David Cameron lobbied the UK government to increase Greensill Capital’s access to state-backed Covid-19 emergency loan programs, months before the finance company collapsed and left the taxpayer struggling with potential losses.
The former UK prime minister, who became an adviser to Greensill in 2018, urged his former colleagues to give the company a bigger role in programs designed to maintain credit for businesses affected by the pandemic, people knowledgeable on the matter to Whitehall and the City.
Public records show Greensill representatives had 10 virtual meetings between March and June last year with the two most senior Treasury officials as they sought access to a Bank of England loan scheme.
What the records don’t show – but the FT has established from industry sources and Whitehall – is that Cameron personally intervened on behalf of the company as well.
Treasury officials were reluctant to include Greensill in the Bank of England’s Covid business finance mechanism, even though the financial group said “concerns about their CCFF eligibility were misplaced or could be addressed,” according to documents published under the Freedom of Information Act. .
Greensill then deployed Cameron to pressure his former colleagues. The former prime minister contacted the Treasury and 10 Downing Street – both through his personal email and at least one phone call, according to two people familiar with the conversations. The FT contacted Cameron and his spokesperson for comment, but they did not respond.
In mid-May, as Treasury officials continued to resist Greensill’s approach, Chancellor Rishi Sunak intervened and asked Charles Roxburgh, the second permanent secretary of the Treasury, to give the company a new hearing. .
An official summary of this conversation prepared for Roxburgh and published following an FT’s Freedom of Information request reads: “At the Chancellor’s request, you took a call from Greensill last night (May 14) . You indicated that no decision had yet been taken, but the Chancellor had asked you to come back to it on two points.
At the beginning of May, the FT had reported the growing number of Greensill-related defaults, signaling that a series of the company’s clients had reneged on their debts in high-profile business collapses and accounting scandals.
On May 18, Roxburgh announced that a proposal to expand the Bank of England’s program to allow Greensill to use it to extend credit to small businesses “would not be likely to provide sufficient benefits to SMEs. British”. Sunak said the government should prioritize other projects instead, the official told the company.
A month later, there was a final meeting on June 26 where Roxburgh once again told the company that his application had been denied.
At this point, Greensill, which was founded by Australian financier Lex Greensill, made a new request. He asked if the Treasury could allow him to take out larger loans under the separate Coronavirus Large Business Interruption Loan Program, through which the state guarantees up to 80% of loan amounts. ready.
Greensill had been admitted to the program in June, but while other lenders such as Barclays could issue CLBILS loans of up to £ 200million, companies using supply chain finance – including Greensill – were limited to a cap of £ 50million.
Greensill has called for his cap to be raised to £ 200million. That request also went nowhere, with Roxburgh claiming that £ 200million would represent ‘significant exposure’.
However, even at the lower limit, Greensill was still able to lend hundreds of millions of pounds through multiple loans to companies linked to Sanjeev Gupta, the steel mogul behind GFG Alliance.
These loans are only part of the current exposure of taxpayers to over £ 1 billion in debt linked to Gupta and Greensill via three different state guarantees. Officials are currently assessing the government’s likely exposure to the failure of Greensill and the struggling GFG.
Although Cameron’s lobbying attempts were ultimately unsuccessful, they will raise concerns about “revolving doors” between government and the private sector.
A Whitehall official said the number of meetings reflected the fact that the company had requested “follow-up meetings” while others had not. The official also said the group deserved to be seen as the biggest player in the market.
A spokesperson for the Treasury said officials regularly meet with stakeholders to discuss the economic response to Covid.
“The meetings in question were primarily aimed at broadening the scope of CCFF to allow access for supply chain finance providers, who – following a call for evidence and discussions with several other companies in the sector – we decided and informed the companies concerned. ”
Cameron’s other job for Greensill saw him visit the offices of an insurance broker in Sydney who was later dismissed after an internal investigation found he had breached risk limits in giving Greensill too much cover.
As part of his compensation from Greensill, Cameron received stock options that could have been worth tens of millions of pounds had the company gone public as planned. Instead, after Greensill filed for administration earlier this month, they’re worthless.