ALEX BRUMMER: Treasury, Bank of England and FCA should have acted earlier over Greensill – and David Cameron’s role in the affair stinks
- David Cameron’s interventions on behalf of Greensill, and the use of the former Prime Minister’s name to try and drum up business, is deeply unedifying
- Cameron is proving an exception to the idea that the richer a politician is the less likely they are to be susceptible to financial greed
- Cameron’s lobbying for Greensill shows that he was not simply a decoration on the letterhead
David Cameron’s interventions on behalf of Greensill, and the use of the former Prime Minister’s name to try and drum up business for the collapsed financial group, is deeply unedifying.
He is proving an exception to the idea that the richer a politician is the less likely they are to be susceptible to financial greed. Donald Trump’s venal behaviour, and an unbowed Cameron, give lie to that notion.
Cameron’s lobbying for Greensill at the heart of UK government, in Saudi Arabia, Singapore and doubtless other places, shows that he was not simply a decoration on the letterhead.
Unedifying: David Cameron’s lobbying for Greensill shows that he was not simply a decoration on the letterhead
In fact, the latest correspondence to come to light, a wrongly directed email by founder Lex Greensill to Aussie prime minister Scott Morrison, bigs up Cameron’s role noting he is ‘on our board and a material shareholder’. Both are exaggerations in that Cameron never sat on Greensill’s board and had options rather than actual shares in the Covent Garden-headquartered enterprise.
The release of texts by the Chancellor Rishi Sunak disclosing further detail of Cameron’s pleas on behalf of Greensill have a desperate air.
As Sunak pointed out in his note back to Cameron, it would require a change in the ‘Market Notice’ – the rules set for the Bank of England’s Covid financing scheme – for Greensill to play a role.
The Chancellor was at the least naïve to have told Cameron that he had pushed for an alternative with the Bank which might work. Whether Sunak was just being polite in his dealings with a former prime minister or was genuinely seeking special treatment is conjecture and needs urgent clarification. Fortunately the Treasury mandarin Charles Roxburgh stamped his foot and said no.
Does all this justify a probe as shadow chancellor Anneliese Dodds demands? There is evidence enough now to show that Cameron’s calls to Sunak and Treasury ministers Jesse Norman and John Glen went beyond informal inquiry and that the way that Greensill earlier had been embraced by Downing Street was wrong.
The Tory-chaired Treasury Select Committee might have saved the former PM and government members reputational damage by a thousand leaks had it agreed to hold hearings. By failing to grasp the significance of the Greensill implosion and its impact not just on the political players, but on jobs and the stability of the financial system, Mel Stride and his Tory colleagues blundered. They allowed politics to get the better of judgement.
The reality is that the collapse of the financial empire is proving to be one of the most far reaching scandals of our time. The focus on Cameron’s feeble entreaties misses the point.
The fallout from the failure of the group, which purported to bring the miracles of high-tech to invoice finance, has spread across the globe like a virus.
In Australia, two metal enterprises, part of Sanjeev Gupta’s Greensill-financed empire, were subject of wind-up orders this week instigated by Citibank. The authorities in Germany are engaged in untangling the liabilities of the locally authorised Greensill Bank at a cost of several billion euros. In Zurich, heads have rolled at Credit Suisse, where up to £7.5bn of Greensill loans were sliced, diced and insured and sold flogged off to unsuspecting investors.
Here in the UK the finances of Gupta’s steel and aluminium empire hang by a gossamer thread as a result of Greensill’s collapse and 5,000 jobs at least are at risk. Whitehall officials are working hard to find solutions which can preserve the steel industry for both strategic and infrastructure reasons.
The most disturbing aspect of this is that Greensill ballooned in size and risk profile in plain sight of UK regulators at the Financial Conduct Authority and the Bank of England and with tacit support from Downing Street. As a shadow bank, Greensill mostly fell through the regulatory cracks with only one small offshoot policed by a little known hosting outfit ACA Mirabella.
Yet as we have since learned, Greensill Capital was at the core of an edifice which has shaken financial stability not just in Britain but across the globe.
It is not good enough for the Treasury, the Bank of England or the FCA, all of which knew enough to keep the Enron-like group at arms-length. The enforcers should have acted earlier and Cameron’s role stinks.
The case for an expedited judge led inquiry is overwhelming.