After months of reporting, the FT has finally nailed former British Prime Minister David Cameron - best known in America for "Piggate" and being hoist by his own petard during the Brexit referendum vote, which will be remembered as one of the worst-played political gambles in history - for some particularly egregious actions undertaken during his post-politics career of shilling for now-defunct Greensill Capital, the disgraced trade-finance specialist.
For those who haven't been following the Greensill scandal, we discussed the details earlier in a post about the fallout at Credit Suisse, which has been stuck with some $10 billion in Greensill product that has become "impossible to value" (i.e. worthless). One reason the scandal has been covered so prominently in the British press is that Cameron has long been linked to the company (he was hired as a senior advisor to the firm shortly after leaving Downing Street). Well, following a series of well-placed FOI requests, the FT finally "has the receipts" as the youth like to say: the paper has obtained proof that Cameron used his extensive connections in government to try and secure more public financing for Greensill, even as media reports raised questions about the firm's overall health as several of its biggest clients defaulted on loans, or became embroiled in accounting scandals.
We already knew that Cameron went so far as to visit a former insurance broker in Sydney who was later fired for over-extending coverage to Greensill. Now, public records show Greensill employees had a series of meetings with top Treasury employees as they sought to access a program for pandemic-hit businesses. Despite the Treasury refusing the loan over its obvious misgivings, the decision was reviewed several times and more meetings were held, largely thanks to Greensill's political connections. When it looked like things weren't working out in the firm's favor, it deployed Cameron, who shamelessly lobbied former colleagues via email and text.
The former UK prime minister, who became an adviser to Greensill in 2018, pressed his former colleagues to give the company a bigger role in programmes designed to keep credit flowing to pandemic-hit businesses, according to people briefed on the matter 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 officials at the Treasury as they sought access to a Bank of England loan scheme. What the records do not 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 Corporate Financing Facility, even though the finance group said “concerns about their eligibility for the CCFF were misplaced or could be addressed”, according to the records released under the Freedom of Information Act.
Even after Chancellor Rishi Sunak himself stepped in and asked the senior bureaucrat in charge of the review to give Greensill another hearing, it was ultimately decided that lending to the company "would not bring suffficient benefits to UK SMEs".
Greensill then deployed Cameron to lobby his former colleagues. The former prime minister approached the Treasury and 10 Downing Street — through both his personal email and at least one phone call, according to two people familiar with the conversations. The FT contacted both Cameron and his spokesman asking for comment but they did not respond.
In mid-May, as Treasury officials continued to resist Greensill’s approach, chancellor Rishi Sunak stepped in and asked Charles Roxburgh, the second permanent secretary at the Treasury, to give the company a further hearing.
An official summary of that conversation prepared for Roxburgh and released following a freedom of information request from the FT, says: “At the Chancellor’s request you took a call from Greensill last night (May 14). You set out that no decision had yet been taken but the Chancellor had asked you to revert to them on two points.”
By early May, the FT had flagged the rising number of defaults linked to Greensill, reporting that a string of the firm’s clients had reneged on their debts in high-profile corporate collapses and accounting scandals.
On May 18 Roxburgh broke the news that a proposal to expand the Bank of England scheme to allow Greensill to use it to write credit to small businesses would “not be likely to bring sufficient benefits to UK SMEs”. Sunak believed that the government should instead prioritise other schemes, the official told the company.
When Greensill was ultimately denied access to the CCFF facility, Cameron tried a different tack: he pushed the British government to increase the cap on a lending facility in which Greensill could participate, and see said loans backed 80% by the British government. In other words, it looks like Cameron conspired with Greensill to stick the British government with losses from the company's trade-finance business. Fortunately for British taxpayers, the government didn't go for it.
At this point Greensill, which was founded by the Australian financier Lex Greensill, made a new request. It asked if the Treasury could allow it to write bigger loans under the separate Coronavirus Large Business Interruption Loan Scheme, through which the state guarantees up to 80 per cent of loan amounts.
Greensill had been admitted to the programme in June but while other lenders such as Barclays could issue CLBILS loans of up to £200m, companies using supply chain financing — including Greensill — were limited to a cap of £50m.
Greensill asked that its cap be raised to £200m. That demand also went nowhere, with Roxburgh saying £200m 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 tycoon behind GFG Alliance.
Those loans are just part of taxpayers’ current exposure to more than £1bn of debts linked to Gupta and Greensill via three different state guarantees. Officials are now assessing the government’s likely exposure to the failed Greensill and troubled GFG.
Labor on Thursday night called for an investigation. Shadow chancellor Anneliese Dodds, said the revelations raised serious questions about the chancellor’s priorities in the middle of a pandemic. The FT added that while Cameron’s lobbying attempts “were ultimately fruitless, they will raise concerns about the ‘revolving doors’ between government and the private sector.” Meanwhile, it does seem like the erstwhile PM, whose Conservative Party remains in power, will likely have some explaining to do…perhaps in front of Parliament.