Finance

‘Lobbying is a healthy part of democracy’, Cameron tells MPs in Greensill inquiry

David Cameron told MPs that lobbying is a “necessary and healthy part of the democratic process”, during a grilling for his role lobbying government on behalf of the now-collapsed supply chain finance firm Greensill Capital.

The former prime minister Cameron is at the centre of a scandal around lobbying following revelations he lobbied the Bank of England and the Treasury for access to the government’s Covid corporate financing facility, which was set up to help businesses access emergency funds during the crisis, months before the collapse of the firm.

“I completely accept that former prime ministers are in a different position to others because of the office that we held, and the influence that continues to bring,” Cameron told the Treasury Select Committee during a virtual evidence session on 13 May. “We need to think differently and act differently.”

The committee has launched an inquiry into the lessons that can be learned from Greensill’s collapse, including around the role of lobbyists and their access to senior government officials.

I accept there is a strong argument that having a former prime minister engage on behalf of any commercial interest…can be open to misinterpretation

Cameron said: “Lobbying itself is a necessary and healthy part of our democratic process, but I accept there is a strong argument that having a former prime minister engage on behalf of any commercial interest, no matter how laudable the motives and cause, can be open to misinterpretation.”

Financier Lex Greensill, founder of the eponymous firm, was an adviser to David Cameron when he was prime minister, before Cameron went on to advise the company once he left office, taking a part-time senior adviser role in 2018.

The company filed for bankruptcy in March after it lost the credit insurance that was crucial to its business.

During the evidence session, Cameron said his motivation for reaching out to ministers and others was to “help UK firms at this moment of difficulty and make sure fintech firms and Greensill in particular were listened to as well as the clearing banks.”

“My reason for contacting the chancellor and others so directly was that these solutions were being considered, introduced and amended in rapid time and I believed Greensill could help the country at this time of acute health and financial crisis.”

However, Cameron left the door open to potential reforms on how influence can be exerted by lobbyists, and former prime ministers in particular.

“The lobbying rules were put in place to deal with lobbying by multi-client firms, rather than employees of individual businesses, to ensure that those being lobbied knew on whose behalf they were being contacted. If lobbying registration can be extended to in house operatives without excessive bureaucracy or damaging the interests of charities, there is a case for making that change,” he said.

“The body that vets jobs for former ministers and civil servants, Acoba is well established and in my view works, but its examination of appointments should be mandatory and comprehensive and its decisions could be enforceable,” he added.

“Former prime ministers are in a different category. A longer period before any contact with government over any commercial issue could be appropriate and a new special committee above Acoba to advise on post-office appointment might help with choices that need to be made.”

Cameron also fielded questions around how much he stood to gain from Greensill’s success. He confirmed that he was paid a “generous annual amount” alongside owning shares in the company, but his exact packet was a “private matter”.

Committee chair Mel Stride said that Cameron’s pay “is and isn’t” a private matter because his motivation could have been “distinctly different” if he received millions of pounds, rather than thousands.

READ Cameron only concerned about Greensill as late as December

In a letter to the committee made public on 11 May, Cameron said he first became concerned that Greensill Capital might be in “serious financial difficulty” in December 2020, despite reports in the press first emerging as early as May that year.

Alongside the former prime minister’s letter, records of texts, emails and calls from Cameron to senior officials in government were released. Spanning 28 pages, these showed that he had interacted with the deputy governor of the Bank of England Jon Cunliffe seven times and the permanent secretary to the Treasury Tom Scholar 14 times, as well as ministers including Michael Gove and Nadhim Zahawi.

READ ‘Are you a fraudster, Mr Greensill?’

Greensill answered questions from the MPs on 11 May, apologising for the company’s collapse and taking full responsibility for its demise.

The former banker, who founded Greensill Capital in 2011, was grilled on what led up to his firm’s collapse. Labour MP Siobhain McDonagh asked the former banker if he was “a fraudster”. Greensill responded that he was not, adding that “all of our investors understood exactly what it was that they were purchasing.”

The Australian native, who worked at Morgan Stanley and  Citigroup previously, pointed the finger of blame for the company’s collapse at a number of third parties, including the German regulators and credit insurers, as well as the impact of the Covid-19 pandemic.

READ Greensill affair may trigger tighter rules for non-bank finance, FCA chief tells MPs

Meanwhile, during an evidence session with the committee on 12 May, chief executive of the Financial Conduct Authority Nikhil Rathi confirmed that while the regulator’s investigation into Greensill Capital’s failure is ongoing, he could not give a firm timetable for its conclusion.

Nikhil Rathi also raised the prospect of greater scrutiny on non-bank finance in the wake of the collapse.

The government has also launched an investigation into Cameron’s Greensill lobbying, which is being led by former Slaughter and May partner Nigel Boardman.

In a statement released on 11 April, Cameron apologised and said he feels “desperately sorry” for those affected by the collapse.

“I completely understand the public interest in this issue, given the impact of Greensill’s collapse on the hundreds of people who worked for the company and on other businesses and livelihoods,” he said.

At the beginning of the committee’s evidence session on 13 May, Cameron said: “This is a painful day coming back to a place that I love and respect so much, but in these circumstances. I’ve had plenty of time to reflect on what has happened.”

“What I don’t accept is that [Greensill] was a business that was pre-destined to fail,” he later added.

While Cameron said former prime ministers should be able to maintain business interests, he admitted that he should have communicated with ministers through formal letters rather than through informal channels during his lobbying for Greensill.

He said he did not believe government departments “were bent out of shape in terms of resources” by the frequency of his communication during the Covid-19 crisis.

To contact the authors of this story with feedback or news, email Bérengère Sim and Justin Cash

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