Greensill: Cameron, Sunak called to explain links
From politicians to regulators to members of AccountingWEB’s own community, everyone wants to know the truth about the Greensill Capital controversy and how dirty the public procurement process really is.
An influential panel of MPs have called former prime minister David Cameron and current Chancellor Rishi Sunak to answer questions on the Greensill Capital lobbying scandal.
The Treasury Select Committee has requested the pair, along with representatives from the Bank of England, Financial Conduct Authority and other business figures, give oral evidence to an investigation into the matter.
The cross-party group of MPs also wants to hear from the man at the centre of the supply chain finance debacle, Greensill Capital's founder, Lex Greensill.
“There are questions to be answered in relation to Greensill Capital regarding the operation of the UK’s financial system and its regulation,” said the committee chair, Conservative MP Mel Stride. “Also, whether the Treasury responded appropriately to lobbying from Greensill during the pandemic.”
Greensill Capital collapsed last month, sparking a corporate and political drama over lobbying on behalf of the company by former PM Cameron.
It emerged Cameron had contacted serving ministers and officials, including sending a series of texts sent to Sunak, pushing for Greensill’s involvement in government-backed financial support schemes during the coronavirus crisis.
The role of Greensill is also being probed in regard to the Australian businessman’s attempts to take advantage of Whitehall’s use of supply chain finance schemes. Greensill took over a financing method for NHS pharmacies shortly before his firm went bust.
The government insists it has obeyed procurement rules having rejected Cameron’s request to allow Greensill access to the Bank of England’s Covid Corporate Financing Facility.
Greensill had been a leading provider of supply-chain finance through its UK, Australian, and German entities until underwriters refused to renew two trade credit insurance policies for around £3.3bn. After filing for bankruptcy, some 50,000 jobs across several industries propped up with Greensill’s financing are at risk.
The spillover has embroiled major international bank Credit Suisse, one of Greensill’s creditors, which has paused a £7.8bn range of funds and subsequently fired senior members of its risk and compliance department.
Steel magnate Sanjeev Gupta also relied on Greensill’s methods of financing, whereby suppliers can receive early payment on their invoices, which are settled by a third party.
Loans to Gupta’s company from Greensill Capital that were later sold to Credit Suisse investors were made on the basis of dubious invoices that have raised suspicions of fraud, the Financial Times has reported.
Now the steel firms owned by Gupta are on the brink of collapse.
The Scotsman reported the Scottish government has spent around £200,000 on financial advice from Deloitte regarding its agreement with Gupta’s Highland company, asking to be notified about “key risks” which could leave it exposed.
Members of the AccountingWEB community have also weighed in on the matter, with readers connected to the sprawling supply chain of Liberty Steel supply chain affected by the future of the Gupta-owned business.
German prosecutors have filed a criminal complaint, while in Australia, regulators are coordinating a response following further allegations of falsified invoices.
Lobbied to probe lobbying
There are currently seven UK probes open into the many moving parts of the Greensill situation.
Alongside the treasury committee hearing, MPs on the standards, business, public affairs and public accounts committees will investigate alongside inquiries by a Cabinet Office review of lobbying laws. An audit of second jobs taken by civil service members is being carried out by cabinet secretary Simon Case, and corporate lawyer Nigel Boardman is leading an overarching government inquiry into the entire Greensill saga.
Despite the abundance of inquests, commentators are pessimistic of any real change.
“How can there be an impartial review of lobbying laws and its breaches by politicians?” said Labour peer Lord Prem Sikka. He said ministerial denials of sleaze showed that “corruption is institutionalized, unethical practices are naturalized and governments are out of touch”.
Tax campaigner Richard Murphy also laid into Cameron’s attempts to take a cut of NHS worker earnings by trying to facilitate a government bond that would pay for a future pay-rise of healthcare staff, with Greensill taking a significant cut.
The deal ultimately failed, however Murphy said ignorance of the way the government makes money and how easily the system can be exploited was an outrage.
“There was, then, a blatant attempt made to advance private interest at cost to the public purse. It did not happen, yet the fact that it was even attempted is shocking,” he said.
The affair has exposed “gaping holes” in the UK’s anti-corruption defences, said Liz Dávid-Barrett, professor of governance and integrity at the University of Sussex. “Before becoming prime minister, David Cameron described lobbying as ‘the next big scandal waiting to happen’ and vowed to fix things. A decade later, the situation seems only to have gotten worse,” she said.