The failure of Greensill Capital will cost UK taxpayers up to £5bn, a parliamentary inquiry has heard, as one expert said the lender’s business model was “as close to fraud as you could imagine”. The former City minister Paul Myners said the government could end up footing the bill of unpaid state-backed loans and social support for thousands of steelworkers whose jobs are currently at risk at one of Greensill’s largest borrowers, Liberty Steel, owned by metals magnate Sanjeev Gupta. The estimate was shared during the Treasury select committee’s first fact-gathering session as part of its inquiry into Greensill’s collapse. It is one of four parliamentary inquiries into the firm’s failure, which has sparked concerns about undeclared government lobbying by former officials – following David Cameron’s attempts to influence ministers on Greensill’s behalf – and the lack of regulation of supply chain finance. Lord Myners, who was giving evidence alongside university professors and former Treasury secretary Nicholas Macpherson, said he believed the taxpayer would be left to cover as much as £1bn in unpaid loans, including those lent to Gupta’s businesses. Myners said the ultimate cost could be “in the region of £3bn to £5bn” once the wider impact was taken into account. “It’s actually going to cost a lot more if you count the externalities, the indirect costs: the cost of having to rescue the steel industry from its ‘saviour’ Mr Gupta; the costs of dealing with social implications of the closure of plants, if necessary; or the net present value of upfront subsidies to keep the steel industry in its current form operating,” he said. Gupta’s sprawling holding company, GFG Alliance, which owns Liberty Steel, relied heavily on Greensill financing, and reportedly owed the lender £3.6bn when it collapsed. The group has so far failed to find new funding, forcing Gupta to pause production at UK factories to preserve cash last month. The billionaire, who is currently in Dubai, even requested a £170m government bailout last month, which was ultimately rebuffed over transparency concerns and fears the money would be funnelled out of the UK. The company’s relationship with Greensill has also come under scrutiny over claims that Greensill was offering loans to GFG Alliance and other borrowers based on speculative invoices that named customers it had never done business with. Those loans, which were backed by nonexistent trades, were then packaged up and sold to investors at Credit Suisse as so-called securitised assets. “The securitisation of it just hid the nature of what was being securitised,” said Dr Richard Bruce, a supply chain expert from the University of Sheffield Management School. “That is, I think, as close to fraud as you can imagine really … because you’re trying to deceive me into believing that it’s a security when there isn’t [one].” When contacted about Greensill’s lending practices, GFG Alliance referred to previous comments, in which it said: “Greensill selected and approved companies with whom its counter parties could do business in the future” as part of its “prospective receivables programme”. GFG Alliance refutes any suggestion of wrongdoing. Greensill is facing criminal complaints by Germany’s financial regulator, BaFin, which says Greensill’s local bank could not provide evidence of receivables on its balance sheet. Prosecutors raided the homes of five Greensill bankers, who are suspected of possible wrongdoing, last week. Lord Macpherson took aim at persistent lobbying efforts by Greensill Capital, founded by Australian financier Lex Greensill, which involved dispatching Cameron, its special adviser, to contact former colleagues. Cameron controversially contacted the chancellor, Rishi Sunak, on his private mobile at the start of the pandemic last year, and pushed officials across the Treasury and Bank of England to give Greensill access to the government’s largest emergency Covid loan scheme, which would have involved bending the rules. It led to at least nine virtual meetings between Greensill and government officials, who ultimately rebuffed the lender’s requests. “It’s slightly disappointing that officials’ time was wasted when that was a valuable commodity because of the wider crisis,” Macpherson said. A spokesperson for Cameron said: “David Cameron was not on the Greensill board, and was not on the credit or risk committees. He emphatically did not think or know that the company was in any danger of collapse until December 2020.” The spokesperson added that the Treasury’s permanent secretary, Charles Roxburgh, “told the public accounts committee last week that consideration of the Greensill proposals was not a disproportionate use of time at all”. Greensill administrators at Grant Thornton declined to comment.