Greensill’s disappearance highlights government ties

Gathered at Westminster Abbey in June 2019 to celebrate the life of Jeremy Heywood, former civil servant, five prime ministers – and a Bundaberg banker.

Lex Greensill, who arrived in the UK from Australia in 2001 as the son of a 24-year-old sugarcane farmer, was now firmly anchored in the British establishment.

He had received a CBE two years earlier and in 2018 had hired a confrere of the congregation: David Cameron, the former prime minister. The two had worked with Heywood, the Mandarin who served as the gray eminence in Downing Street for a decade.

Today, Greensill’s eponymous financial company is on the brink of collapse. Greensill’s attorneys have warned it could trigger a wave of client defaults and 50,000 layoffs.

Greensill’s fall also raises difficult questions for his friends and associates in government.

In June 2019, questions were already being asked about Greensill’s activity. The day before the memorial service for Heywood, former financial services minister Lord Paul Myners called on the UK financial watchdog to investigate a supply chain finance fund run by Swiss firm GAM Holdings, which had invested in illiquid bonds linked to Greensill, and later. turned into a financial scandal.

“Greensill frequently encountered officials and ministers who seemed at times bewitched by him,” Myners said this week. “There were no basic questions about him and how his company has so quickly become a major player in such a large market.”

Access to power

Senior government officials believe it was Heywood who facilitated Greensill’s entry into the halls of power in Whitehall.

Although the former permanent secretary is remembered as the last low-key and powerful official, he temporarily moved from Whitehall to the City of London during the height of the financial boom of the early 2000s.

From 2003 to 2007 he was at Morgan Stanley as co-head of the UK division of investment banking, where he worked with the young Australian and took him under his wing for some time, according to reports. people close to their relationship.

After the financial crash, the two men took different paths. Heywood returned to government, becoming permanent secretary at number 10 in 2008, then cabinet secretary in 2011 until shortly before his death in 2018.

After a stint at Citigroup, Greensill created Greensill Capital in 2011. The origins of Greensill’s vision for his business have become the traditions of the company. Growing up in Bundaberg, a town in the Australian agricultural belt of Queensland – as Greensill would explain – his family had suffered firsthand the financial pressure caused by delays in receiving payments for goods sold or services rendered.

Greensill has grown his business to help businesses access working capital more easily through supply chain finance, with a particular focus on small and medium-sized businesses.

He offered advice to the Cameron government on setting up a supply chain finance initiative, which was launched in 2012. The Carillion construction group has made extensive use of the program, which MPs said investigating on the possible collapse of the outsourcer in 2018, allowed it to “support its failed business model”.

Greensill’s ambitious plans came at an opportune time to foster relationships within government. During the 2010-2015 coalition years, ministers were keen to bring private sector expertise to the Cabinet Office, the hub of Whitehall..

It is against this background that the Cabinet Office recruited Greensill in 2014 as one of six new ‘Crown Representatives’ to help tackle contract waste and ensure that suppliers deliver the best value for money. price.

Greensill “gained considerable access and preference through Jeremy Heywood,” says a former Mandarin. From there he mingled with various personalities.

One official said Greensill’s level of access was considered “bizarre” at the time, as he sometimes used a Cabinet Office pass to “camp” at the Economic and Home Secretary – one of the parties. most powerful of the ministry. “It was really pretty weird,” he said.

According to transparency records, Greensill had one meeting with Matt Hancock, then Cabinet minister, to discuss supply chain finance policy, and two with John Manzoni, the department’s top official. There were no less than five with Heywood in just two years from 2016 to 2018, with a few “regular catches” badged.

One of those meetings with Heywood involved a dinner with the Greensill board in July 2016, according to a senior Mandarin.

But Lord Nicholas True, a Cabinet minister, hinted that there may have been other undocumented meetings. He recently said – in response to a question from a peer on Greensill – that “details of internal meetings are normally not disclosed”.

Around this time, Greensill poached Bill Crothers, who until the end of 2015 was commercial director for the UK government, where he was responsible for managing £ 40bn of taxpayer money.

After starting his role as Vice Chairman of Greensill, Crothers still enjoyed Cabinet Office meetings, according to the Transparency Records, although they do not refer to his role at Greensill Capital.

Crothers’ LinkedIn profile was deleted on Tuesday and he referred the FT to Greensill Capital for comment.

A government spokesperson said: “Senior officials and ministers meet regularly with a range of private sector stakeholders. Strong transparency processes are in place to ensure proper review of these meetings. “

The highlight of Greensill’s rise in British society came in 2017 when he was awarded a CBE “for services to the economy”, smiling proudly as Prince Charles leaned down to wrap the medal around his neck. “Mum never got to go to my graduation, so in a way today was the graduation that my mom never got to, at Buckingham Palace,” said Greensill to reporters at the time.

A variety of government work

Greensill has also been involved in high level government work. In 2018, for example, Greensill Capital partnered with financial technology firm Taulia to help public sector bodies in the UK, including the NHS, speed up bill payments.

Greensill in 2019 was boasting on his website that his work with Taulia and the government had won numerous industry awards, including one for a program where pharmacies could access prepayment in exchange for a reduction from to the value of the invoices.

Although the Cabinet Office declined to disclose full details of the meetings between Heywood and Greensill, two meetings were scheduled to discuss the “pharmacy advance payment system,” according to its transparency register.

Greensill wanted these prepayment solutions to be extended to other areas of the public sector. At the start of the Covid-19 pandemic, Greensill announced he would work with some of the largest NHS trusts in the country to provide health workers with ‘instant access’ to their pay.

Under this program, NHS staff could access what the company describes as essentially free short-term loans, which are then repaid by employers on a monthly basis. Greensill waived its fees on the program, which is run by Earnd, an Australian fintech company it acquired in March 2020.

Greensill also saw an opportunity in the government Covid crisis loans, which were introduced last spring. Under this program, borrowers are fully responsible for their debt, but the government provides approved lenders with an 80% guarantee on the outstanding balance of the loan facility.

In June, the British Business Bank had accredited Greensill Capital as a lender to provide funding through the program, alongside Barclays and HSBC.

Soon after, Greensill lobbied the UK Treasury to quadruple the amount of funding it could offer borrowers from £ 50million to £ 200million. Greensill Capital participated in six phone calls with senior Treasury official Charles Roxburgh between April and June 2020. However, Roxburgh told Greensill that £ 200million was “significant exposure”; the cap remained at £ 50 million.

Greensill then helped provide businesses linked to British steel tycoon Sanjeev Gupta with tens of millions of UK government guaranteed loans.

Greensill Capital and Greensill declined to comment.

A godsend that has disappeared

Cameron has not commented on Greensill in recent days, either directly or through his spokesperson.

But there is Schadenfreude among some of the former colleagues of the ex-PM. “It seems like everything he touches turns to dust,” said an old friend. “Unlike George [Osborne, the former chancellor], which seems to be killing the private sector.

After Cameron left Downing Street in 2016, the day after the Brexit vote was lost on the Remain side, he sought a post-political portfolio career – writing his memoir from a ‘shepherd’s hut’ while playing charitable roles and taking only a few businesses.

Aside from Greensill, he agreed to chair a “UK-China Investment Fund” project, but it struggled to get started. Meanwhile, his concerts dried up last year due to the pandemic, he complained privately.

When he took the part-time job in the summer of 2018, Cameron’s spokesperson said the former Tory leader had “great admiration for Lex Greensill” and considered Greensill to be “one of them. of the many great success stories of British fintech ”.

The role, the former prime minister had boasted to his friends, could potentially net him millions of pounds thanks to the stock options Greensill granted him.

Those options were worth up to 1% of the company, according to industry figures with knowledge of the matter, a potential windfall with Greensill looking to raise funds last year at a valuation of $ 7 billion ahead of a planned initial public offering. .

Now, however, the value of the business is uncertain. One of its largest funders, SoftBank, wrote off its stake. And Greensill’s contacts among the big and the good in the British establishment are also reassessing the value of their relationship.