Greensill, Cameron and the return of Tory sleaze

The collapse of Greensill Capital threw a spotlight on political lobbying when it emerged that former PM David Cameron had been fighting its corner. Just how big a problem is it?

David Cameron illustration
(Image credit: David Cameron illustration)

What’s happened?

Greensill Capital was in the “supply-chain finance” business – a modern spin on a well-established payment system known as reverse factoring. It involves intermediary lenders (such as Greensill) earning a small fee on loans that allow purchasing companies to smooth out their spending and suppliers to get paid more quickly if they accept a fractionally lower payment. It’s a legitimate business, but opaque and unloved by regulators since it can be used to disguise spiralling borrowing. Greensill was one of a handful of firms that made the basic concept more risky by selling off loans in order to write more, and packaging supplier debt into bond-like investments. In Greensill’s case, the major customer of the packaged loans was Credit Suisse, which put them into funds sold to outside investors. This risky model unravelled after the insurers covering Greensill’s mounting credit risk decided to end the cover – and no other insurers could be found.

How was David Cameron involved?

During Cameron’s period as prime minister, the finance firm’s Australian founder Lex Greensill worked as an adviser to the government on using supply-chain finance to improve procurement and save public money. His champion within government was the late Jeremy Heywood, a top mandarin who served both parties with distinction and was widely respected – and who knew Greensill from a period when he left the civil service and was working at Morgan Stanley. Cameron now says he thinks he met Greensill only twice as PM. But in 2018, once Cameron had been out of office for two years – the period required under parliamentary rules – he joined Greensill as a paid adviser. It’s not known what he was paid; unconfirmed reports suggest he was given shares potentially worth tens of millions if Greensill had listed, though Cameron says “their value was nowhere near the amount speculated in the press”.

What lobbying did Cameron do?

In the activities we know about so far, the ex-PM contacted four ministers, plus other officials, to lobby for Greensill on two fronts. First, he lobbied Chancellor Rishi Sunak and two other Treasury ministers – Jesse Norman and John Glen – to try to gain access for Greensill to a Bank of England coronavirus soft loan scheme. When this proved unsuccessful (despite Sunak agreeing to “push” officials to look at the case), Cameron contacted a senior adviser at Number 10, Sheridan Westlake, to complain. Second, he directly lobbied the health secretary, Matt Hancock, over “private drinks”, on Greensill’s plans for an NHS wage-payment scheme.

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Did Cameron do anything wrong?

It was widely reported last month that Cameron had been “cleared” by the lobbying watchdog. But that’s a generous gloss on what they actually said. In fact the Registrar of Consultant Lobbyists simply concluded what is acknowledged by all parties: that Cameron was acting as a paid employee of Greensill, not as an external lobbyist – meaning his activities were beyond the watchdog’s remit. Cameron complied with rules for ex-ministers in that he waited two years before taking up his lobbying job with Greensill. But there is more to this affair than whether lobbying rules have been broken – it’s about whether those rules are fit for purpose. “It is about politicians trying to subvert normal processes by using their influence and the old pals’ act,” says The Sunday Times. “It’s about trying to bypass and intimidate a civil service whose job it is to avoid the misuse of public funds, on the principle that if a minister can be persuaded, officials will find it hard to resist. It is not the British way, and it stinks.”

Hence the inquiry?

Boris Johnson has announced a very limited six-week inquiry into what he called “this supply-chain finance stuff”. The lawyer conducting it, Nigel Boardman, is a highly respected former senior partner at Slaughter and May. But if the review is to have any real credibility, says Larry Elliott in The Guardian, then it needs to address several questions: “Is the current system of lobbying unsavoury and helping to create a culture of cronyism?” Should former politicians be banned from lobbying on the behalf of business, and does the current ministerial code need to be tightened to cover all approaches made to senior ministers, “and their response to them?”. While Johnson might enjoy – as one former minister put it – “throwing Cameron under a bus”, says Ross Clark in The Daily Telegraph, there’s a risk of opening “a Pandora’s box” that both he and Sunak might wish they had kept closed. This government is less than 18 months old, but “already mired in sleaze”, says Gaby Hinsliff in The Guardian. Once the narrative of Tory sleaze gains traction, it could be very hard to shift.

How should lobbying rules be tightened?

One of the more bizarre aspects of the affair is that Cameron hasn’t only embarrassed himself, he has embarrassed professional lobbyists. “When a former prime minister lobbying ministers who are his former colleagues is not covered by the Lobbying Act that he himself introduced in order to uphold public confidence in the democratic process, then it is surely obvious that the Act is not fit for purpose.” That is the view of Francis Ingham, director-general of the Public Relations and Communications Association (and ex-Tory councillor) writing on ConservativeHome. Ingham suggests three changes. First, broaden the Lobbying Act so that it covers anyone paid to lobby (such as Cameron), not just third parties (professional lobbyists). Second, deepen it, to cover special advisers and senior politicians, as well as direct contact with politicians. Third, create an externally enforced code of conduct, compelling lobbyists to publish details of all their clients. The lobbying industry will welcome the scrutiny: lobbying scandals have involved no lobbyists, just ex-cabinet ministers doing a bit on the side.

Simon Wilson’s first career was in book publishing, as an economics editor at Routledge, and as a publisher of non-fiction at Random House, specialising in popular business and management books. While there, he published, a bestselling classic of the early days of e-commerce, and The Money or Your Life: Reuniting Work and Joy, an inspirational book that helped inspire its publisher towards a post-corporate, portfolio life.   

Since 2001, he has been a writer for MoneyWeek, a financial copywriter, and a long-time contributing editor at The Week. Simon also works as an actor and corporate trainer; current and past clients include investment banks, the Bank of England, the UK government, several Magic Circle law firms and all of the Big Four accountancy firms. He has a degree in languages (German and Spanish) and social and political sciences from the University of Cambridge.