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David Cameron lobbied Bank of England on behalf of bust Greensill

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Saleha Riaz
·3-min read
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During his time as prime minister, David Cameron appointed Lex Greensill as an unpaid adviser. Photo: Reuters
During his time as prime minister, David Cameron appointed Lex Greensill as an unpaid adviser. Photo: Reuters

The Bank of England (BoE) has admitted that former UK prime minister David Cameron lobbied it on behalf of bankrupt supply chain finance firm Greensill Capital.

The central bank said on Thursday that Greensill had contacted the Bank and the Treasury on a number of occasions in the spring of 2020 to discuss potential access to the government-backed COVID Corporate Financing Facility. 

The Bank declined to give Greensill access, saying it was not eligible for the scheme. Cameron then repeatedly contacted the Bank asking for clarity on why the Greensill proposals did not qualify for the scheme.

“Cameron, in his capacity as adviser to Greensill, contacted the Bank on 5 and 7 March 2020 to discuss financing conditions at the onset of the pandemic,” the Bank of England said.

Cameron also offered to arrange a meeting with Greensill to discuss "emerging risks to supply chain financing for SMEs" and other issues in the space.

READ MORE: Bank of England blames decline of cash as it shuts Leeds office

He contacted the BoE again on 22 April about Greensill’s application and asked the Bank to give Greensill's founder — Lex Greensill — another hearing.

This conversation took place two days later but the Bank said Greensill’s revised proposal were still ineligible under the terms of scheme, which were a matter for HM Treasury.

The BoE made the conversations public in response to a Freedom of Information request.

Greensill, which lent money to companies to pay their suppliers faster, went bust last month after losing insurance coverage for its debt repackaging business. 

While supply chain finance is relatively low risk, it emerged that Greensill was involved in far more high risk financing activities that many investors were unaware of. At the time of its collapse, Greensill said its largest client, GFG Alliance, had started to default on its debts. 

READ MORE: Credit Suisse raises $2bn after 'unacceptable' Archegos loss

The collapse of Greensill, which was once worth billions, has created a major financial and political scandal. Credit Suisse (CSGN.SW), which helped to finance Greensill, has warned it faces likely losses from the collapse. Meanwhile, Cameron's role in promoting Greensill and lobbying ministers has been heavily criticised. 

Cameron had a commercial interest in the firm and potentially stood to make millions if the business went public.

During his time as prime minister, he appointed Lex Greensill as an unpaid adviser and gave him access to the heart of government. Greensill developed a scheme that would help small firms get paid quicker by government departments, a scheme which his company later benefited from.

After his term as prime minister finished, Cameron was employed by Greensill. He lobbied on behalf of the company to try and get more access to government-backed loan schemes. Cameron contacted chancellor Rishi Sunak, Treasury ministers Jesse Norman and John Glen, and health secretary Matt Hancock on behalf of Greensill.

READ MORE: COVID-19 creates thousands of 'zombie businesses'

Parliament's Treasury Select Committee this week officially launched an inquiry into the matter. The Committee has asked Cameron, Sunak, Greensill, and representatives from the Bank of England and the FCA to give evidence.

“There are questions to be answered in relation to Greensill Capital regarding the operation of the UK’s financial system and its regulation," Treasury Committee chair Mel Stride MP said this week. "Also, whether the Treasury responded appropriately to lobbying from Greensill during the pandemic."

The BoE said it would also publish a response to the Treasury Committee’s letter in due course. The committee will hold its first evidence session next week.

WATCH: Minister defends lobbying rules amid Cameron's Greensill scandal