Finance

Greensill probe: Tough questions for Rishi Sunak, David Cameron, and Andrew Bailey

The chair of the Treasury Committee is questioning former Prime Minister David Cameron about his lobbying efforts for collapsed supply chain finance firm Greensill Capital as part of an inquiry into the scandal.

Cameron, who was an adviser to Greensill Capital, was reported to have lobbied the UK government to increase the supply chain finance firm’s access to state-backed emergency Covid-19 loan schemes, months before its collapse.

Mel Stride is leading the investigation and seeking answers from other senior City figures alongside Treasury Committee MPs who want to get to the bottom of the ongoing scandal.

“There are questions to be answered in relation to Greensill Capital regarding the operation of the UK’s financial system and its regulation,” Stride said in a 19 April statement about the inquiry’s launch. “Also, whether the Treasury responded appropriately to lobbying from Greensill during the pandemic.”

The “Lessons from Greensill Capital” inquiry will focus on the regulatory lessons from the failure of the supply chain finance firm, as well as the appropriateness of the Treasury’s response to lobbying from Cameron during the Covid-19 crisis. 

Greensill was founded in 2011 by former Citigroup and Morgan Stanley banker Lex Greensill. The company filed for bankruptcy in March after it lost credit insurance that was crucial to its business. Credit Suisse suspended the investment funds.

The governor of the Bank of England Andrew Bailey is being asked to provide a timeline of any contact Bank officials had with Treasury representatives, Greensill’s representatives or other government department’s representatives in relation to the collapse of supply chain firms.

Stride is asking Cameron for a description of when and how he first became aware of any potential financial difficulties or weaknesses at Greensill. Cameron also has to answer how the lobbying of the Treasury was coordinated within Greensill, including who was involved and how.

The Financial Conduct Authority’s Nikhil Rathi is expected to provide details for what work the FCA did to assess the potential conduct and prudential risk of non-regulated non-bank lending by its regulated entities. He is also being asked what analysis the regulator carried out around the perimeter of Greensill’s business activities.

Chancellor of the Exchequer Rishi Sunak must provide a list of Treasury officials who were contacted by Cameron regarding Greensill – both formally and informally. The committee also wants to have a view of the estimate of the level of Treasury resource that went into assessing options for access by Greensill to the Covid Corporate Financing Facility (CCFF), and how that compared to others attempting access to the facility.

Charles Donald, the chief executive of UK Government Investments, is being asked if any analysis was carried out relating to Greensill by the UKGI.

Who will be under scrutiny? 

The chair of the influential group of MPs, tasked with holding the Treasury and the City to account, has written to Cameron. He has also written to the governor of the Bank of England Andrew Bailey, the chief executive of the Financial Conduct Authority Nikhil Rathi, the Chancellor of the Exchequer Rishi Sunak, and chief executive of UK Government Investments Charles Donald. 

Questions for Andrew Bailey

– Can you provide an outline of the role the Bank had in relation to the CCFF, and in particular Greensill’s desire to participate?

– Can you provide a timeline of any contact which Bank officials (whether senior or junior) had with Treasury’s (or its agencies’ or public bodies’) representatives, Greensill’s representatives, or any other government department’s representatives in relation to Greensill? Please provide a description of the nature of the contact and any records related to those contacts. Redaction of the names of more junior officials will be acceptable.

– Can you provide an estimate of the level of Bank of England resource that went into assessing options for access by Greensill to the CCFF, and how that compared to others attempting access to the facility?

– Can you provide details of any Bank analysis of Greensill’s ability to take part in the CCFF, including the iteration of any ideas that were presented to allow it to take part, and when that analysis was conducted?

– Can you outline what analysis, if any, the Bank carried out of Greensill for any of the Bank of England’s other functions, including relating to financial stability or prudential regulation (including of insurers)?

– Can you provide an outline of any analysis the Bank has carried out into the potential financial stability implications of the growth of supply chain finance more generally, including analysis commissioned as part of understanding the significance of the collapse of Greensill?

– The Committee is aware that parts of the Greensill Group were regulated in other countries. Were there any information requests from or to those countries’ regulators regarding these entities?

– Can you provide a description of when and how Bank of England officials first became aware of any potential financial difficulties or weaknesses at Greensill?

– Was any Bank official made aware of the lobbying by David Cameron for Greensill in relation to the CCFF?

– Was any Bank official contacted by David Cameron (or his representatives) with regard to Greensill, whether formally or informally? If so, please provide details of the nature of that contact, and any records relating to it.

– Can you provide a copy of any rules, procedures or guidance used by the Bank relating to lobbying and conflicts of interest?

Questions for David Cameron

– Can you provide a timeline of any contact you (or your representatives) had with Treasury’s (or its agencies’ or public bodies’) representatives or Ministers in relation to Greensill? Please provide a description of the nature of the contact, and any records related to those contacts.

– In particular please provide the Committee with the full texts that you sent the Chancellor, referred to by Treasury in its response to the Freedom of Information letter published in April 2021, but not provided then. Redaction of the names of more junior staff will be acceptable.

– Can you provide a timeline of any contact you had with any other Government department’s (or their agencies’ or public bodies’) representatives or Ministers in relation to Greensill, where the aim was to influence Treasury policy or any decisions in relation to Greensill? Please provide a description of the nature of the contact, and any records related to those contacts. Redaction of the names of more junior staff will be acceptable.

– The Treasury’s response in April 2021, referred to above, states that you “… reached out informally by telephone to the Chancellor, the Economic Secretary and the Financial Secretary on the matter of Greensill’s access to the CCFF [Covid Corporate Financing Facility].” Please could you provide a description of those contacts, and any records you hold of them?

– Can you provide a description of when and how you first became aware of any potential financial difficulties or weaknesses at Greensill?

– Can you provide a description of how the lobbying of the Treasury was coordinated within Greensill, including who was involved and how?

READSunak’s Greensill texts to Cameron revealed: ‘I have pushed the team to explore an alternative’

Questions for Nikhil Rathi

– Can you provide an outline of the history of the FCA’s dealings with the above entities, including how and for what they were supervised? The Committee is aware that Greensill Capital Securities Limited was an appointed representative of Mirabella Advisers LLP. Can you provide information on the oversight by the FCA of entities, such as Greensill Capital Securities Limited and Mirabella Advisers LLP, in this context?

– To what extent did the FCA have responsibility for combatting economic crime in relation to the two entities?

– Can you outline whether the FCA carried out any analysis of the Greensill entities for any other reason than their direct supervision, including supporting you (or your predecessor) as CEO in your role on the FPC?

– What work has the FCA done to assess the potential conduct and prudential risk of non-regulated non-bank lending by its regulated entities; and what, if any, conclusions have been drawn?

Questions for Rishi Sunak

– A timeline of any contact which Treasury Ministers or officials (whether senior or junior) had with Greensill representatives, or any other Government department’s (or their agencies’ or public bodies’) representatives in relation to Greensill; a description of the nature of each such contact, and all records related to each of those contacts. Redaction of the names of more junior officials will be acceptable.

– A timeline of any contact which Treasury (including its Ministers) had with its own agencies and public bodies in relation to Greensill; a description of the nature of each such contact, and any records related to each of those contacts. Redaction of the names of more junior officials will be acceptable.

– An estimate of the level of Treasury resource that went into assessing options for access by Greensill to the Covid Corporate Financing Facility (CCFF), and how that compared to others attempting access to the facility.

– In the response to an FOI request, the Treasury stated “HM Treasury officials also engaged with a wide range of supply chain finance firms in the same time period to inform policy development.” Please could you provide details of the number of these firms and the extent of Treasury engagement with them? In general did these firms receive the level of consideration (in terms of number of meetings, duration and seniority of Treasury participants) as that received by Greensill?

– A timeline and details of any Treasury analysis undertaken on Greensill, whether related to the CCFF or Coronavirus Large Business Interruption Loan Scheme or any other matter, including on financial stability, regulation or the monitoring of the flow of financing to firms.

– A copy of any analysis which the Treasury has carried out of the growth of supply chain financing (including by non-regulated entities), including analysis commissioned to help understand the significance of the collapse of Greensill.

– An outline of any work undertaken by Treasury officials to consider the financial position of Greensill in the course of providing any analysis to senior Treasury officials or Ministers during the Covid crisis, and a list of who was provided with that analysis. An outline of any such analysis into the financial position of Greensill provided by other entities, whether from within government or elsewhere, and when it was provided.

– A description of when and how Treasury officials (and Ministers) first became aware of any potential financial difficulties or weaknesses at Greensill.

– A list of Treasury officials who were made aware of the lobbying by Cameron for Greensill in relation to any work which Treasury was overseeing or in which it was participating, and when they were made aware.

– A list of Treasury officials, if any, contacted by David Cameron (or his representatives) with regard to Greensill, whether formally or informally; a description of the nature of each such contact, and any records related to each of those contacts.

– Any informal or formal complaints or concerns raised by Treasury staff into work being undertaken on Greensill, redacted for anonymity where appropriate.

– Any concerns expressed to Ministers about whether work on Greensill was appropriate, whether at the initiation of that work or during the work being undertaken.

– A copy of any rules, procedures or guidance used by the Treasury relating to lobbying and conflicts of interest;

– A list of any employee or non-executive director of the Treasury (or its agencies) who has simultaneously worked for Greensill at any time since 1 March 2020.

– An account of the role, if any, which Treasury ministers or officials played in the decision to approve Greensill as an accredited lender in the Coronavirus Large Business Interruption Loan Scheme and/or lend to companies associated with Sanjeev Gupta, including in the provision of advice or views.

– An outline of the role if any, Treasury ministers and officials had in approving Greensill as a contractor in the Pharmacy Earlier Payment Scheme (PEPS); a confirmation of whether they were aware of such a scheme. confirmation of whether explicit Treasury consent (within the meaning of Box 2.3 of Managing Public Money) was given in relation to any aspect of PEPS as run by Greensill, and if so, if that consent could be supplied to the Committee.

– An outline of any Treasury advice or analysis undertaken on Earnd, including on its role in the public sector.

Questions for Charles Donald

– Can you provide a timeline of any contact which UKGI officials (whether senior or junior) had with the Treasury’s (or its agencies’ or public bodies’) representatives, Greensill’s representatives, or any other Government department’s (or its agencies’ or public bodies’) representatives in relation to Greensill? Please provide a description of the nature of the contact, and any records related to those contacts. Redaction of the names of more junior officials will be acceptable.

– If there was analysis carried out relating to Greensill, can you provide an outline and timeline for this?

– Was any UKGI official made aware of the lobbying by David Cameron for Greensill in relation to any work UKGI was overseeing or a participant in?

– Was any UKGI official contacted by David Cameron (or his representative) with regard to Greensill, whether formally or informally? If so, please could the nature of that meeting, and any record relating to it, be provided to the Committee?

– Can you provide a copy of any rules, procedures or guidance used by UKGI relating to lobbying and conflicts of interest?

What are the next steps?

The Committee said in its 20 April release that it plans to hold a “scene-setting” oral evidence session with relevant experts on 28 April. The inquiry is currently accepting evidence until 10 May. 

In his letters, Stride asked that the relevant parties respond to the Committee’s request by 6 May. The group of MPs also said that it would seek to take oral evidence from Cameron, Sunak, the Bank of England, the FCA and Lex Greensill “in due course”. 

READ Government to investigate David Cameron’s Greensill lobbying

Separately, the government has also launched an investigation into Cameron’s lobbying on behalf of Greensill, which will be led by Nigel Boardman, a former partner at law firm Slaughter and May. 

To contact the author of this story with feedback or news, email Bérengère Sim

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