Greensill had 'elements of Ponzi scheme', ex-City minister says

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Former British prime minister David Cameron delivers the keynote address during the World Travel and Tourism Conference in Bangkok on April 26, 2017.
Cameron condemned Donald Trump's attempts to ban people from six Muslim countries from travelling to the United States, saying the policy
Former British prime minister David Cameron. Photo: Lillian Suwanrumpha/AFP via Getty Images

Former prime minister David Cameroon came under scathing attack for lobbying for Greensill Capital from MPs hearing evidence into the collapse of the financial company.

Cameron and current UK chancellor Rishi Sunak have both been dragged into probes over ethics and possible impropriety following revelations that Greensill had access to Downing Street, allowing it to bid for lucrative public sector work, including in the NHS.

On Wednesday, the first witnesses appeared in front of the Treasury Select Committee as MPs kicked off their inquiry into the lessons from the demise of the financial firm.

Former City minister Lord Paul Myners who said said Lex Greensill "offered him a directorship" accused the company of being a "Ponzi scheme."

"I concluded it would be a good idea to keep talking because I left that meeting…travelling down in the lift, thinking to myself, this has many of the elements of a Ponzi scheme," he said.

He also said Lex Greensill and other members of Greensill's board knew the state of the company, and that former prime minister David Cameron "should have known" Greensill was facing trouble.

Myners, who was a Treasury minister in Gordon Brown’s government, had consistently raised concerns about the firm before it went bust, accusing the government of failing to heed warnings about Greensill posing a "potential systemic risk."

He told the committee that "one should have been highly suspect about Greensill."

While Myners admitted that he could not know if Cameron knew the exact details as an "adviser and salesman" who was there to "oil the wheels" to get Greensill into government business, which would have been very beneficial for Greensill as options were limited.

READ MORE: The Greensill scandal: how finance firm's collapse rocked Westminster

In recent weeks, Greensill Capital has captured the headlines, exposing a lobbying scandal involving top government officials, in one of the biggest political crises at Westminister in recent years.

There was little known about the lender before it entered administration in March, but it has since prompted fresh questions about Britain's regulatory regime for commercial and private organisations.

Explaining his scepticism, Myners listed a few reasons, including: "High risk concentration both in assets and liabilities, concentration of power in the hands of a single man in the form of Lex Greensill, the fact businesses were not subject to any regulation, the fact it was growing very rapidly..."

"I don't know how many of those points the former PM identified, or the degree to which he was much bothered about what was in the product as opposed to selling the product," Myners said.

He said the Treasury spent too much time courting Greensill, despite knowing that it did not qualify for the Covid Corporate Financing Facility (CCFF) scheme. Myners added senior officials would not have spent that much time if not for "pressure" from chancellor Rishi Sunak and Cameron's "inappropriate" targeting.

He also told the committee that he was "targeted by those involved in the global financial crisis." The former minister said he received daily calls from Barclays (BARC.L) and Lloyds Bank (LLOY.L).

"Barely a day went by when I didn't get a phone call from either the chairman or chief executive of Barclays and Lloyds," Myners said.

"An important part of the process is recording what went on... because we are dealing with public money here."

Greensill, which specialised in supply-chain finance, was founded in 2011 by Lex Greensill. Photo: Oli Scarff/ AFP via Getty Images
Greensill, which specialised in supply-chain finance, was founded in 2011 by Lex Greensill. Photo: Oli Scarff/ AFP via Getty Images

The demise of the company, which was once worth around $30bn (£26bn) put 440 jobs at risk. It has also left a number of pension funds facing big losses after banks put their money into the firm.

The committee also heard testimony from Lord Nick Macpherson who is an ex-chief secretary to the Treasury.

Macpherson said while Cameron's decision to work for Greensill was questionable, there is "nothing wrong" with "people getting in touch" with the Treasury and officials engaging with Cameron "providing there is clear record" of what was said and ensuring that there is no "special treatment."

When asked whether Cameron's lobbying to enter Greensill into the CCFFscheme was behind the Treasury's "rapid responses", and if there was "special treatment" and whether it would have engaged in a similar fashion with others, he said: "In times of crisis you have to listen to people" adding "Greensill was not systemic."

He said that the Treasury is "doing its job in being transparent" before acknowledging officials spent longer time than expected in entertaining Cameron's various approaches.

"At the heart of this problem was a degree of ambiguity.... going back in time..about Greensill", which is less of a Treasury issue but one for the "civil service as a whole," he concluded.

Greensill, which specialised in supply-chain finance, was founded in 2011 by Lex Greensill.

After being hired as an unpaid adviser by Cameron, Greensill developed a scheme that would help small firms get paid quicker by government departments — a scheme that his company later benefited from.

However, this week it emerged that Greensill was given access without a contract, in an apparent major breach of protocol. He carried a business card embossed with the Downing Street insigne.

According to reports by the Financial Times, the scheme was effectively planned as a lever to secure other more lucrative work with the NHS, with people familiar with the matter saying the firm had allegedly gone through NHS trusts in attempts to parlay the scheme.

WATCH: Cameron/Greensill row: The seven inquiries looking into government lobbying

While, Cameron denied any wrongdoing, there was also a financial conflict of interest.

It was alleged Cameron, who was employed by Greensill following his term as PM, stood to gain financially as he was poised to make millions if the company floated on the stock market.

The former PM also lobbied the government on behalf of Greensill in an attempt to get access to government-backed COVID loan schemes. He contacted Sunak, Treasury ministers Jesse Norman and John Glen, and health secretary Matt Hancock, among others.

The Bank of England (BoE) said earlier this month the firm and Cameron contacted the central bank and the Treasury several times to lobby for £20bn ($28bn) in taxpayer money, which the BoE and Treasury declined.

WATCH: Government lobbying scandal explained

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