David Cameron lobbied for Greensill to access Covid loan programs
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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 responsible for potential losses.
The former UK Prime Minister, who became an adviser to Greensill in 2018, has 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 about it in 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 and Whitehall sources – is that Cameron also intervened personally on behalf of the company.
Treasury officials were reluctant to include Greensill in the Bank of England’s Covid business finance facility, even though the financial group said “concerns over their CCFF eligibility were misplaced or could be resolved,” according to the reports. documents published under the Freedom of Information Act. .
Greensill then deployed Cameron to pressure his former colleagues. The former prime minister approached the Treasury and 10 Downing Street – 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 called on Charles Roxburgh, the second permanent secretary of the Treasury, to grant a new hearing to the society.
An official summary of this conversation prepared for Roxburgh and released following an FT’s Freedom of Information request reads: “At the Chancellor’s request, you received 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 slew of the firm’s clients had reneged on their debts in corporate bankruptcies and high-profile 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 write small business credit “would not be likely to bring sufficient benefits to SMEs. British ”. Sunak believed the government should prioritize other programs instead, the official told the company.
A month later, there was a final meeting on June 26 where, once again, Roxburgh told the company his request was 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 issue larger loans under the separate Large Business Coronavirus Interruption Loan Program, whereby the state guarantees up to 80% of loan amounts.
Greensill had been admitted to the program in June, but while other lenders such as Barclays could issue CLBILS loans up to £ 200million, companies using supply chain finance – including Greensill – were limited to a ceiling of £ 50 million.
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 bound, 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 now 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” when other companies 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-19.
“The meetings in question focused on expanding the scope of CCFF to allow access for supply chain finance providers, which – following a call for testimonials and discussions with several others companies in the sector – we have decided not to do this and have informed the companies concerned. ”
Cameron’s other job for Greensill saw him visit the offices of an insurance broker in Sydney who was later fired after an internal investigation found he breached risk limits by granting too much cover in Greensill.
As part of his Greensill salary, Cameron was granted stock options that could have been worth tens of millions of pounds had the company gone public as planned. Instead, after Greensill filed his administration brief earlier this month, they’re worthless.
Labor called for an investigation Thursday evening. Phantom Chancellor Anneliese Dodds said the revelations raised serious questions about the Chancellor’s priorities amid a pandemic.
“The government should spare no effort to conduct a full and thorough investigation into this matter,” she said.
“Taxpayers and businesses alike deserve answers as to why it appears Greensill had so much access to the Treasury at a time when the Chancellor was refusing to engage with groups representing the millions of people he had excluded salary support. “