financing for the goods and fabricating paper trade,” it alleged.

Gupta’s group played an “instrumental” role in the fraud, according to the report.

Bills of lading are shipping receipts that play a vital role in the world of trade finance as they’re used by banks as a form of security to underpin lending. The sector has been hit by numerous frauds in recent years where bills of lading have been forged or used to raise money against the same cargo several times, often leaving banks and and insurers facing losses.

The trades were routed through a so-called carousel of apparently unconnected companies that were all in fact acting together, according to the report. In some transactions, it said, Gupta’s Liberty acted as both the original seller and the ultimate buyer of a cargo. 

“Such a scheme allows Liberty to pocket twice the money for the same materials,” according to the report.

The Diligence report also alleged that Liberty controlled a shipping company that it used “to control the issuance of bill of ladings and other trades documents.” 

Outside Gupta’s group, other companies named in the report included Phoenix Commodities, which collapsed amid losses in 2020, and was later alleged in court to have raised finance based on fabricated documents. The report also alleged the involvement of Ushdev International, the now-defunct company of Prateek Gupta, who Trafigura Group alleges defrauded it of more than $500 million. Prateek Gupta (who is not believed to be related to Sanjeev) has conceded he sold Trafigura cargoes that were supposed to contain nickel but did not, but denies fraud.

The liquidators of Phoenix did not respond to a request for comment. Neither did a lawyer for Prateek Gupta.

In the report, Diligence said it had not investigated all of the trades it had found that were connected to Liberty, but that when it had investigated other trades carried out by companies it believed to be part of the fraud, it had found that “an overwhelming number of those trades were simply fake.”

The report doesn’t include detailed evidence for all of its claims. Still, it prefigures much of what has been reported about Gupta, Liberty and his wider group — known as the GFG Alliance — in the years since the findings were delivered to Credit Suisse in 2018.

Bloomberg has previously reported that several banks backed away from Gupta’s companies starting in 2016 after finding irregularities in bills of lading that suggested the same cargoes were being borrowed against multiple times. In response to that report, Gupta’s group denied wrongdoing.

The Financial Times reported that Liberty invoices that had been financed by the Credit Suisse funds involved sales to companies that denied doing business with Gupta’s group. Gupta responded with a letter to the FT, saying “I refute any suggestion of wrongdoing.” 

And a UK lender that Gupta bought — Wyelands Bank — was censured by the banking regulator after it was found to have lent large amounts of money to parties connected to him, and forced to return money to depositors.

For Credit Suisse, the Diligence report adds to a damning picture of failures that ultimately contributed to the Zurich-based bank’s near-collapse and sale to crosstown rival UBS. 

The Greensill funds that lent to Gupta had been arranged by Credit Suisse’s asset-management arm, and executives at that division oversaw the arrangement. Yet as far back as 2016, the bank’s trade-finance division, which lent money to companies in the commodities sector, had blacklisted Gupta and stopped doing business with him after becoming concerned about some of his transactions, Bloomberg has previously reported.

Around 2018, officials at the trade-finance division heard from a confused executive at Trafigura, one of the world’s biggest commodities trading firms, according to people familiar with the matter. He had been approached by bankers from Credit Suisse, pitching an investment in the Greensill funds. If the bank had blacklisted Gupta, the executive wondered, why was it asking clients to lend money to him? 

Credit Suisse’s trade-finance bankers were alarmed and raised their concerns with colleagues at the asset-management division involved with the Greensill funds. When this went nowhere, they commissioned the Diligence report and took it to Credit Suisse’s Swiss general counsel, Thomas Grotzer, in a final effort to kill the relationship, the people said.

Grotzer sent the report to Michel Degen and Luc Mathys, the respective heads of Switzerland and of fixed income at the asset management business, writing that “the issues raised here should be clarified in detail,” according to the Finma investigation. He copied in two other general counsel at Credit Suisse on his email, which was then sent on to other top officials at the division.

In mid-2019, a memorandum written by Mathys and portfolio manager Lukas Haas dismissed the allegations of the Diligence report as unsubstantiated and incorrect — a conclusion that they based on information provided by Greensill and Liberty, according to Finma. In any case, they wrote, all of Credit Suisse’s investments were covered by insurance so “we have zero economic exposure to GFG Alliance.” 

Mathys didn’t respond to requests for comment and Haas couldn’t be reached for comment. A lawyer for Degen declined to comment.

In the ruling from its investigation, Finma described the asset management division’s handling of the warnings about Gupta as “questionable” and said that the 2019 memorandum contained “serious and demonstrable misstatements.”

UBS bought out most of the investors in the Greensill funds in 2024 for 90 cents on the dollar and is now owed around $900 million by Gupta’s group. Almost seven years since the allegations made in the Diligence report, and despite several legal cases and long-running talks over a settlement, the money remains outstanding.