Lex Greensill (Image: Greensill)

The rise of Aussie billionaire Lex Greensill, whose finance empire is now in tatters, had been painted as a classic rags to riches story. But the billionaire didn’t write that narrative on his own. 

The Australian Financial Review has been pumping up the tyres of his eponymous supply chain finance business for years, praising its innovative business model even when regulators and ratings agencies were increasingly sceptical. 

Now amid Greensill’s spectacular collapse, with billions of dollars in loans under a cloud, it’s worth revisiting some of the favourable coverage he received.

The AFR’s first story to appear about the “Bundaberg billionaire” was a profile in July 2018. Written in typical fanboy rich-lister style, it invited us to meet the sugar cane farmer turned financier who had become “Australia’s newest $2 billion unicorn”.

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The story describes Greensill as a “farmer at heart” and relies solely on comments from Greensill himself, including some interesting claims about the company.

“The business is extraordinarily capital efficient,” he says, without qualification. “Dozens and dozens of our employees have become millionaires on the back of this.”

Next was a piece in March 2019 describing how the young Australian billionaire was “knocking on the doors” of Australian super funds to help build his fintech empire. It includes a line presumably copied from the company’s website about how in just over eight years the billionaire “has built Greensill into a global business” with “customers in 60 countries”. 

In July 2019 the AFR ran a story about the growth of Greensill’s controversial financial product, reverse factoring. It included a comment from governance expert Dean Paatsch comparing the practice to “crack cocaine for CFOs”. Even so, the reporters cautioned, “there is nothing wrong with it”. 

By September 2019, ratings agency Moody’s warned the practice of reverse factoring was risky because it could mask the true health of a company. (The very definition of insolvency in Australia is when a company can’t pay its suppliers. Reverse factoring/supply chain finance allows businesses to look like they have paid suppliers when they haven’t.). 

The AFR’s response to this was to run an op-ed by Greensill himself, hitting back at the claims and painting supply finance as a “lucrative, low-risk business” that was “unlocking trillions of dollars” of capital around the world — another wild claim that included no qualification. 

In October 2019 the paper ran another “exclusive” interview with Greensill about how there was “nothing evil” about the booming demand for “early payment schemes”, as it called it, and that the Australian government should learn from the UK and use them to get cash to their suppliers faster.

It wasn’t until 2020 that the AFR started to refer to Greensill’s business model as controversial. By this point concerns had been raised by small business ombudsman Kate Carnell. Carnell said she would be watching Greensill and other players in the fast-growing reverse factoring sector to ensure they were lending money to customers that treat their small business suppliers fairly. She launched an inquiry into the practice in October 2019.

Even as Greensill’s company entered insolvency this week, the AFR has resisted using some of the stronger language used by others, such as the Financial Times. FT described the implosion of Greensill’s shadow bank as an “accident waiting to happen”.

Columnist Joe Aston provided a breath of fresh air on Monday when he wrote that the most remarkable part of Greensill Capital’s collapse was that it took this long.

“For years Lex Greensill was warmly lit by newspaper profiles depicting the boy from Bundaberg ingeniously subverting the gravity of supply chain finance.”

He is so right.