David Cameron’s intense lobbying on behalf of Greensill Capital, which collapsed in March, showed “a significant lack of judgment”, a committee of MPs has concluded in another blow to the reputation of the former UK prime minister.
The Treasury select committee found that Cameron did not break the rules on lobbying by former ministers but it said that was just a reflection of “the insufficient strength of the rules”. The report added there was a “strong case” for fortifying them.
The cross-party committee was also scathing on Cameron’s claims that he was lobbying on Greensill’s behalf to ensure small and medium-sized businesses had access to sufficient funding during the pandemic. “It seems that this was more of a sales pitch than a reality,” the report said.
Cameron, who quit after six years as prime minister in 2016 after losing the EU referendum, joined Greensill in 2018, where he earned a $1m-plus annual salary along with generous share options that are now worthless following the lender’s collapse.
The MPs questioned Cameron’s judgment for having “relied heavily on the board of Greensill as a guarantee of its propriety and financial health” rather than taking a more enquiring assessment of the business.
His efforts to secure access for Greensill to state-backed emergency coronavirus loans, first revealed by the Financial Times, have put the former Tory party leader at the centre of the biggest Westminster lobbying scandal for a generation. In a speech early in his premiership in 2011, Cameron had condemned lobbying as “the next big scandal waiting to happen”.
But in early 2020 the former premier bombarded cabinet ministers and officials via text, WhatsApp, email and phone calls in an attempt to change the rules on Covid-19 emergency financing schemes so Greensill could have access to them.
He sought access for his client to the Bank of England’s Covid-19 financing facility and wanted the threshold lifted on a loan scheme run by the British Business Bank (BBB).
Greensill went on to access guarantees from BBB for £400m worth of loans, all of which went to entities linked to Sanjeev Gupta, the metals tycoon behind GFG Group.
The Serious Fraud Office is carrying out an investigation into suspected fraud, fraudulent trading and money laundering in relation to GFG, including its financing arrangement with Greensill.
The committee said the Treasury should have encouraged Cameron “at the initial stage of his lobbying” into more formal means of communication.
It said ministers and officials at the department had handled Cameron’s lobbying with “complete and absolute integrity” but added: “The Treasury’s unwillingness to accept that it could have made any better choices at all in how it engaged in this case is a missed opportunity for reflection.”
The government said the report was clear that “the Treasury was right to consider Greensill’s proposals” and “right to ultimately reject their proposals”.
There are 13 different inquiries taking place into separate elements of the Greensill scandal, prompting the Treasury select committee to lament this “fragmented and siloed” approach. The report made several recommendations, including urging the Treasury and Financial Conduct Authority to consider reform to the “appointed representatives regime” to limit its scope.
Greensill, which was not regulated itself, employed that regime using an authorised agent to undertake regulated activities. Sam Woods, deputy governor of the Bank of England, told the committee that the regime was designed in the 1980s for self-employed salespeople rather than for the regulatory hosting of companies such as Greensill — which he described as a “strange state of affairs”.
The MPs also called for revision of the definition of “securitisation” in the Securitisation Regulation, which did not cover the finance company’s business. Woods said it was “a bit bizarre” that the Greensill securities were not covered by the system because there was no “tranching of risk”.
The report also called for reform of the “change in control” process that regulates who can acquire the ownership of an existing bank.
It said the Prudential Regulation Authority should be given powers to prevent existing banks from falling into the hands of owners who would not be granted a banking licence in their own right.
Gupta acquired a bank called Wyelands in 2016 through a change of control, although it was ordered by the Bank of England to return its cash to savers in March this year.
Cameron said he was “pleased” the report confirmed he did not break any rules. “However, I have been clear all along that there are lessons to be learnt,” he added, and said he accepted “communications of this nature should be done in future through only the most formal of channels”.
He said he “had no idea until the end of last year that Greensill Capital was in danger of failure”.
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