Chancellor Rishi Sunak was under fresh scrutiny last night over the design of the Government’s pandemic loan scheme that gave access to collapsed financier Greensill Capital.
Greensill, which was advised by David Cameron and run by Lex Greensill, was accredited to provide loans of up to £50million to struggling firms under a multi-billion-pound taxpayer-backed emergency strategy overseen by the British Business Bank.
But it also wanted access to a larger company scheme which provided up to £1billion to Blue Chip companies, including British Airways, Rolls-Royce and Burberry.
Under fresh scrutiny: Chancellor Rishi Sunak
It was alleged this weekend that Treasury officials considered redesigning the Blue Chip scheme so Greensill might avoid losses from loans that did not get repaid.
A report in The Times said Sunak, who was lobbied by Cameron as a paid Greensill adviser, pushed officials to explore a proposal over a three-month period.
The British Business Bank is a state-owned lender responsible for overseeing the Government’s smaller emergency loan schemes.
Shadow Chancellor Anneliese Dodds has dispatched a letter – seen by The Mail on Sunday – to the bank’s chief executive, Catherine Lewis La Torre, demanding to know how Greensill became involved with lending just months before it collapsed and what changes were made to ease its access to the scheme.
Greensill was one of just three non-bank lenders allowed to hand out loans to struggling firms under the Coronavirus Large Business Interruption Loan Scheme (CLBILS), which is 80 per cent backed by taxpayers if borrowers default.
The Chancellor said last week the Treasury had ‘no role and was not involved in the accreditation decision for Greensill Capital’. It said the CLBILS was ‘run independently’ by the British Business Bank and the ‘Treasury has no involvement in standard accreditation decisions’.
Demanding answers: Shadow Chancellor Anneliese Dodds
The decision to accredit Greensill Capital in June last year came just as one of its biggest customers, Liberty Steel, was running into trouble. Greensill Capital collapsed last month and Liberty, run by Sanjeev Gupta, is still scrambling for cash.
Insolvency experts at Deloitte were this weekend understood to be working on a possible Government rescue plan should Liberty fail, sources said. Deloitte declined to comment.
Greensill Capital was allowed to dish out loans of up to £50million under the CLBILS scheme, which permitted banks to handle loans of up to £200million. It recently emerged that Cameron lobbied the Government last year to increase Greensill Capital’s access to the scheme. The Government rejected the request.
Cameron had also previously asked the Government to give Greensill Capital access to the Blue Chip lending platform, the Covid Corporate Financing Facility (CCFF), which allowed the Bank of England to supply finance to large firms. This request was also rejected.
Reports also allege that Greensill Capital then flouted the rules by providing eight separate £50million taxpayer-guaranteed loans to firms connected to Gupta’s GFG Alliance.
As a result, the British Business Bank removed the taxpayer guarantee on the loans and launched an investigation.
Greensill Capital focused on supply chain finance and earned its fees by helping suppliers receive payments quickly.
Sunak has confirmed that David Cameron had reached out informally by telephone to him on the matter of Greensill Capital’s access to the CCFF
Liberty Steel is searching for finance to stay afloat after the collapse of Greensill Capital, and after the Government rejected a £170million bailout plea. Last week, Sunak confirmed Cameron had lobbied him and other senior Ministers for Greensill to access emergency loan schemes.
Sunak said: ‘I can confirm David Cameron reached out informally by telephone to me, and to the Economic Secretary and the Financial Secretary, on the matter of Greensill Capital’s access to the CCFF.’
The Government revealed in response to a Freedom of Information request that Sunak texted Cameron about the CCFF in April last year.
One said: ‘Hi David, apologies for the delay. I think the proposals in the end did require a change to the Market Notice but I have pushed the team to explore an alternative with the Bank that might work. No guarantees, but the Bank are currently looking at it and Charles should be in touch. Best, Rishi.’
He was referring to Charles Roxburgh, a senior civil servant in the Treasury.
‘We need to get to the bottom of this,’ Dodds said. ‘The Chancellor is desperately trying to wash his hands of the decision to put hundreds of millions of pounds of taxpayer money in the hands of an unregulated lending firm with links to a former Conservative PM. The collapse of Greensill Capital has put public money and jobs at risk, and the public deserve to understand why this has happened.’
Liberty Steel is searching for finance to stay afloat after the collapse of Greensill Capital, and after the Government rejected a £170million bailout plea
In her letter, Dodds has asked La Torre to confirm the Treasury had no influence in Greensill’s accreditation decision, if any Treasury officials contacted the Bank about Greensill’s accreditation and if any of Greensill’s representatives had a role in setting the accreditation process.
The letter asked the British Business Bank ‘to explain why Greensill Capital was accredited to one major Government loan scheme after it had already been turned down for another’.
She added: ‘Did any external parties, including any representatives from Greensill Capital, play any role or input in any way to the process by which the criteria for accreditation to the CLBILS scheme were set?’
And she asked that the Bank ‘confirm that the decision to accredit Greensill Capital was taken by the British Business Bank, entirely independently of the Treasury and without any input from Treasury officials’.
She also asked for the bank to reveal which companies Greensill supported through the scheme, and if it was just Gupta’s Liberty Steel or his sprawling global steel company GFG Alliance.
Dodds added: ‘The Treasury set the rules for the scheme and Sunak is ultimately accountable for the money lent through it.
‘This is not his money. It’s public money. We need to know if he’s looking after it.’
The British Business Bank declined to comment.
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