Greensill’s disappearance highlights relationship with government
Gathered at Westminster Abbey in June 2019 to celebrate the life of former civil service chief Jeremy Heywood were five prime ministers – and a banker from Bundaberg.
Lex Greensill, who arrived in the UK from Australia in 2001 as the 24-year-old son of a sugarcane farmer, was now firmly rooted in the British establishment.
He had received a CBE two years earlier and in 2018 hired another member of the congregation: David Cameron, the former prime minister. The two had worked with Heywood, the Mandarin who served as Gray Eminence in Downing Street for a decade.
Today, Greensill’s eponymous financial company is on the verge of collapse. Greensill’s attorneys have warned it could trigger a wave of defaults among his clients and 50,000 job losses.
Greensill’s downfall also raises embarrassing questions for his friends and associates in government.
In June 2019, questions were already being asked about the Greensill activity. The day before the memorial service for Heywood, former financial services minister Lord Paul Myners called the UK’s financial watchdog to investigate a supply chain finance fund run by GAM Holdings, based in Switzerland, which had invested in illiquid bonds linked to Greensill, and then turned into a financial scandal.
“Greensill has frequently met officials and ministers who at times seemed entranced by him,” Myners said this week. “There were no basic questions about him and how his company had become such a big player in such a big market so quickly. ”
Access to power
Senior government officials believe it was Heywood who facilitated Greensill’s entry into Whitehall’s halls of power.
Although the former permanent secretary is remembered as the ultimate powerful and low-key public servant, he temporarily moved from Whitehall to the City of London at 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 investment banking division, where he worked with the young Australian and took him under his wing for some time, according to people familiar with 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 tradition of the company. Growing up in Bundaberg, a town in the agricultural belt of Queensland, Australia – as Greensill would explain – his family had experienced firsthand the financial pressure caused by delays in receiving payments for goods sold or services rendered.
Greensill started his company to help businesses access working capital more easily through supply chain finance, with a particular focus on small and medium-sized businesses.
He advised the Cameron government on a supply chain finance initiative, launched in 2012, with commitments from companies, including construction group Carillion. MPs are investigating The eventual collapse of Carillion in 2018 said the tool allowed him to “strengthen his failing 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 was against this background that the Cabinet Office recruited Greensill in 2014 as one of six new “Crown Representatives” to help tackle unnecessary contracts and ensure that suppliers offer the best value for money.
Greensill “got huge access and preference through Jeremy Heywood,” says a former Mandarin. From there he mingled with various senior officials.
An official said Greensill’s level of access was considered “bizarre” at the time, as he sometimes used a Cabinet Office pass to “camp” in the economic and domestic secretariat – one of the parties. the most powerful of the ministry. “It was really quite strange,” he said.
According to transparency records, Greensill had one meeting with Matt Hancock, then cabinet minister, to discuss supply chain financial 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 Office 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 has always enjoyed meetings in the Cabinet Office, 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 scrutiny of these meetings. “
The highlight of Greensill’s rise in British society came in 2017 when he was awarded a CBE “for service to the economy”, smiling proudly as Prince Charles leaned down to drape 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,” Greensill told reporters at the time.
A variety of government work
Greensill has also been involved in major 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 boasted in 2019 on his website that his work with Taulia and the government had won many industry awards, including one for a program where pharmacies could access prepayment in exchange for a discount on the value of bills.
Although the Cabinet Office declined to disclose any details of the meetings between Heywood and Greensill, two meetings were scheduled to discuss the “pharmacy prepayment program,” according to its transparency register.
Greensill was in favor of such prepayment solutions. to extend in other areas of the public sector. At the start of the Covid-19 pandemic, Greensill announced that he would work with some of the largest NHS trusts in the country to provide health workers with ‘instant access’ to their pay.
Under the 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 managed by Earnd, an Australian fintech company acquired in March 2020.
Greensill also saw an opportunity in the government Covid crisis loans, which were introduced last spring. Under the program, borrowers are fully responsible for their debt, but the government provides approved lenders with an 80 percent 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 pressured the UK Treasury to quadruple the amount of funding it could offer borrowers from £ 50million to £ 200million. Greensill Capital was involved 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 £ 50million.
Greensill then helped supply businesses linked to British steel magnate Sanjeev Gupta with tens of millions of loans guaranteed by the UK government.
Greensill Capital and Greensill declined to comment.
A boon that has faded away
Cameron has not commented on Greensill in recent days, either directly or through his spokesperson.
But there is schadenfreude in some former colleagues of the ex-PM. “It seems like everything he touches turns to dust,” said an old friend. “Unlike Georges [Osborne, the former chancellor], which seems to be killing the private sector.
After Cameron left Downing Street in 2016, the day after the rest of the world lost the Brexit vote, he looked for a post-political career in the portfolio – writing his memoirs in a ‘shepherd’s hut’ while playing charitable roles and undertaking only a few business ventures.
Besides Greensill, he agreed to chair a project of “”UK-China Investment Fund», But who struggled to take off. Meanwhile, his concerts dried up last year due to the pandemic, he complained privately.
When he took up his part-time post in the summer of 2018, Cameron’s spokesman said the former Tory leader had “great admiration for Lex Greensill” and considered Greensill “one of the many great British fintech success stories “.
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 figures from the industry familiar with the matter, a potential windfall with Greensill seeking 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 major backers, 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.