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‘Stench of cronyism’: Greensill Capital scandal shakes up U.K. government

April 9, 2021, 8:52 AM UTC

Chancellor of the Exchequer Rishi Sunak is facing fresh demands for an inquiry into his conduct, after it emerged he “pushed” his officials to consider helping Greensill Capital following a request from former Prime Minister David Cameron.

Sunak told Cameron he had asked his team to look at ways to give Greensill access to the state’s pandemic corporate support program last year, according to text messages released Thursday by the government. He was responding to a direct approach by the former prime minister, a lobbyist for the since-collapsed Greensill.

“I have pushed the team to explore an alternative with the Bank that might work,” Sunak said in one text sent April 23. “No guarantees, but the Bank are currently looking at it.” The government’s Covid Corporate Finance Facility program was administered by the Bank of England.

The Greensill affair represents a major test of Sunak’s credibility and integrity. Since he became finance minister weeks before the pandemic hit last year, he has been lauded for his handling of the economy and touted as a future prime minister after designing an emergency support package for businesses and workers.

But questions are now are now being asked over whether he followed all the correct procedures, as he has insisted he did.

‘Accelerated Treatment’

“These messages raise very serious questions about whether the chancellor may have broken the ministerial code,” the opposition Labour Party’s shadow chancellor, Anneliese Dodds, said. “They suggest that Greensill Capital got accelerated treatment and access to officials, and that the chancellor ‘pushed’ officials to consider Greensill’s requests.”

Sunak’s texts were released by the Treasury following a Freedom of Information request. The Treasury said in its disclosure that Cameron had also contacted by telephone the junior Treasury ministers John Glen and Jesse Norman. Cameron’s messages to Sunak were not released.

“I think it’s important that, whoever people are, whether they’re prime ministers or anyone else, that they follow the rules and the guidelines that we have in place for lobbying,” Sunak told ITV News last week. “We have the rules in place for good reason. And I think whoever you are its important processes are appropriately followed.”

While the U.K. watchdog has cleared Cameron of unregistered lobbying, his involvement has opened the government up to accusations of cronyism. The former leader also lobbied the Bank of England over financial support for Greensill, the bank has said. It declined to comment on the release of Sunak’s texts on Thursday.

‘Thorough Investigation’

Dodds called for “a full, transparent and thorough investigation” into what happened.

Greensill Capital collapsed in March in one of the most spectacular financial blow-ups of recent years, sending shock waves through Swiss banking giant Credit Suisse Group AG and two of Japan’s largest firms.

The company, which specialized in financing invoices, was founded by Lex Greensill, an Australian financier who was given significant access to the U.K. government during Cameron’s premiership. Cameron then became an adviser to the firm and lobbied officials on its behalf.

Tens of thousands of jobs are at risk because the future of businesses in Sanjeev Gupta’s GFG Alliance — including steel mills and aluminum smelters in France, Spain, and the U.K. — is in doubt without access to credit from Greensill.

Multiple Calls

In the April 23 text message, Sunak told Cameron that “Charles should be in touch,” a reference to Charles Roxburgh, a senior civil servant in the Treasury who held at least six calls with Greensill executives between April and June last year.

Previous documents released by the Treasury about those meetings show how Greensill sought rule changes to the Covid Corporate Finance Facility to enable it to access the program’s funds.

Greensill was also an accredited lender under another of the government’s coronavirus loans programs — the Coronavirus Large Business Interruption Loans Scheme — and sought to persuade Treasury officials to raise the cap on the loans it could issue under that plan to 200 million pounds ($275 million), from 50 million pounds.

Earlier this week, Dodds of Labour wrote to Sunak, calling for a probe “into the chain of events that saw Greensill awarded lucrative supply chain contracts, the freedom of Whitehall and the right to lend millions of pounds of government-backed Covid loans.”

The Treasury on Thursday published Sunak’s reply to her letter. In it, Sunak told Dodds that Greensill’s meetings with the Treasury covered the lender’s requests to access CCFF by changing its terms, and to broaden the scope of the program.

“As is a matter of public record both of these requests were rejected but it is right that HM Treasury listened to — and gave due consideration to — all potential options to support businesses to survive the pandemic,” Sunak wrote.