SoftBank Used ‘Circular Financing’ Scheme To Prop Up Struggling Vision Fund Companies

From Zero Hedge:

Just imagine for a second that you’re the treasurer or CFO of a mid-sized corporation, and your looking for somewhere to park money where you can earn a decent return without taking too much risk. One of the Credit Suisse corporate bankers comes to you one day with an idea. They call it “supply-chain financing”.
The new strategy is essentially just another tool to help companies more “flexibility” in managing their short-term financing needs. It’s a fool-proof idea, the banker explains, because even if the companies default, there are all kinds of insurance policies and other safeguards in place to help make the lenders whole. You’re a
So you invest. A few years later, your banker calls with some bad news. Four of the 10 companies to which the fund was most heavily exposed imploded, and are likely headed for liquidation. It could be years before the lenders are made whole – if ever – and you and your fellow unlucky investors are simply along for the ride, but you can probably kiss that money goodbye.
Several months later, you open the FT, only to discover that many of the other investors in the fund, as well as the advisor managing the fund, were all financially linked to the companies in which the fund was investing. The circular flow of money from the funds to the companies’ suppliers means that, for these other investors, any losses stemming from loan defaults have already been offset, since they’re basically paying themselves…with your money.
Well, that appears to be what happened to some investors who weren’t too happy when they found out that several Credit Suisse ‘supply chain finance’ funds were essentially part of an elaborate shell game orchestrated by SoftBank to help inflate the value of Vision Fund portfolio companies by making them look more financially healthy than they actually were.
Here’s more from the FT:
SoftBank has quietly poured more than $500m into Credit Suisse investment funds that in turn made big bets on the debt of struggling start-ups backed by the Japanese technology conglomerate’s Vision Fund. SoftBank made the investment into the Swiss bank’s $7.5bn range of supply-chain finance funds, said three people familiar with the matter. Credit Suisse touts these funds to professional investors, such as corporate treasurers, as a safe place to park their cash in the short-term debts of seemingly diversified companies. Marketing documents sent to investors show that these funds have ramped up their exposure to several start-ups in the Japanese group’s $100bn Vision Fund over the past year. This has coincided with a disastrous stretch in which $18bn was wiped off the equity value of these technology bets. At the centre of the circular flow of funding is Greensill Capital, a Vision Fund-backed company that says it is “making finance fairer”. The London-based firm, which employs former British prime minister David Cameron as an adviser, selects all of the assets that go into the Credit Suisse funds under an agreement dating back to 2017.
SoftBank effectively used these Credit Suisse funds – which were administered by Greensill Capital, an investment firm that, bizarrely, received a $1.5 billion slug of cash from VF. Aside from being run by an Aussie “paper billionaire” and advised by former Tory PM David Cameron, it’s not clear exactly what Greensill is supposed to be doing with all that money. But the company has managed to find itself enmeshed in all sorts of skullduggery uncovered by the intrepid reporters at the FT.
The most prominent proponent of the financing technique is Lex Greensill’s eponymous firm Greensill Capital, backed by the SoftBank Vision Fund

Greensill selects all of the assets that go into the Credit Suisse funds, which we delved into last month 

Four of the CS’s supply chain finance funds’ top investments were tied to Vision Fund portfolio companies.
Marketing documents for Credit Suisse’s main supply-chain finance fund show that, at the end of March, four of its top 10 largest exposures were to Vision Fund companies, accounting for 15 per cent of its $5.2bn assets. This included companies hit hard in the coronavirus crisis, such as Indian hotel business Oyo and struggling car subscription start-up Fair. A separate document shows that Santa Monica-based Fair was also the second-largest exposure in Credit Suisse’s “high income” supply-chain finance fund at the end of last year.  In October, the car subscription company’s founder and chief executive resigned shortly after announcing plans to cut 40 per cent of its workforce. Audited accounts for both funds show they had no exposure to Fair at the end of that month, suggesting that they only began financing the company after its difficulties came to the fore.
As the FT explains, investors (well, the investors who aren’t SoftBank) have pulled $1.5 billion from the Greensill-managed Credit Suisse funds as several of Greensill’s investments went sideways. Another interesting thing about Greensill: former British PM David Cameron is a paid advisor.
But now, the firm has hit upon a new strategy that just might revive the sagging fortunes of the SoftBank-backed lender.
Clients have withdrawn more than $1.5bn from these supply-chain finance funds this year, after a string of Greensill Capital’s clients defaulted on their debts in high-profile corporate collapses and accounting scandals, such as former FTSE 100 company NMC Health. Credit Suisse has told investors that a group of insurers and Greensill itself are covering losses in the funds. Australian financier Lex Greensill founded the company in 2011 and cemented his status as a paper billionaire last year when SoftBank’s Vision Fund invested $1.5bn into his eponymous firm. Greensill Capital specialises in supply-chain finance, where businesses borrow money to pay their suppliers. This week the British Business Bank approved Greensill to provide so-called “invoice finance” through the UK’s Coronavirus Large Business Interruption Loan scheme. “Making sure capital reaches the real economy, where it is needed most, is integral to Britain’s broader economic recovery,” Mr Greensill said of the decision.

There’s nothing like extracting rents from government capital intended for the “real economy” to help keep a small, politically connected lender afloat.

Chinese Scientist, Escorted Out Of Canadian Biolab, Sent Deadly Viruses To Wuhan

 From Zero Hedge:

We have a researcher who was removed by the RCMP from the highest security laboratory that Canada has for reasons that government is unwilling to disclose. The intelligence remains secret. But what we know is that before she was removed, she sent one of the deadliest viruses on Earth, and multiple varieties of it to maximize the genetic diversity and maximize what experimenters in China could do with it, to a laboratory in China that does dangerous gain of function experiments. And that has links to the Chinese military.” -Amir Attaran
A Chinese scientist who was escorted out of Canada’s only level-4 biolab over a possible “policy breach” shipped dealdy Ebola and Henipah viruses to the Wuhan Institute of Virology, according to the CBC, citing newly-released documents. The shipment is not related to COVID-19 or the pandemic.
Dr. Xiangguo Qiu, her husband Keding Cheng and her Chinese students were removed from the Canadian lab after the Public Health Agency of Canada (PHAC) asked the RCMP to investigate several months earlier. According to PHAC, Qiu’s eviction from the lab is not connected to the shipment.
Dr. Xiangguo Qiu accepting an award at the Governor General’s Innovation Awards at a ceremony at Rideau Hall in 2018. Qiu is a prominent virologist who helped develop ZMapp, a treatment for the deadly Ebola virus which killed more than 11,000 people in West Africa between 2014-2016. (CBC)
“The administrative investigation is not related to the shipment of virus samples to China, said PHAC chief of media relations, Eric Morrissette.”
“In response to a request from the Wuhan Institute of Virology for viral samples of Ebola and Henipah viruses, the Public Health Agency of Canada (PHAC) sent samples for the purpose of scientific research in 2019.”
To recap, a Chinese scientist, her husband and her Chinese students were escorted out of Canada’s only Level-4 lab for reasons unknown, and which are not related to her shipment of deadly viruses to the Wuhan Institute of Virology.
“It is suspicious. It is alarming. It is potentially life-threatening,” said University of Ottawa law professor and epidemiologist, Amir Attaran.
Amir Attaran, professor in the Faculty of Law and the School of Epidemiology and Public Health at the University of Ottawa, is concerned about the shipment of dangerous viruses sent from Canada’s only level-4 lab to China. (CBC)
While Canada doesn’t do ‘gain-of-function’ experiments – which are where natural pathogens are mutated in a lab and assessed to see if it has become more deadly or infectious, “The Wuhan lab does them and we have now supplied them with Ebola and Nipah viruses. It does not take a genius to understand that this is an unwise decision,” said Attaran.
I am extremely unhappy to see that the Canadian government shared that genetic material.
Attaran pointed to an Ebola study first published in December 2018, three months after Qiu began the process of exporting the viruses to China. The study involved researchers from the NML and University of Manitoba.
The lead author, Hualei Wang, is involved with the Academy of Military Medical Sciencesa Chinese military medical research institute in Beijing. 
All of this has led to conspiracy theories linking the novel coronavirus responsible for COVID-19, Canada’s microbiology lab, and the lab in Wuhan. –CBC
According to the report, the RCMP and PHAC have repeatedly denied any connections between the virus shipments and COVID-19.
According to the newly-released documents, the following virus strains were shipped to the WIV (approximately 15 ml):
  • Ebola Makona (three different varieties)
  • Mayinga.
  • Kikwit.
  • Ivory Coast.
  • Bundibugyo.
  • Sudan Boniface.
  • Sudan Gulu.
  • MA-Ebov.
  • GP-Ebov.
  • GP-Sudan.
  • Hendra.
  • Nipah Malaysia.
  • Nipah Bangladesh.
The documents also shed light on communications from the months leading up to the shipment – including confusion on how to package the viruses, along with a lack of decontamination of the package prior to its shipment, as well as concerns expressed by NML Director-General Matthew Gilmour to his superiors in Ottawa – particularly over where the package was going, what was in it, and whether its paperwork was in order. 
CBC News received hundreds of pages of documents through an Access to Information request, detailing a shipment of Ebola and Henipah viruses sent from the National Microbiology Lab in Winnipeg, to the Wuhan virology lab in China. (Karen Pauls/CBC News)
In one email, Gilmour said Material Transfer Agreements would be required, “not generic ‘guarantees’ on the storage and usage.”
He also asked David Safronetz, chief of special pathogens: “Good to know that you trust this group. How did we get connected with them?”
Safronetz replied: “They are requesting material from us due to collaboration with Dr. Qiu.” CBC
According to the report, the shipper of the viruses had originally planned to use inappropriate packaging, and only corrected the mistake when the WIV flagged the issue.
“The only reason the correct packaging was used is because the Chinese wrote to them and said, ‘Aren’t you making a mistake here?’ If that had not happened, the scientists would have placed on an Air Canada flight, several of them actually, a deadly virus incorrectly packaged. That nearly happened,” said Attaran.

Read the rest of the report here.

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