The United Kingdom has opened an investigation into the now-insolvent finance firm Greensill Capital, which suddenly collapsed last month in a financial blow-up that hit institutions including Credit Suisse’s asset management arm.
The investigation, announced on Monday, follows reports that former prime minister David Cameron had lobbied U.K. ministers on Greensill’s behalf.
Lex Greensill, the founder and CEO of Greensill Capital, in 2011 began serving as a government advisor to Cameron, who was prime minister from 2010 to 2016. Cameron then became an advisor for Greensill Capital in 2018.
According to recent news reports, Cameron directly contacted ministers and organized at least one private meeting with a lawmaker to lobby them on Greensill’s behalf, prompting criticism that the former prime minister may have used unofficial channels to curry favor and secure government contracts for the company.
Part of the government investigation into the company will look at “how contracts were secured and how business representatives engaged with the government,” according to a person familiar with the matter. The Sunday Times has reported extensively on Cameron’s lobbying efforts, including texting finance minister Rishi Sunak and setting up a private drink between Greensill and the U.K.’s Health Secretary Matt Hancock.
“The Cabinet Office is commissioning an independent review on behalf of the prime minister to establish the development and use of supply chain finance and associated activities in government and the role Greensill played in those,” the spokesperson for prime minister Boris Johnson told Institutional Investor. “This independent review will also look at how contracts were secured and business representatives engaged with government,” she added.
Nigel Boardman, a former partner at the law firm Slaughter and May and a non-executive director at the U.K.’s Department for Business, Energy and Industrial Strategy, will lead the investigation, the spokesperson said. Boardman will report his findings to the prime minister no later than the end of June, according to a statement from the cabinet office.
Softbank-backed Greensill, which specializes in supply-chain finance, collapsed suddenly in March after its insurance provider declined to renew more than $4 billion of insurance for its loans. Greensill’s clients, which includes U.K. and German government agencies as well as other Softbank-backed start-ups, are scrambling to replace the funding they had from Greensill.
The Sunday Times reported that Cameron lobbied the U.K. Treasury Department to change the terms of a government program to provide companies with cheap loans during the pandemic so that it would include Greensill. In response to a Freedom of Information Act request, the Treasury Department confirmed that Cameron had texted Sunak about the program.
In a separate report, The Sunday Times said Cameron also lobbied the prime minister’s office about the loan program. The Times also reported that Cameron had separately arranged a private meeting between Greensill and NHS Secretary Matt Hancock to discuss a payment scheme in 2019.
Cameron said Sunday that he did not break any government lobbying laws or standard codes of conduct, but acknowledged that “there are important lessons to be learnt,” according to the full statement published by BBC News.
“As a former prime minister, I accept that communications with government need to be done through only the most formal of channels, so there can be no room for misinterpretation,” he said in the nearly 2,000-word statement.
“There have been various charges leveled against me these past weeks, mainly that I made representations to the government on behalf of a company I worked for. I did,” Cameron added. “Not just because I thought it would benefit the company, but because I sincerely believed there would be a material benefit for U.K. businesses at a challenging time.”