A powerful Commons committee will investigate the collapse of Greensill Capital and the way Rishi Sunak’s Treasury responded to lobbying for the firm by David Cameron.
The announcement of an investigation by the cross-party Treasury Committee, which will officially launch next week, came after Labour leader Sir Keir Starmer hit out at “Tory sleaze” over the controversy.
Another probe could be launched by the Public Administration and Constitutional Affairs Committee after its chairman, Tory MP William Wragg, described Mr Cameron’s lobbying for the collapsed lender as “tasteless, slapdash and unbecoming”.
Meanwhile the Civil Service was also caught up in the row after it emerged former head of government procurement Bill Crothers had worked for Greensill while still employed in Whitehall.
Boris Johnson admitted it is not clear whether the “boundaries” between Whitehall and business have been “properly understood”.
The Prime Minister said an inquiry he has set up, led by lawyer Nigel Boardman, would examine the situation.
Cabinet Secretary Simon Case has written to Whitehall department chiefs highlighting the need for “transparency and full and proper management of any outside interests”.
He calling for them to declare by the end of the week any examples of “senior civil servants holding remunerated positions or other interests outside government which might conflict with their obligations” under the Civil Servant Code.
The affair has raised questions about a “revolving door” between Whitehall and the private sector.
Senior civil servant Mr Crothers began working for Greensill as a part-time adviser to the board in September 2015 and did not leave his role as Government chief commercial officer until November that year.
At Prime Minister’s Questions, Mr Johnson said he shared the “widespread concern about some of the stuff that we’re reading at the moment”.
“I do think it is a good idea in principle that top civil servants should be able to engage with business and should have experience of the private sector,” Mr Johnson said.
“When I look at the accounts I’m reading to date, it’s not clear that those boundaries had been properly understood and I’ve asked for a proper independent review of the arrangements that we have to be conducted by Nigel Boardman, and he will be reporting in June.”
Labour leader Sir Keir Starmer repeatedly questioned Mr Johnson about the row, saying an “overhaul of the whole broken system” was needed.
“The Greensill scandal is just the tip of the iceberg,” he said.
“Dodgy contracts, privileged access, jobs for their mates, this is the return of Tory sleaze.”
He said financier Lex Greensill was brought into the government as an adviser by Mr Cameron, before hiring the former prime minister to act as a lobbyist contacting Cabinet ministers including the Chancellor and Health Secretary Matt Hancock.
There was a “revolving door, indeed an open door, between this Conservative government and paid lobbying”, Sir Keir said.
In a reference to hit police corruption TV show Line Of Duty, he added: “The more I listen to the Prime Minister, the more I think Ted Hastings and AC-12 is needed to get to the bottom of this one.”
Mr Johnson insisted “we’re getting on with rooting out bent coppers”.
The Prime Minister insisted the Tories had been “consistently tough on lobbying”.
Mr Cameron has admitted that “communications with government need to be done through only the most formal of channels” after it emerged he had sent text messages to the Chancellor and also contacted other Treasury ministers as he lobbied for Greensill to be included in the Covid Corporate Financing Facility bailout scheme.
A spokesman for former the prime minister said he would respond “positively” to any request to give evidence to any of the inquiries into what happened once the terms of reference were established.
Mr Wragg said Mr Cameron’s activities were “no doubt a tasteless, slapdash and unbecoming episode for any former prime minister”.
He said his committee “is and will be giving these matters proper consideration” and it is something “I am more than happy to take up as the AC-12 of Whitehall”.
The Treasury Committee, led by Tory Mel Stride, will set out the terms of reference for its inquiry next week but it is expected to look at the regulatory lessons from the failure of Greensill Capital, which went into administration in March, and the appropriateness of the Treasury’s response to lobbying.
Labour attempted to force the creation of a new Commons committee to look into the lobbying and the Greensill affair, but Tory MPs opposed the move and it was comfortably defeated by 357 votes to 262, majority 95.
The Opposition also criticised the appointment of Mr Boardman, whose father was a Tory minister, to lead the inquiry established by Mr Johnson.
He is pausing his role as a non-executive director of the Department for Business, Energy and Industrial Strategy and will be unpaid for his work on the inquiry.
But Sir Keir said law firm Slaughter and May, where Mr Boardman is a senior consultant, had “lobbied to loosen lobbying laws”.
Shadow cabinet office minister Rachel Reeves said “it’s a fact that Nigel Boardman is a very good friend of the Conservative Government” and “what is being proposed by the Government is not remotely fit for purpose”.
Downing Street said Mr Boardman was a “distinguished legal expert” and “an independent reviewer”.