Duncan Mavin - The Pyramid of Lies: Lex Greensill and the Billion-Dollar Scandal

W hen Greensill Capital began its rapid meltdown in March 2021, the effects were felt around the world, from the UK to Japan, from Australia to the coal fields of West Virginia.

Billions of dollars of investors money was missing, billions more simply written off. Top politicians and financiers began desperately trying to distance themselves from their entanglement with a start-up firm that had promised to make them rich and then imploded in spectacular fashion. Lex Greensill, the firms charismatic, super-salesman CEO, was supposed to be the next-big-thing in global finance. Suddenly, he was an arch-villain, his grinning photo appearing on nightly news and on front pages everywhere.

Greensill Capitals rise had been swift, but its demise was even speedier. Most of the 1,000 or so employees had had no idea of the failings at the company they worked for, or the allegations of fraud. And then it was over.

By then, Greensill had gone mainstream. A photo I had been given by a source showed ex-UK Prime Minister David Cameron and Lex Greensill sitting cross-legged, in twin blue suits, at the desert retreat of the controversial leader of Saudi Arabia. When we published it at The Wall Street Journal, the photo instantly went viral. Within a couple of hours, it popped up on the main BBC News bulletin. Then it started to appear on news websites. The next day, it was republished on just about every front page in the UK press. That didnt surprise me the photo of the Australian banker and the former Prime Minister lounging at the luxurious desert campsite of the Saudi Prince seemed to underscore everything the public felt was wrong about the revolving door of politics and business. For me, it also illustrated Lexs rapid and unlikely ascent to global power player.

As a reporter, Id first written about Lex Greensill in 2019. Greensill Capital was a difficult firm to cover, not least because accurate information was always hard to get your hands on. Greensills corporate public relations strategy was aggressive and erratic. On several occasions, they would tell me one thing was true and then tell me the opposite days later. The firms lawyers were quick to pull the trigger threatening legal action they frequently denied things that later turned out to be accurate. Ive never before worked on a story where so many potential sources would ask for financial reward before they would agree to talk (naturally, I always refused).

Greensill Capital also suffered from an incredibly gossipy culture, perhaps because so much centred on Lex himself. Even seasoned, senior executives were often left relying on second-hand bits of information to ascertain what was going on at the company they worked for. Sometimes, very plugged-in sources would tell me something they believed to be true because it came from Lex himself or someone very close to him, but they were later proved wrong.

Lexs rapid downfall was a surreal moment. For most of the time Id been covering Greensill, it felt as if I was shouting into an abyss. I would bore friends and colleagues, harping on about a fast-growing supply chain finance (SCF) business that was either going to change banking for ever or would be the next major financial scandal. But I couldnt tell if anyone else cared. Then suddenly Greensill blew up, and everyone cared.

I wasnt the only journalist covering Greensills rise and fall. Far from it. Reporters at Bloomberg, the Financial Times, The Sunday Times and Reuters all did sterling work uncovering the reality about Lexs business as did several of my Dow Jones colleagues at Financial News and The Wall Street Journal. Many of these reporters had their own brushes with Greensills aggressive public relations and legal strategies. At one point, Greensill even took Reuters to court and lost.

When a big business collapses, the reasons are complex. Greensill was no different. Covid-19 helped trigger Greensills collapse it shocked the markets and rattled through Greensills business. But Greensill Capital also just wasnt very profitable. It aimed to hit overly ambitious revenue targets to sustain its sky-high valuation. It grew too fast and was far too reliant on just a handful of key relationships, despite Lexs claims that it had a diverse pool of clients, funders and other critical partners.

Above all, Lex Greensill was telling investors they were buying into a super-safe form of financing when he was actually making billions of dollars in loans to risky enterprises that could not pay them back. The whole scheme had echoes of the worst elements of the financial crisis, when risky US home mortgages were dressed up as something much safer and sold off to unwitting investors.

All of that made for a fascinating story to cover. But what most interested me about Greensill was Lex and the incredible network of supporters he had gathered along the way. Lex was smart and hard-working. He was a compelling salesman. He was certainly driven. But he was otherwise unremarkable. He didnt party hard. He dressed conservatively. He often seemed bland, robotic.

Somehow, he had won over big banks, giant asset managers, the worlds biggest investors, top politicians, long-tenured financial executives. They were all on board. They were all believers. For anyone reporting on the company, it was a constant challenge to reconcile the presence of this extraordinary group of powerful supporters with the numerous red flags about Lex and his business.

This book is an attempt to build on years of reporting to explain what happened at Greensill, and to figure out why so many top bankers, investors and politicians went along for the ride, why they got behind Lex even when it was clear he was taking aggressive risks with other peoples money.

My reporting draws on interviews with hundreds of individuals who graciously shared their time and knowledge to help reveal the truth. These include former Greensill executives, staff, shareholders and investors in the assets that Greensill sold; staff at Greensills business partners, including the giant Wall Street banks and the asset managers, the insurance companies and the tech platforms that Greensills business relied upon; friends and old colleagues; lawyers; regulators; politicians and other government officials. Ive also drawn on emails, letters, internal reports, financial presentations, spreadsheets, legal contracts, photos, audio and video recordings, and other documentary evidence.

In almost all cases, my sources agreed to help me on the condition that I did not reveal their identities. Some of them cited non-disclosure agreements. Others feared retribution from parties involved in the Greensill scandal.

In some cases, I have reconstructed scenes and dialogue based on information gleaned from these sources. Readers should not assume that a person named in the book or quoted here has spoken to me. Where there have been conflicting accounts, I have relied on the most plausible description and the most credible sources. Sometimes I have included notes to reflect alternative views.

Lex Greensill declined several requests to be interviewed for this book. He was presented with the key facts I intended to include about him. I also talked with Lex Greensill and his senior staff several times over the years of reporting on the firm. Some of these meetings were on the record. At other times, they requested that we talk off the record where it later turned out that what they had told me during such meetings was not accurate, I consider that our agreement of confidentiality does not apply.