Duncan Mavin | Lex Greensill's Billion Dollar House Of Cards & Scandalous Collapse

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#153 - Lex Greensill's Pyramid Of Lies by Duncan Mavin.

What if I told that you that Credit Suisse, one of finances most foundational banks was helped brought to it’s knees by a charismatic bogan playing posh from Bundaberg…

This podcast is about a fella called Lex Greensill… who, among many other things, roped the likes of (Brexit instigator) David Cameron, current prime minister Rishi Sunak to even Vision Fund, Uber and WeWork investor, Masoyoshi Son into his sprawling supply chain finance scandal.

The full story of how Lex talked and awkwarded his way into the central halls of power is immense, and the guest on todays podcast, the incredible investigative journalist, Duncan Mavin, wrote a book documenting all of this called, pyramid of lies

• 00:00 - Introduction
• 02:02 - Lex As A Bloke & How He Became Who He Is
• 15:20 - Could The End Have Justified The Means?
• 22:02 - Separating The Legitimacy From The Fraud
• 32:12 - Similarities & Differences Between Lex & Adam Nueman Of WeWork
• 36:32 - My Soft Spot For Lex & The Role In David Cameron In All Of This
• 46:32 - People Risking Their Reputations + Where Is The Due Diligence?
• 52:47 - Cancer Of Offshore Finance
• 1:06:27 - Greensill's Role In The Collapse Of Credit Suisse
• 1:10:43 - Who Were The Victims Of Greensill Capital?
• 1:12:08 - Duncan's Direct Message To Lex
• 1:14:22 - How Often Does An Anonomys Tip Get The Ball Rollling?
• 1:17:20 - Do We Live In An Age Of Unprecedented Fraud?
• 1:19:54 - Serendipity, Bullish Country & Conversation Between Any Two People Of History

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Curious Things Mentioned During The Episode

• Investigative Journalism Starter Pack
• Offshore Finance Starter Pack

Transcript

SPEAKER_00 0:00

What if I told you that Credit Suisse, one of finance's most foundational banks, was helped brought to its knees by a charismatic bogan playing posh from Bundaberg. This podcast is about a fella called Lex Greensill. And among many other things, this podcast is about how he roped the likes of Brexit instigator David Cameron, current Prime Minister Rishi Sunak, to even vision fund Uber and WeWork Investor Masayoshi's son into a sprawling supply chain finance scandal. The full story of how Lex talked and awkwarded his way into the central halls of power is immense. And the guest on today's podcast, the incredible investigative journalist Duncan Maven, wrote a book documenting all of this called A Pyramid of Lies. This podcast with Duncan will cover a bit of the following and then more as well. Is there a universe where Lex could have continued to fake it until he would make it? How did all these people with big reputations fall for Lex's charm? What was the role in offshore finance in all of this? What are the similarities between Lex and WeWork's Adam Newman? And then plus, right at the end, Duncan delivers a direct message down the barrel straight to Lex. And before we get into it, and I remind you all to pump your good juice into the algorithm with those five-star reviews, I actually just wanted to bring your attention to the newsletter that I've launched. I will be sending at least one email a week to you, mostly more in depth and behind the scenes of the podcast, but as well the occasional curious well be weekender, which will be a nice companion to a Sunday morning coffee. It's the top link in this podcast description. Did you know that Tim Ferris values his email list higher than his podcast? I want a more direct relationship with you, my very dear listener. So put your email in. Well, first click the link, then put your email in and let me learn a little bit more about you. And with all of that out of the way, with absolutely no further ado, here is the great and powerful Duncan Maven. Alright, mate. Has your proximity to Lex ruined how you relate to Australians?

SPEAKER_01 2:08

No, not at all. Not at all. I have a few good Australian friends. And actually Australian family as well, so um definitely not.

SPEAKER_00 2:20

Did you end up um spending much time in Bundaberg or Sydney uh in research for this book?

SPEAKER_01 2:26

In Bundaberg, uh no, I didn't. No, I didn't at all. Um I am told that I, you know, the book is very well read there. I believe it's sold out there. Uh and I'm also told it's kind of divided the community. Um you know, there's some people who've done very well out of Green Cell Farming, which has received an awful lot of money from Green Cell Capital, and so those people I think are very supportive of Lex and his family. And then there are a whole bunch of other people who um feel like they didn't do so well out of it, who are farmers whose farms were squeezed by green cell farming and they feel pretty upset about what happened.

SPEAKER_00 3:07

It's just such a stark contrast and subversion of your expectations of what a Bogan from rural Queensland would aspire to. The idea that you know he wanted to be knighted in the UK and wanted to be in the top class drinking the fanciest champagne, it's so opposite to what I would expect from a fellow from Bundaberg.

SPEAKER_01 3:35

Um yeah, I think that's right. I think Lex, so my understanding of Lex as a kid was that he was sort of, you know, bullied a little bit, he was not a very big kid, it was a very kind of rough and tumble place to grow up, and uh he was, on the other hand, quite intellectual, and uh that that was how he saw his way out, right? So he kind of might his brains were his way out, and then I think he realized or he believed that actually to make a lot of money he had to sort of portray himself as a guy who came from you know the right side of the tracks, as it were, or you know, could mix with the wealthy upper class uh kind of finance people and politicians in the UK, and so it it's definitely odd, right? It definitely means he stood out, um, but he was kind of standing out from quite an early age. You know, I know now, since since I wrote the book, I I probably know more people in Bundaberg than I did um before I wrote the book, and I know now that at school he was already, you know, as a as a fairly young kid, he was kind of dressing in a way that other people found was odd. So that he was, you know, an example is he was he was a leading light in the debating club at school, and where the other guys would show up to the debating club in Bundaberg in you know shorts and t-shirts because it's like subtropical or whatever it is, um, Lex would show up like in a stiff shirt and you know long trousers, and you know, he this is kind of when he's like 12, 13, and was already regarded as a little bit odd for that.

SPEAKER_00 5:12

Interesting. Do you know where in talking to people from Bundaberg and being the recipient of anecdotes such as that, have you come to a understanding for where Lex just got his intense ambition from?

SPEAKER_01 5:32

Yeah, I mean, uh look, I'm not a psychologist, so I'm like about to engage in a field of research that I'm not qualified to engage in. But like the pop psychology of it would be this kind of bullying, right? That this is this is his way to get back. Like he can't he can't get one over on the big kids when he's growing up by like out uh fighting them or outrunning them. He gets one over on them by being kind of smarter than them and you know by helping his far his parents have the biggest farm in in the area. And so I think that is sort of yeah, it seems like a logical place to start when you look at why why is Lex ambitious? Um, I think he clearly like him and his brothers, um all three of them I think get kind of pushed around a little bit. And so I think this is a there's a sense of like sticking it to these people who pushed him about when he was a kid. You know, when when one of the other anecdotes I heard was um yeah, one of the other anecdotes I heard was that when he was you know running Green Seal Capital and making a lot of money, he would if people from Bundaberg who he'd grown up with were in the UK, for instance, and he heard about it, he would offer up to them, hey, you know, why don't you go and fly on my private jet? I'll I'll fly you to Spain or or Italy on my private jet. And it's this kind of like showing off to them, you know, that look, I might have you might have thought I was just some little you know smaller kid than you when we were all grown up, but look at me now.

SPEAKER_00 7:08

We're all just trying to get back at our high school bullies at the end of the day.

SPEAKER_01 7:13

Exactly, exactly.

SPEAKER_00 7:15

Well, it feels like if half the town's on his side and you know the book is flying off the shelves there. In some sense, he sorta has um uh fulfilled that getting back at the people who didn't think he would ever become much from his childhood. You know, he's a well-known guy in Bundaberg now. People knew that he rubbed shoulders with David Cameron. It doesn't really matter how it all ended up. Like, this is a guy from Bundaberg who has done something on the international stage.

SPEAKER_01 7:47

Yeah. Yeah, I think that I think there's an element of truth to that. But I think the story's not finished yet, right? So I think you know, there's two things I would say to that. One is what I'm told, you know, as it collapses, when there are like these rare moments of introspection, because I think Lex, you know, firmly believes he never did anything wrong. In these rare moments of like him kind of thinking maybe I did, what he had he would say to people, you know, I brought shame on their family name, or or words to that effect. So I think he was aware that actually how it ended up, how it ended up was not good for his family. And I guess that is the danger, right? When you call it Greensale Farming Group or Greensill Capital or Greensill Bank, your name is all over it. So when it goes wrong, you know, it's your name. Um, so there's that, and then I think the other thing I would say is it isn't over yet, right? And so at the minute he's still a wealthy guy, the farm has all this money, it's you know one of the biggest uh agribusinesses in in the region, if not in Australia, I think now. And um, you know, but it is not over, and there are criminal investigations in Switzerland and Germany, there are some pretty big lawsuits in Australia, there's an SFO investigation that's kind of linked to Green Cell here in the UK. Um, you know, he's been named personally in the criminal investigation in Switzerland, for instance. So, you know, that isn't like it's one thing to be the big personality in Bundaberg, but not if you're the big personality in Bundaberg because of things that went really badly wrong.

SPEAKER_00 9:21

Is there a genuine threat that he uh serves uh jail time?

SPEAKER_01 9:28

Uh you know, I well again, you know, I that would be me getting into another area that I'm not qualified to get into, as well as psychology to kind of uh deeply into the law. But I think in Switzerland, look at the case in Switzerland seems to be the most fur you know, furthest along, the most uh it's progressed the most. And the Swiss authorities seem uh like they were they are serious about trying to uh pursue criminal uh a criminal investigation. They've named a bunch of bunch of guys who worked at Credit Suisse, which was you know the bank that was deeply involved with the Green Cell funds, and and Lex is also um party to their investigation. And so, you know, that is a like you know, I I don't know how that ends up, but it it seems very serious, and certainly you know, I wouldn't want to be the subject of a criminal investigation.

SPEAKER_00 10:24

No, certainly not. Okay, so that's a little bit about where he is at the moment, um, but that does beg the question, how did he get there? Um at the foundation of this entire book, which documents the Greensill fraud and scandal, and in some language a Ponzi scheme, um is something we've already touched upon. His intense sort of charisma, ambition, uh ability to be a salesperson. So in one sense, to start the story, I think uh the anecdote from when he was working at that Sydney firm is a good way just to highlight what type of character we're talking about here.

SPEAKER_01 11:09

Yeah, so you're talking about what way back like this is 20 odd years ago when he's first starting out. He is uh a guy with essentially like no experience in business or finance, right? He's he's uh a guy with a law degree and some experience of working for um like a local farming lobby group. Um nevertheless, he has a a resume of about 20 pages, um which is pretty extensive for anyone. Um, and you know, lots of pretty extravagant claims of being kind of you know, world I am exaggerating a little bit, but it's like world champion debater and things like that, which are kind of laughable. But he got he you know, he he he walks into that this firm, which is um kind of it's like the remnants of a property development company um that is kind of flipped into like a uh hothouse for for tech startups. And he walks in and says, Look, I want to be paid, you know. I I think I think you should hire me. He says, the guy who's running it, I think you should hire me, and I think you should pay me um, you know, basically the salary that you're paying the top guys who've been here 20 years. And the guy sort of laughs at him. It's like that's a ridiculous claim. Um, nevertheless, I really like your um ambition. Um, so why don't you come and work here? And that sort of thing actually works for him for the next 20 years, right? He he continues to make ever more kind of elaborate or extravagant uh claims, you know, ever more kind of like, hey, you know, next uh we're all gonna be billionaires. You know, within a few years of that, he's in Morgan Stanley and he's saying, We're all gonna be billionaires. If you guys back me, we're all gonna be billionaires. And everybody kind of thinks similar to what happened in Sydney, people kind of go, Well, that's ridiculous, but you know, maybe we'll be multimillionaires, so let's just like this guy's crazy, but let's just go along for the ride. And you know, that sort of serves him pretty well, and you know, good luck to him, right? Like that's there's nothing really wrong with that, right? Um, with a lot of ambition and you know, setting the bar really high, and you know, trying to whatever metaphor you want to use, shoot for the moon, and you know, if people people buy into it, well done, right? It's that that's all fine, I think. It's uh when it becomes sort of uh unconstrained, and it sort of strays into areas where he's kind of not telling the truth, or he's you know, which which happens a lot, or he's you know deliberately misleading people so that they'll provide financing to him, then then you get into a whole other area. But yeah, I think you know it's there are very early signs that this is a guy who is incredibly ambitious, he will say he will say and do whatever it takes. Um and some people go along with that because you know that's kind of the way the world works.

SPEAKER_00 14:01

Is there some alternative universe where he just managed to continue to fake it until he ultimately made it?

SPEAKER_01 14:10

Uh you know that that's a really uh interesting question. I've thought about it a lot. Um in some ways there is, because there is a sort of, you know, we can get into it, but there's a legitimate business inside Green Sill Capital. Um there's a non- there's an illegitimate one too, but there's a there is a legitimate business. So there is a there is a universe in which that legitimate business carries on. Um the problem with the idea that there is an alternative, you know, uh universe in which it's all okay, is that that universe probably does not contain Lex Greensell because he he is who he is. And you know, I my view is he he's you know there he's shown no signs at any stage uh throughout you know his entire career and even since it's collapsed, that he's this is a guy who you know wants to do things on the level, that he knows where to draw the line, um, that he's uh you know a guy who you can trust, frankly.

SPEAKER_00 15:13

If he did in this alternative universe carry on and eventually make it, would the ends have justified the means?

SPEAKER_01 15:23

Uh well it's a good question. Um he's look, I think that's a question that is part of like it's a big question for our time, right? Because it's it is you know, he is very similar in many ways to Elizabeth Holmes at Theranos and you know the guy at WeWork and so on, where it it is that kind of you you know, use the phrase, fake it till you make it. Um well, you know, difficult to say, right? Like I think he his I think he knew that there were things wrong with his business. Um and his view was if we grow it big enough, I can kind of deal with those things. Um but you know, isn't that isn't that kind of true of all people who you know, many, many people who go kind of go rogue in finance? Um you know, is that any different to the rogue traders who are like, oh, I mean the hole, if I just keep betting more and more money, I'll get myself out of the hole. I mean, I think that's kind of what happens to every everybody in, you know, um in these situations.

SPEAKER_00 16:25

There's a great anecdote from Walter Isaacson's biography of Steve Jobs, I'm sure you're familiar with it, but it's not actually one anecdote, it's multiple anecdotes of um Steve one selling features that don't exist, demoing features that didn't exist, and being a total fabrication, um ultimately then delivering in in the final hour, and Apple is what it is now, an incredible company, and Steve Jobs is remembered as an absolutely incredible founder. Although, if you read that same biography, you should also come to the conclusion that he was a phenomenal asshole. But um I I don't know, it's just like it's different fields, it but no, sorry, you go on.

SPEAKER_01 17:07

It's totally understand where you're coming from. I think it is different, and I and and I think I don't want to uh under undersell uh the level of wrongdoing. So I I don't I don't I'm I'm very careful not to use the word fraud because you know Lex has not been uh convicted or even charged with fraud yet. Um you know he has been accused in parliament in the UK of running a Ponzi scheme and by others, so you know I think we're free to talk about that. Um what I what I would say though is there are like things coming out now and things I wrote about in the book that show that this is clearly somebody doing something that this is more than like saying, you know, oh uh you know, my the iPhone will be able to, you know, have Google Maps on it when it doesn't yet have it. This is the there for instance, there is a particular loan. So, you know, what's wrong with Lex is he he's lending other people's money, right? He's going to um Credit Suisse or previous previous to that a big uh asset manager called Gam, and he's taking, he's persuading them to give give their clients' money to him, and he is lending it out to uh borrowers, companies that are that are essentially he's sourcing, right? And he's saying, Oh, these guys are are good for these loans. So um he's lending out other people's money. So then where it goes wrong is when you start to look at some of the loans and some of the loan deals, and these are loans that are clearly never going to get paid back. These are often loans to friends and family of Lex uh or people close to Lex. Um, you know, there's one that is mentioned in a court case, uh has been mentioned in a court case recently in Australia, which I wrote a little bit about, but there's more detail out on it now, you know, where they take some money from this asset manager, Gam. They they take uh you know it's 20 odd million dollars, and they the Greensale lends it to this company, small kind of small industrial conglomerate in the UK, um which you know may or may not be a like legitimate business itself, but they lend this money 20 odd million dollars. The legal documents that have come out recently show that uh of the 20 odd million, five million went to Lex as a as an arrangement fee, five million went to one of the directors, I think another five or more million went to another one of the directors, so uh as arrangement fees. So the this the loan, what was left in the company was only a few million dollars. Like, how are they ever gonna pay that back? Like they didn't get the money. It went straight out the door. You know, there are loans to Lex's Lex's neighbor. Actually, you know, it's more than Lex's neighbor, it's a guy who lives in a property on Lexa Lex's land. Um you know, this is this is not quite right, right? There are loans that he he makes to um guys he's known for a few years, and uh they just they just get rolled over and over and over again. So when they come due, rather than claim rather than the loan be paid back, Lex just sort of automatically makes a new loan. So they of the same amount or more even. And so those loans never ever get paid back. So he's sort of sort of suggesting, you know, to the the investors, uh, the people whose money he's taken that, hey, you know, these are great loans, I'm giving you the money, it's coming back, but actually it never does come back. In fact, there's no expectation it'll come back. So that's that's a bit different, I think, than you know, claiming that your your Mac can do things that you know it are still in the research and development stage.

SPEAKER_00 20:49

Because the victim ultimately is being taken for a far bigger ride, or the consequences are far more severe?

SPEAKER_01 20:57

Well, because I think you're you're outright lying. It's it's not like hey, this loan, you know, like if you're saying, hey, there's this this thing on an iPhone or a Mac, that's in research development, and we'll get it later. Um, you know, that this is like these are these are supposed to be super safe loans that you know pay a certain return. Um, whereas in fact, they're highly risky loans that are not being paid back ever. They're not really loans at all, right? If it's a loan that never gets paid back, what is that? That's not that's not a loan, that's just a a payment to a friend of yours. You know, and you take an account as well. Um, and so that that whole structure only works so long as you can keep persuading people to put more and more money into it. Um, you know, that's that's what a Ponzi scheme is, right? It's um it works, it's a it's an investment that works so long as more money keeps coming in. But as soon as the m money stops coming in and investors want their money back, you kind of look and go, Well, actually, there isn't any money back because I took it all. I spent it.

SPEAKER_00 21:58

Okay, so we've touched upon so far parts of the Green Seal Empire, which is multiple businesses that are legitimate businesses, and then the example you just gave, which is just completely illegitimate business. So to really get the play-by-play from Lex the overly ambitious banker through Lex the Unicorn founder through to Lex the disgraced financier fraudster, one should listen to or read the book for sure. To get the true bay by play. For the sake of the podcast, I thought it'd be best to just ask you if you could separate it into two sort of columns. The Green Seal affair, how much was Ponzi scheme lies, and then how much was perfectly legal within the bounds of uh of creative accounting.

SPEAKER_01 22:46

Yeah. So um yeah there are very different views on this right so we have to take a bit of a step back and say what is it that he's trying to sell? What it what kind of finance is Lex Greensell into. And it's something called supply chain finance. It is essentially you provide loans to companies to pay their suppliers right so it's it's sort of short-term loans. You know it's like a a a factory that buys widgets from its supplier and you you provide a loan to make that transaction happen more efficiently. So it should be really short term and that's why it should be safe and you provide like you know loads and loads and loads of these loans. And so um again so it becomes sort of safer if any one loan collapses it's not a big deal. So in theory that stuff is is all legit and it's something that's happened for for up decades if not hundreds of years in different formats and Lex is in that business. Now that immediately raises a question right like how can Lex be in this business if it's been around forever how can you how can you get into this um out of nowhere? And you know that's a very legitimate question and there's not a great answer for it. But what he does is he kind of essentially undercuts the banks on on this business. So he takes he goes to asset managers GAM Credit Suisse and he says look I I can do this business. If you give me some money I don't I'm not a bank so if you give me some of your clients money I will finance these loans and we and your clients will get back you know a decent return. And um that's kind of in essence what's happening. So how much of this is legitimate and how much of it isn't well he deals with a lot of legitimate names so you know Coca-Cola I think Ford Motor Company Nestle like a lot of like really big companies he doesn't make any money off those deals right nothing at all. The the documents I've seen greensell documents I've seen all of the business he was doing billions of dollars of transactions with big names big sort of blue chip companies he is making no money or a loss on those deals um all of his profits are coming from a handful of other clients who are not big companies there are companies like the one I mentioned earlier it's like this little industrial conglomerate in the UK or his neighbor in some cases there are other supply chain finance businesses that are similar kind of startups to his own. And then there are a couple of big ones bigger ones so one is um uh Sanjeev Gupta the the steel magnets um metals business and the other is a company called Bluestone Resources which is a coal mining company uh in West Virginia owned by the governor of West Virginia in the US and between those the this those sort of groups that makes all of Green Cells profit. However those loans are not supply chain finance loans at all they're just kind of you know he takes the the the client money from Gamma or Craig Suisse and hands it over with no expectation I'll ever get paid back and he takes a cut. And so he's able to kind of show profits because his profits all come from this kind of high risk lending and he's able to show kind of volume because the volume comes from the low risk lending to blue chip companies which is entirely unprofitable. So so how much of his business is legit and how much isn't in the past I've said well you know based on the volume of transactions maybe 75% is legit and 25% isn't um but that might be a false way to look at it. I think uh as I've learned more and more about green cell I think probably a more accurate way to look at it is to say well let's look at how much profit was coming from legitimate businesses and how much was coming from you know the the less legitimate stuff and if you look at that well it's it's essentially like the the there's nothing coming from the legitimate business that is not profitable. It's loss making and so the whole business is essentially you know stuff that should not exist. It is high risk it is not what he's telling his clients they're getting is it a mastermind of accounting or a master of salesmanship that could make that exact scenario you just described possible it's a little bit of both right so there's an accounting kind of trick in there and I'm a former chartered accountant before I was a journalist I was an accountant for about 10 years so you know I admire the accounting trickery but it's giving you some ideas a little bit of yeah um it's uh so there's definitely a little bit of that going on so um you know probably more relevant than the accounting per se is that there's a lot of like complexity around the structure of the investment vehicles so there's layer upon layer of um corporate entities some of them are green cell entities some of them are have other names um he has a bank in Germany like all the money just gets funneled around in many many different ways and so that complexity is is kind of uh important um I think sales is super important he is a great salesman um and in fact if he'd stayed as a salesman you know maybe maybe there's a there is an alternative universe there where he's just a really good salesman but um you know a salesman in charge of a bank is probably not a good thing um and so I think you know he he grows this business partly by convincing people um that he really has something magical when of course he doesn't um but I think you know the the the accounting stuff is is um it's a it's a little complicated but it's it's actually you know it's not hard to find the problems in these in these loans. It's not it wasn't a tricky thing to do as a journalist and you know anyone could have done it really um and many many you know I'm not the only journalist who found this stuff by the way like quite a lot of us uh were digging around and you know googling and finding plenty of evidence that there was something wrong here.

SPEAKER_00 29:18

I'm just thinking you know for my own business it would be incredible if we could get Nestle Coca-Cola one of these massive companies on board and we would happily uh break even on it maybe even take a small loss because it gives you so much authority to then go out and speak to other people so there is still there must be Lex this upstart and no one knows who he is he's just raised money from GAM and Credit Suisse and he approaches these guys there still must be I'm imagining an incredible amount of work and ambition and salesmanship that goes into creating these deals that then make all the other deals possible in the first place yeah I think so so I I think um he's uh well he he has a lot of these relationships right with the big companies from his time in the banking world right so he worked for Morgan Stanley and he worked for Citigroup and a lot of these relationships start there um there's another element by the way and it it comes out when he you know before Green Cell Capital when he works at Citigroup and this is this is kind of the way Lex works so there's a there's a an anecdote in the book about um he one of the things that gets him in trouble at City is he says that he's got this big deal with uh Phillips the um the the Dutch electronics company and uh it turns out that actually he has a deal with like a Hungarian or Eastern European subsidiary of Phillips not not Phillips itself you know and this is kind of classic how Lexus works.

SPEAKER_01 30:51

So you know he's not lied right like he didn't lie he didn't you know but he's certainly the people other people in the room misunderstood right um what he said to them yeah like I think he's he is well aware that he often will say things that leave somebody leave the person in the room with one impression when the reality is somewhat different. And that's kind of that's kind of his style which maybe you know that maybe that's a good sales technique in some some cases. But yeah I think you're right like getting all those big companies on board is legitimate right like the it is a legitimate way to to build a business is to go and talk to big credible businesses and use them as a kind of loss leader to to um build your own brand uh that's fine but if the other business that you're building is then one where you're pretending it's uh sort of nice safe loans to stable companies when in reality it's high risk loans to companies that can't pay them back well that's not great right um using credible names to mask in a business that isn't uh isn't legitimate that's a problem.

SPEAKER_00 32:07

Definitely a problem. Um before the collapse so in this stage where the business is actually all going very well and he's got all the right attention from all the right people and he's raising all these incredible amounts of money around the world there are so many Adam Newman synchronicities with him in the way that he likes to flaunt wealth, collect celebrity even Masyoshi-son and the soft bank uh vision fund are involved here so I wanted to ask you specifically this is before the crash when the business is doing well some of the details of extravagance of wealth and Lex's utter desperation to be viewed as just someone important by people who he thought was important yeah so I think I think it's a it's interesting and then the Adam Newman um you know the sort of comparison with Adam Newman's really interesting I I don't know Adam Newman but I you know I know what I've read and um uh it seems like Adam Newman kind of enjoyed that celebrity lifestyle right like that was part of what was driving him was he actually enjoyed you know spending lavishly and and having a non-stop party lifestyle with Lex it's somewhat different I think um because actually in his sort of quieter moments in some ways he's kind of conservative right like he he um is you know he doesn't have a he has like a nice car but it's not something people people kind of remark on the fact that his car is you know it's okay but it's nothing special you know driving around a Ferrari um yeah it's a pretty sort of quiet home life in some respects but with with but what he does have is like a fleet of private jets um expensive suits you know he goes to dinner at great restaurants um will buy the most expensive bottle of wine um but with Lex that is not I don't think that's about him you know that is not the the objective like the the the lavish lifestyle is not the objective it is it is the means it's like you know by presenting himself as a wealthy successful businessman Lex sort of believes he will sort of you know to use the phraseology of the day he'll kind of manifest that you know he he will become a rich successful businessman by persuading people that he already is one um and be and I think he's sort of right to some degree right like that that sort of those outward displays of of wealth um attract people like David Cameron and you know plenty of others who um add more credibility to who Lex Green still is and that brings in more money and you know it's it's uh it's a really interesting piece of you know human psychology and I think that that may be his genius right like that may be where and it's again I think it's like a real sales um kind of sales profession technique to sort of say well if if everybody thinks I'm really rich they'll want to come and spend time with me and then some of that money will rub off on me and and so on.

SPEAKER_01 35:11

But yeah it's interesting it's not you know for the the example that that's really kind of top of my mind always is you know the Adam Newman the famous Adam Newman story is that we work private jet and they're kind of all partying and and taking drugs on the plane and stuff. And on Lexus Private Jet it is cups of tea and it's work. Everybody is like the laptops are out you know the the craziest it gets is somebody might take their suit jacket off and roll up their sleeves. But it's it's it's all work. And I think he is kind of a workaholic right I think he is um you know he makes the case quite often that uh when people criticize him for having the private jets so some of the investors uh the soft banks and others say to him look you know this is a bit extravagant you got like you have a whole fleet of private jets Goldman Sachs doesn't have a fleet of private jets what do you you know this doesn't look good. He'll say um well yeah but you know it's where I do my work. I'm on the plane all the time and I work on the plane so you know it's a legitimate it's a place for me it's not it's not just uh uh you know being flash it's just because I I'm flying so often I don't want to stop working.

SPEAKER_00 36:23

Yeah exactly yeah I mean with whilst reading the book yeah there is a part of me that was found the story extra intriguing because I know so intimately North Queensland and my family's all from there and it's like this guy is rubbing shuttles of David Cameron and creating all this amazing business and then it for so there's a part of me that thinks he's so competent in so many ways but seemingly just ethically has zero compass at all. You know and and to a degree as long as it serves his final purpose he's willing to cross that line um which makes it you know like so tragic uh to to to a degree I I don't know how much I'm just projecting my own you know thoughts onto it then I I kind of agree with you actually you know like um there was when I first started talking to people about Lex uh as a journalist there were definitely a couple of people I I talked to who would say there's there were so many skeptical people about Lex Greensel but there were there were a couple of them who would say to me look you know I don't want to bash the guy like he he you know he's he's a like they they liked the fact that he was kind of an outsider right there were there were definitely some people in finance circles who would say to me you know come on we we we shouldn't be giving this guy a hard time he's he's like uh you know we should be rooting for him he's he's an outsider we should be supporting guys like this um and that like I I get that right like I there there's an element of that that I kind of um I believe in too but not when he's doing things that are wrong of course of course um you brought up David Cameron a little bit earlier in the Guardian review of your book that had such a good line um but this you know for the context for the audience is just after David Cameron is ushered in Brexit and then like next time he's in the news is he's roped up in this massive scan scandal where a bunch of the British taxpayer money has been lost um but the the review said um yes they perfectly surmise the relationship between Lex and Dave Cameron by saying Lex got the class David got the money yeah so um well well Lex had kind of got into Downing Street um when Cameron was prime minister he he got a sort of uh there was a civil servant um a very senior civil servant who'd been around the UK uh government for many years who'd ended up at Morgan Stanley and then he'd gone back into government when Cameron was there and around that time it was kind of post-financial crisis the UK government is looking for ways to cut costs and a report comes out and it says you know one way to cut it would could could be this stuff called supply chain finance.

SPEAKER_01 39:15

And so this civil servant turns around and he says um well I know a guy at Morgan Stanley he was like the guy advocating this thing. So Lex kind of gets his foot in the door because of this right so he gets like a a sort of very loose role to give a bit of advice to the government on supply chain finance which he because he's like screen cell turns into like you know an amazing opportunity where he's suddenly got business cards with 10 Downing Street on them. He's holding meetings in 10 Downing Street he's you know inviting kind of former colleagues and business partners in and showing them around as though he owns the place um but you know as a result he sort of gets to know some people um again people kind of laugh at him um but you know admire his ambition whilst laughing behind his back he gets to know David Cameron a little bit and then again because he's Lex and he understands what kind of motivates people when Cameron leaves office he makes an offer to him to come and join Green Soul Capital. They they kind of have to fudge around it a little bit because of the rules about what politicians in the UK can do after they leave office. But but essentially they give him a sort of special advisor role I mean ultimately it's like a board level role Cameron is uh you know what's appealing so what's appealing to to Lex is pretty obvious right he the massive credibility and Cameron's connections um that is absolutely what Lex wants and you know as the relationship progresses he's basically badgering Cameron the whole time you know you gotta call people you gotta do this and what Cameron gets is is is pretty obvious too money right so you know politicians they leave office a lot of them in the UK at least and you know I think it's true in Australia too they go and work for private companies typically I guess they will work for you know giant multinationals um you know UK um former UK prime ministers have gone to work for the likes of uh JP Morgan um what Cameron was a bit different right so there are a couple of theories one is that you know his his brand was kind of tarnished by Brexit and so actually the big Wall Street banks weren't that keen to to offer him a job I I'm kind of not so sure about that. I've I've heard people say that but I kind of think the big Wall Street banks wouldn't care. I think what what's more likely and what I have heard from my sources is that what was appealing to Cameron about Green Cell was a he kind of thought it was cool right so he cameron like always wanted to be a bit cooler. So like a fintech startup that's cooler than going to work for JP Morgan.

SPEAKER_00 42:07

Two he didn't think it would be that hard work right he'd have to go to a board meeting every now and then and that would be okay it's pretty cushy work to be honest sounds like it's pretty cushy work.

SPEAKER_01 42:18

And the pay was going to be extraordinary so if they had managed to you know if green cell capital had IPO'd I understand he would have been in line to receive tens of millions of pounds maybe as much as 70 million pounds. Obviously that never happened Green Cell collapsed before the IPO nevertheless uh Cameron had a special deal which said that his uh the stock that he was given the options he was given I guess essentially in the company um would vest uh even before an IPO and so he was able to extract uh I think the BBC said something like seven million pounds I think it might have even been even more than that um so this was you know a lot of money for not a lot of work and pretty quickly and it gets to be cool um I think what he didn't do was enough due diligence on Lex Greensell I mean that's clear you know I think if as an ex-prime minister the only thing you've got to sell is your reputation um your credibility and if you you give it to the wrong guy you're kind of really badly burned. I know he was warned by at least a couple of kind of very senior politicians who told him you know this guy don't touch him and yet Cameron went ahead anyway. Yeah I mean I think Cameron has a lot to answer for because I think you know his name definitely definitely helped Lex Greensar uh gain a lot more credibility. Yeah you know he flew Cameron went with Lex to Japan to secure the investment from Softbank which turned this company from being you know uh worth uh like a you know billion dollars to being worth several billion dollars you know good softbank vision fund uh Ultimately, well, uh, they put 800 million in, another six hundred million in. I think in the end, they probably lost a couple of billion dollars. And that was you know, Cameron went with Lex to secure that. Wow. So he he's kind of critical to how big they become how big Lex becomes.

SPEAKER_00 44:16

Absolutely. Um what's uh what's Cameron said about all of this since it's uh un unfolded?

SPEAKER_01 44:25

Yeah, I mean he was pretty quick to distance himself. He did one he you know did one kind of appearance in front of Parliament when the inquiries initially happened. Um, and since then he's like said nothing, totally refused to engage on it. Um which I suppose is you know to be expected, disappointing, but to be expected. Um fortunately, a lot of what a lot of what happened between him and Lex we know because it was um subject to this parliamentary inquiry into you know a couple of things, um the kind of revolving door of politics and and uh business um inquiries into what happened to uh loans, government loans during the COVID uh period when uh Greensel managed to secure quite a lot of UK government money. Um and so a lot of actually Cameron's role at Greensell Capital is kind of public information now, um text messages and things like that, WhatsApp messages is already public. So, you know, yeah, he's pretty he he himself isn't saying much about it. Um but actually we have a lot already. It's pretty clear what his role was.

SPEAKER_00 45:37

Yeah. Is there any apart from reputational damage, is there any other exposure potentially that could fall on Cameron?

SPEAKER_01 45:48

Um well I think the big one is reputational damage, let's just put it that way. Right, right, right.

SPEAKER_00 45:56

He doesn't have much left. Poor guy.

SPEAKER_01 45:59

I I think look, the other thing he he my understanding is he flew on the Greensel private jet a lot.

SPEAKER_02 46:06

Yeah.

SPEAKER_01 46:08

Uh you know, and so that's that's a pretty big benefit, right? Like I don't know if he I don't know how you pay tax on a benefit like that. So you know, there could be stuff like that.

SPEAKER_00 46:20

You mentioned before I'm speculating now. Sure, sure, don't worry about it. You mentioned before um Australian politicians will also go into the private sector. Um I was intrigued to see Julia Bishop uh feature in the book. How close was she to getting roped up into all of this?

SPEAKER_01 46:38

I mean, really close, right? So she was sort of uh uh you know, you know, how much time did she spend with Lex? I don't know, but I think you know he was perceived as a kind of champion of you know, it's like something to be proud of. And so she was she was out um you know promoting Lex Greensell and was uh you know uh uh would have been again had the company continued, she would have been a board member, um, she would have had a definitely had a role uh going forward. She kind of was fortunate in some ways that it collapsed before she had too much exposure.

SPEAKER_00 47:19

See, that's for me, that's particularly intriguing because obviously I I don't know Julia Bishop at all on a personal level. I only know um broadly what journalists have said about her over the years. But I I kind of measure her as the best, all the best qualities of a politician with very few of the worst qualities. Um the worst qualities being mainly lying, you know, um flip-flopping on an issue purely for self-gain and so forth. Julie Bishop did strike me as someone who had like deep integrity to her values and was an intensely smart individual who really couldn't be taken for a ride. Uh, she was the most senior female politician for so many years in the Australian um scene. And uh so for you for you to say that yeah, she also fell for the Greensville uh you know silver tongue, I wonder, you know, yeah w w what's the lesson in that? Is that just me giving too much credit to Julia Bishop or is there something deeper?

SPEAKER_01 48:24

I th I think look, he he tried it, he tried to charm many, many, many people, and and you know, lots of them did not fall for it. Um so I think what it probably tells us is you know, if you try to charm enough people, some of them will fall for it. And you know, if you're a guy like Greenseller, and so you know she did, um and Cameron did, and so did a few other politicians, not you know, actually politicians of different stripes, right? Like there were politicians from either side of the political spectrum in the UK who were somewhat involved one way or another. Um, I think you know, it probably teaches us these people uh all kind of lean on each other a bit, right? So if like you know if David Cameron's on board, then maybe Julie Bishop thinks it's it's it's it's okay, you know. Um if the guys raised a couple of billion dollars, then people think, oh, it must be somebody else must have done their due diligence. I mean, that's you know, like leaving the politicians aside for a minute, just thinking about the big investors in Greensel Capital, right? The the first really big investor is a private equity fund out of the US called uh uh General Atlantic, and they put about a quarter of a billion dollars in. They, you know, had sort of tracked Lex for a while, they realized there were some flaws with him, but probably a little bit arrogantly believed that they would be able to fix them. That they they were, you know, that was their job as private equity investors. So they put their 250 million in and then kind of realized pretty quickly afterwards, oh no, we can't fix him. But they're fortunate in that you know, Softbank Vision Fund comes along and does like eight weeks of due diligence before putting $800 million in, partly because they look at General Atlantic and go, well, those guys are really smart and they know what they're doing, so let's just put some money where they are. Um, and that allows General Atlantic to essentially get out, you know. So they're they're totally all leaning on each other, right? People are just like you Lex has kind of figured out that if you can get one politician or big investor, then actually you can get more of them because they'll all just kind of you know assume the last one did their job properly.

SPEAKER_00 50:42

Uh that's so fascinating, isn't it? Because at the end of the day, who who who knows what supply chain financing is at the level of detail that Lex is selling it on. And yeah, the proport the precautionary principle goes out the window once you see, oh, I respect that person's reputation. Um if they're on board, I'm on board. What else do I need to see?

SPEAKER_01 51:05

There's no way David Cameron really understood the intricacies of supply chain finance. You know, just no way, right? Um, but once he's in, well, like you know, the next one kind of thinks they don't even need to they don't even need to think about that. All they need to know is if David Cameron's in.

SPEAKER_00 51:22

Yeah, no, totally, totally. I wonder as well, I mean, you I'm I imagine you and your journalistic colleagues could uh rapture on this for days, but how many existing similarly you know, balancing on a knife's edge financial institutions are there out there at the moment strung up on similar dynamics?

SPEAKER_01 51:43

Yeah. I mean, I dread to think really. Um I think we're we're starting to see them get flushed out a little bit, right? Like we we went through a period post-financial crisis where there was just so much money knocking around. Uh, you know, like if you go to if you go to the people at the Vision Fund, right? And the they had a hundred billion dollar fund. Um, they lost probably a couple of billion dollars on Green Cell. Um I think they're kind of okay with that. You know? I mean it sounds it's like extraordinary to say, but I think they're kind of like, well, yeah, but we'll make a couple of billion dollars somewhere else. So um that's okay. But I I think you know that sort of uh that time where there was just lots of money around, clearly that's coming to an end, right? With interest rates rising around the world and and so on. Um we're in a very different world to where we were maybe two or three years ago. And you so so maybe you know, if it would be impossible to pull off a green cell capital now.

SPEAKER_00 52:46

You've mentioned a few times throughout the chat, uh just off-handedly, but avoiding tax or creative accounting and so forth. One of the major themes on this podcast has been the cancerous nature of offshore finance and financial secrecy. Nicholas Shackson, one of the godfathers on this topic, has been a repeated guest, as has a number of other people who've written explicitly on the topic. And although it's not explicitly spoken about throughout the book, I imagine um you would have just especially as a former accountant yourself, just come across case after case of wow, this is hidden under layers and layers of secrecy. How much yeah. So, underneath all that question is just asking you what role the offshore uh financial system played in all of this.

SPEAKER_01 53:34

Yeah, the offshore, the the offshore structures I think are really important when you start to look at the kind of murkier loans in the green cell world. So um, just to give you an example that's fairly straightforward, um, there's one loan that Lex makes to a company called Atlantic 57. Uh, it's it's owned offshore, I think in the British Virgin Islands, um, through a couple of other structures. It's hard to pin down who exactly owns it, but you know, I was able to ultimately find that it was a longtime associate of Lex Green Cells. Um and the loan is maybe 20 million pounds or thereabouts. Um, it doesn't get paid back when when the GAM funds collapse, which is what happens there. And by the way, GAM is like a complete basket case of a company these days. But um when the when the GAM funds collapse, um that that it that loan is sitting there um and it needs to be dealt with. Um a few months later, I was looking at the credit suisse funds, which Greensol had kind of started up to replace the the pot of money he lost when GAM uh stopped working with him. And the this Atlantic 57 loan suddenly appears in these Credit Suisse funds, which are now kind of Liechtenstein and Luxembourg funds. Um but I can see them because they disclose enough information, I can see it. So then I go to Credit Suisse and I say, hey, you know, this loan that's in here, this has been around for a while now. And by the way, it was in the GAM funds which collapsed, and you know, by the way, it's tied to Lex's friend by these offshore entities. And the the Credit Suisse guys there kind of plead ignorance. And then the next set of Credit Suisse documents that appear, it's gone. Um, and you don't really know where it goes until Green Cell as a whole collapses and suddenly it appears in the the German bank that he owns. So this is this is like you know, an a loan to an offshore entity whose ultimate ownership is unclear, but it but he can kind of tie it to a friend Alexis, and you know, it starts off in one fund, moves to another fund, they're both offshore, then it ends up in a German bank. You know, this is like complicated, you know, it's a shell game of shuffling money around. Um, you know, that is is a classic kind of offshore mess, really. Um and actually, you know, right now that whole sort of weird structure that he set up is is is causing so many problems, right? As the the wind up of green cell capital has become really, really complicated because there are so many different uh entities and so many different jurisdictions that um lawyers and and and the people who think they're owed money are really struggling to figure out you know how to get to it.

SPEAKER_00 56:16

That is an incredible example. Thank you for giving it. And um, although it might seem like a redundant question, could you highlight what the problem is with that entire structure that you just laid out?

SPEAKER_01 56:29

Yeah, well, the the problem with that one in particular is um that this loan was sitting at different times in funds that were marketed, like so these are investment vehicles, marketed to to um you know, to some ordinary investors as safe, reliable, um, low-risk loans. And clearly that is not a safe, reliable, low-risk loan. In fact, as as I said earlier, it's not really a loan at all, right? It never gets repaid. So that's not a loan. That's just a payment to Lex's friend.

SPEAKER_00 57:06

Yeah. And so it is it is very explicitly a cover-up to benefit the financiers and not hold anybody accountable at the end of the day.

SPEAKER_01 57:20

I think that's exactly right, yeah. I was gonna say, you know, the other the other thing about something like that, right, is this is 20 million. I think it ends up being like 35 million because the loan, there's a bit more added to the loan every few months when it's not repaid. Um the the the the thing about something like that is, you know, in these in this world where he's got like billions of dollars of loans in theory to you know Coca-Cola and Nestlé and so on, that 35 million is sort of immaterial, right? Except that there are lots of the 35 million. And actually they're the only they're the only amounts on which he's actually recorded any profit.

SPEAKER_00 58:01

So this might be putting you on the spot a little bit, but uh since you operate in the world of financial journalism, you're a trained accountant, I would be really, really keen to hear you answer the following. Um could you red pill the audience on just how pervasive and cancerous the offshore financial network and financial secrecy is on the globe? Not to be too hyperbolic with the question, but I just uh yeah, want to present it to you as that and hear what you think.

SPEAKER_01 58:35

Uh yeah, it's a tricky one to say like what you know to quantify, I think is difficult, but I think it's clearly deeply problematic. Um you know, I I can I can tell you again, just to go back to Green Cell. Look, another another way of looking at Green Cell is that he set up a business that kind of sat in a regulatory like grey area, like a a no man's land, right? So he's got a parent company that was uh registered in Australia, audited by a pretty small Sydney-based auditor, like very small. Um he's got a main operating company in the UK, which is audited by a pretty small UK company, despite the fact that it's got um billions of dollars of transactions in theory running through it. Um he is registered with the UK Financial Conduct Authority through a kind of third-party registration system, which is usually used for like small family offices. The the funds that make the Greensill loan, so like the Credit Suisse funds, are listed in Luxembourg and Liechtenstein. So they're in theory kind of regulated there. Um the German bank, which sort of shuffles asset he he shuffles assets in and out of, are kind of regul it's kind of regulated there, but it's like not that big a deal in in Germany. So he kind of manages to sit this whole thing, you know, in a place where it's not really clear who is who is really on the hook for regul for regulating Greensill as a whole or auditing Greensill as a whole. And that's because he's able to set this up in you know in this complex global way.

SPEAKER_00 1:00:24

And one of the other benefits might be that he can now sit in Bundaberg and presumably still have access to incredible amounts of money, which no matter what criminal um conclusions might fall upon him, they will never have access to, and was never taxed, and etc.

SPEAKER_01 1:00:43

Yeah, well, so this is a really good point, right? So he's uh the a lot of money came out of Green Cell, right? Like several hundred million dollars went out. You know, when when Softbank put its money in, uh not much of that was used to kind of invest in the business, most of it was used to pay out investors, like previous investors. So Lex, his brother, um took took a lot of money out. Um so a lot of that money has ended up in the farm, right? Which is what's enabled them to grow the farm to such a big big size. Um there actually, you know, it's funny you talk about the tax uh situation because actually he did, you know, one of the things before it collapsed was he was in a big fight with the Australian tax authorities over an unpaid tax bill. 50 million Aussie, I believe was a number, but I'm maybe more than it. Uh yeah, so he he was struck. Yeah, so he while he'd structured his investment. Look, I'm I'm no expert on this bit, but there was a there was a part of the investment, I think, of either his or his brothers in Green Cell Capital was structured through a trust. Um, and when they kind of cashed out some of the the the stock, uh they didn't pay any tax on it um because of this trust structure, but the Australian tax authorities uh subsequently ruled that they should have paid tax on it. Um so you know there's a clear example of some of him trying to minimize tax um and being accused of doing it wrongly. Um but yeah, I think you know this is not uncommon, right? Like I think most people who have founded businesses like this will go out of their way to minimize their um their tax bill. Um and there are you know there are legitimate ways to do that, but um there are also ways to do it which seem less legitimate.

SPEAKER_00 1:02:42

Which is at the core of the problem, right? Like Lex does not stand alone in having abused these systems, it's it's common practice. Um and therefore um just to return to that question for one moment, uh this is how Bradley Hope answered it. Uh he was the journalist who broke the story of uh Joe Lowe and the billion dollar whale, and you know, just an absolutely phenomenal journalist, in my opinion. Um he said that the red pill would be as follows, basically. You could be a regular guy and you could be just working at a cafe in London, and completely unknown to you, the owner of that building is 40% owned by some Russian oligarch. And so you're there, irrespective of what your politics are, your morality, but you're generating revenue that ultimately a piece of is going to be paid towards the rent of a building that is owned by um someone who in other circumstances you might refuse to sort of work for. And that's a really, I think, in my eyes, like a good red pill moment. Like, okay, yeah, that's one, totally true, and uh really brings it down to the personal level and makes you start to you know have a little bit more legitimacy to your grievance about income disparities and wealth disparities and tax breaks and so forth. Because you can just sound like a bleeding lefty if you're complaining about it all the time, but you know, once you get into it, it's like, no, it's so unfair, it's it's it's absurdly unfair. So that I thought stood out to me as a great example from Bradley Hope. So I just wanted to, with that context, see if you something could come to mind.

SPEAKER_01 1:04:21

Yeah, yeah, yeah. Uh first of all, I agree. Bradley's fantastic former colleague of mine and a brilliant, brilliant journalist, and has done many, many good stories. Um, look, I think um, you know, let me let me give you a different thing, like a slightly different thing, right? So um uh but but similar, and it you know, I'm getting at like a similar level of cynicism about the way the the whole global financial system is sort of rigged, okay? So um Credit Suisse had about $10 billion of their clients' money in Green Cell funds when it collapsed. Um the the details of why it collapsed are a little bit complicated, but not too complicated. Um but they were warned by me and others that you know they'd invest they'd invest their clients' money in some things they shouldn't have invested in. So why when why then didn't they pay them out? Like why didn't they pay their clients back? What you know what's happened there? Well, because if they pay their clients back, um then the Swiss financial regulator will say to them, well, look, if you if you're always gonna pay back uh your clients uh when you make a loss on their their investments, then you're gonna have to reserve that much capital against all of your investment funds. And so for credit suites, that's really problematic. So that means they sort of know, they certainly know now that they were ripped off and taken for a ride, but they kind of can't admit it because if they do, it's gonna you know gonna cost the bank uh you know billions more. Now, Credit Suisse, as it turns out, is gone now anyway. But you know, that was part of why like they they they're reluctant to admit. Truth, right? Which is a a couple of our portfolio managers um didn't do their work properly and got ripped off. Um and you know, that is a there's another way that the system is kind of rigged, I think, right? That even when even when these sort of scandals come to light, actually the big financial players don't have that much incentive to like acknowledge it. You know, it's not good for them to say, yeah, we got ripped off.

SPEAKER_00 1:06:27

You since you brought up Credit Suisse, as you noted, they've since um been bought by their biggest competitor for a bargain, three billion francs. Um, and the economists made a direct connection between Credit Suisse collapse and the Green Seal affair. So could you explain, in addition to what you just did, $10 billion they had on the hook for in Greenseal's demise? Um yeah, how significant was Lex Greenfield and his whole grift towards the demise of this really ancient institution uh and at the core of global finance?

SPEAKER_01 1:07:01

Yeah. Well, I think I think really, really critical actually. I I think it's probably misunderstood how important GreenSale in particular was. Because um what happened at Credit Suisse in the end, you know, there were many, many scandals at Credit Suisse and many kind of um strategic issues and and and problems there with with the bank uh over the years. Um but the big thing that happened to them in in the last 18 months or so was that uh a bunch of their clients, people who'd invested money in Credit Suisse's um uh or in had invested money with Credit Suisse, um, decided to pull their money out. And and we're talking like billions of dollars. Not you know, a lot of money was coming out, not not you know, small amounts of money. This is not even like you know, retail depositors. This is this is people with serious, serious money pulling it out. And the reason they're pulling it out is because um you know they're they're frightened that they're not gonna that that if something goes wrong with Credo Suisse, they'll lose their money. And what was it like you know, what was a big indicator of that was Lex Green Cell and Green Cell Capital. Um, and you know, when when that happened, they didn't stand by their their clients. And so I think you know, I think green cell capital plays a huge role in in uh what happens in to Credo Suisse in the end.

SPEAKER_00 1:08:20

To kind of tie that back into an earlier speculation I made about Lex's moral compass and his the fact that uh Bundaberg might still welcome with open arms as like a bit of a you know someone who really made something of himself within the community. That on your resume alone, you know, was was absolutely fundamental in the destruction of a giant global institution in a non-ethical worldview, is quite an achievement in itself, you know what I mean?

SPEAKER_01 1:08:48

Yeah, totally agree. Like it's it's unbelievable, right? Like that this guy, you know, grew up in a farm in Bundberg, you know, sort of um blagged his way in finance and then you know plays a major part in destruction the destruction of uh of a global, you know, one of the biggest banks in the world, one of the oldest, biggest banks in the world. Um it's incredible, right? Um, you know, and and when you sort of add it all up, you know, the Green Cell story is really it's like fascinating, right? Like prime ministers' reputations are damaged forever. Um politicians, you know, more than you know, more than a handful of politicians get in real trouble, hundreds of millions of dollars are missing, billions of dollars are missing still, you know uh investors like SoftBank lose billions of dollars, credit suite goes bust, GAM is you know struggling to survive and it's kind of being passed from one potential buyer to another. It's it's pretty amazing that this this happened. And I think it's it's sort of um, you know, I think it got lost a little bit in the UK as a scandal because it became such a political scandal. The financial element of it got forgotten about a little bit. It became about lobbying, you know, former prime minister lobbying on before behalf of the company he worked for. But what you know what got lost a little bit in that was that it wasn't it wouldn't have mattered if he was lobbying for a company he worked for that was a legitimate company out to do good business. It what matters is that he's lobbying for a company that is accused of being a Ponzi scheme and which is you know implicated in all of these um major, major disruptions in the financial markets.

SPEAKER_00 1:10:24

I think that was a terrific summary. Um so let's wrap it up there. I've got a couple more questions for you, not necessarily green seal related, but they try to ask them to as many guests as possible. You still got a bit of time?

SPEAKER_01 1:10:36

Sure.

SPEAKER_00 1:10:37

Brilliant. Um oh, I lie. One more on the Green Seal affair. Um, who, at the end of the day, were the victims of all of this grift?

SPEAKER_01 1:10:48

Yeah, I think that's a really good question. So I think it it gets it gets lost and forgotten a little bit. But yeah, there are investors in the credit suisse funds who lost money. So there are, you know, some of those are big institutions, but there are individuals. Um, and sure they're you know relatively wealthy individuals, but nevertheless, they lost millions, millions of uh dollars. There are you know there were a thousand employees at Green Seal Capital, most of whom thought they were working for a legitimate, fast-growing business, and they're all out of work. Um there were uh there were along the way a couple of whistleblowers who you know were whose careers were ruined, whose kind of lives were shattered because they you know had the nerve to speak up and say there's something wrong here. Um I think there were a lot of victims um uh of Green Cell. And then of course, you know, if you look at the sort of value destruction, whether it's at uh the Soft Bank Vision Fund or anywhere else, like these are often it's like pension money, right? Pension fund money and and so on. So the money, the money came from somewhere, you know, the money that got lost came from somewhere, and at the end of the day, it's kind of you know the the the victims might not be easy to spot, but they are there.

SPEAKER_00 1:12:05

And with that being said, with the assumption that Lex is monitoring everything Duncan Maven, and that there is a very real possibility he listens to this conversation. Is there something you would want to say directly to Lex?

SPEAKER_01 1:12:23

Oh, that's a really good question. Look, I've tried to I have talked to Lex in the past. Before it all blew up, I talked to him several times, and um I've tried to talk to him since. Um he is much less friendly now than he was before. Um you know, I I think uh I think it's it's really tough to say what how we would talk right now. There's so much going on for him uh in different lawsuits and investigations and and so on. Um I prefer to find out what happens uh as a result of all of those those sort of dynamics, and then maybe ask him a couple of questions based on the outcome.

SPEAKER_00 1:13:06

Okay, nice. So no direct.

SPEAKER_01 1:13:13

There is one direct question, I suppose I could ask. Um, you know, there's an anecdote in the book uh about my car being broken into, and uh, you know, pretty sure it was a corporate espionage type thing. Um and so I just like to ask him if I could have my sweaty gym bag back, please.

SPEAKER_00 1:13:37

Nice. That's framed as a memento in his uh rumpus room. Nice. Okay, well, um uh incredible Duncan. Thank you so much again for all of that. Um really, there's only three questions that I try to ask every guest, and so ah damn it, I I keep setting this up the wrong way. Um a really fascinating detail from all of this, uh not related to Lex, but is that this all started for you from uh a tip from a long-term source of yours? And so I wanted to ask about when you are talking, you know, with your mates, uh fellow journalists how often are big stories incepted by an anonymous tip versus first hand journalists digging where they uncover it themselves?

SPEAKER_01 1:14:36

Um That is a that is a good question. Uh you know, I think the best stories usually come from a tip. Um and that's because, you know, as journalists we're only uh we are very reliant on the quality of the information we can get hold of. And people who are uh already inside a business or know a business inside out or know about a scandal uh in detail obviously have better information than we do. You know, it occasionally I think a journalist will kind of, you know, dig through some accounts and find a number that doesn't make sense. But it's rare, I think, even then, that they've done that without somebody pointing them in the right direction.

SPEAKER_00 1:15:24

And now that you've published a book that explicitly speaks to a financial a case of financial fraud, alleged financial fraud, do you suspect your tip line to increase?

SPEAKER_01 1:15:38

Um yeah, it already has.

SPEAKER_00 1:15:40

Ah, that's it already has that must be that must be so rewarding.

SPEAKER_01 1:15:45

It is, it is. The the challenge, right, is that um people come to you with uh what they perceive to be like genuinely interesting tips and stories, and in many cases they are, right? They're really interesting things. Sometimes it's difficult to figure out how do you turn this into a story. Um sometimes it's just difficult to verify it, right? So you might get a little bit of information from one person, but how do you verify it from numerous different angles? You know, how do you make sure that it's not somebody who genuinely thinks that they've got you know something real to tell, but maybe doesn't understand some other bits of the story. Um, and sometimes it's just a matter of time, right? Like you just don't have the time, you're dealing with lots of other things. Um I mean, look, I I when when I've come across interesting things lately, I've tried to keep them, you know, I've tried to be really upfront with people, say to them, look, I'm interested in what you're saying, I'm not sure I can make it a story, but if you want to keep talking to me, if you want to keep helping me try to figure out how we make it into a story, uh like I mean I'm interested in doing that. But I can't promise anything, right? And I think I think that's the only fair way you can be with sources, right? And then you have to be, you know, you've got to be you've got to exercise due skepticism uh about their motivations and the motivations of everybody else uh that you might talk to.

SPEAKER_00 1:17:19

And finally, do you think that we live in an age of unprecedented financial fraud?

SPEAKER_01 1:17:28

Uh I think we I think we live in an age when there is an incredible amount of money around, uh where possibly you know the financial system is so complicated and in and so globalized that there are places where you know bad actors can seek to make money in bad ways. Um and yeah, I mean I think I you know, I guess for that reason, just the scale of the money, scale of the you know, global economy, we I think you're right, we we we do. But you know, are people worse now than they were um a hundred years ago? I I don't know if that's true. Um you know, Charles Ponzi, the the uh uh name behind the Ponzi scheme, that's a hundred years ago. So um people have been doing bad stuff for a long time.

SPEAKER_00 1:18:23

I'm gonna publish an episode in a few weeks with a guy called Matthew Friedman, who runs the Mekong Society. I don't know if you've heard of him. Uh no. You have? Oh, okay. Um, well then I'm sure you're familiar with the absolute horror that is uh at the core of his job. And if you uh take his worldview, um yeah, it's worse than it's ever been. Um you know, obviously you covered a big global fraud case of fraud, but more um individual cases of financial fraud, it's uh worse than it's ever been, and more accessible to more bad actors than it's ever been. And yeah, one of the worst parts is that the exact same financial transp um hidden the exact same forces of lack of financial transparency and offshore networks enable the scale of these organizations just as much as they enable the scale of Green Seal Capital.

SPEAKER_01 1:19:25

Yeah, I think that's right. I think I think that just this sort of scale of the global economy, the the the speed with which transactions happen, um, you know, I think that it it's likely that there is more uh happening now than there has been um uh in absolute terms. I I I don't know if it's true in kind of proportionate terms, right? Um there's some pretty bad financial stuff happen historically.

SPEAKER_00 1:19:53

All right, Duncan, three that I try to ask everybody. First of all, um what is the role that serendipity has played in your life?

SPEAKER_01 1:20:03

Oh, I mean huge. I think um uh look, I I was an I was uh I studied history at university, I became an accountant, I kind of traveled the world on accounting, I became a journalist, traveled the world about journalism, you know, those things have all happened through kind of serendipitous kind of happenings. Um this particular like writing this book is probably the most serendipitous of all of them. Um as as as we talked about, like a a longtime source, somebody who I think I, you know, had earned the trust of set me on the path to writing about this thing. And it's been a major part of my life actually.

SPEAKER_00 1:20:48

Incredible. And in your personal life, anything worth commenting on?

SPEAKER_01 1:20:55

Uh I don't know. I um the now I'm really on the spot. Uh I you know, I um look, I mean I I you know I uh I I kind of am really interested in getting to the truth of things. I have a pretty strong sense of of kind of right and wrong, I guess. And uh that that is always that sort of drives me a bit.

SPEAKER_00 1:21:22

Uh if you could what is a country that you're particularly bullish on?

SPEAKER_01 1:21:27

That's a that's a difficult one. You know, I'm really interested in India. Um I just think that you know India's role in the world is gonna be huge over the next however many decades. I think it's just gonna be so important, you know, how the how the West relates to India in particular. And so I'm I'm a bullish, I don't know, but I'm really interested to see how India sort of evolves. Um clearly it's gonna be really important in every every aspect of kind of um you know, whether we're whether we're talking about climate change or whether we're talking about economics or um geopolitics, I think India India is really, really important.

SPEAKER_00 1:22:11

And are you optimistic about the role they'll play?

SPEAKER_01 1:22:14

I I'm not sure. I'm uh I'm uh you know, at the minute I don't feel very optimistic about uh, you know, many places. Um but it's it's it's uh it's difficult I think to find anywhere to feel really bullish on.

SPEAKER_00 1:22:27

Yeah. Not the great state of Queensland and the city of Bundaberg. They just had a bunch of capital flight fled into the city.

SPEAKER_01 1:22:37

Well, no, I think uh I heard there's some uh really big things happening in sweet potatoes there.

SPEAKER_00 1:22:45

Alright, and finally, Duncan, if you could uh witness a conversation between any two people of history, dead or alive, no language barrier. So if you were to listen to a podcast, who are the two people you would want to be listening to?

SPEAKER_01 1:23:01

Okay, so I I'm uh well I'm uh you know a history graduate. Um really, really kind of it's it's a tough, tough choice for me. Um but uh I'm kind of I'm really interested in uh the the Battle of Trafalgar and so uh Nelson I would, you know, before he's shot, before he's finally dying, I think would be just a fascinating character, especially because he's kind of such a like uh you know gung-ho kind of guy. Um and you know, my other real sort of uh passion I suppose is is uh football. So if I could put together like Horatio Nelson and and Pele and uh hear them talk about the best tactics to win, uh that would probably be a pretty interesting one.

SPEAKER_00 1:23:52

I love it. Super eclectic. Thank you so much, Duncan. Um yeah, uh and thank you for the book. It it was uh it was it was such a good read. Uh I loved it.

SPEAKER_01 1:24:04

Thanks, Ryan.