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Greensill Capital

Volume 811: debated on Wednesday 14 April 2021

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Tuesday 13 April.

“Greensill Capital (UK) Ltd was approved by the British Business Bank for the Coronavirus Business Interruption Loan Scheme and the Coronavirus Large Business Interruption Loan Scheme last year in accordance with the bank’s published guidance on accreditation. All decisions taken by the bank were made independently and in accordance with the bank’s usual procedure.

The criteria by which the decisions were made were based on those used in the existing enterprise finance guarantee scheme, dating back from 2009, and were set out in the CLBILS request for proposals, which was a publicly available document. These criteria included minimum requirements such as the ability to demonstrate a track record of lending to larger enterprises, provision of evidence-based forecasts, the ability to demonstrate sufficient capital available to meet the lending forecasts, a viable business model, robust operations and systems, that the proposed lending will not have unreasonable lender-levied fees and interest, and that the lender has all the necessary regulations, licences, authorisations and permissions to operate the scheme. All accredited lenders are subject to regular audit by the bank to ensure their compliance with scheme rules.

Following analysis of loan data as part of its standard due diligence, the bank opened an investigation into Greensill Capital’s compliance with the terms of the scheme in October 2020 and informed the Government of this on 9 October. That investigation is continuing and the Government’s obligations as guarantor under the CLBILS guarantee are suspended on a precautionary basis. It would not be appropriate to comment further on the investigation at this time.”

My Lords, the government response fails to grasp the seriousness of this issue. Not only did the former Prime Minister lobby his mates through the backdoor for Greensill Capital but it now emerges that the Government’s chief procurement officer, Mr Crothers, a full-time civil servant, was also an adviser to the Greensill Capital board, apparently en route to becoming a director. I have here his letter to the noble Lord, Lord Pickles, in which he says he was given approval to transition back to the private sector, that it was not contentious and, he says, “not uncommon”. At best this is sloppy governance; at worst it is dodgy in the extreme. I have two questions: who gave that approval and how many other cases are there across Whitehall? The Minister should have that information. If he does not, I will settle for him writing to me. The Minister is known to be an honourable man. Is he really comfortable defending this?

I thank the noble Baroness for her questions. She will be aware that the Prime Minister has asked Nigel Boardman to conduct a review that will look into all the decisions that were taken around these developments and the questions of supply chain finance, which was the original point of the question that was posed. I say to the noble Baroness that I think it is a good thing that there is some cross-fertilisation between civil servants and the private sector. It is wrong for people to have experience purely in the public sector. These are long-standing arrangements. It has happened under Governments of all political persuasions.

My Lords, I hope very much that the Minister will rethink his response to the noble Baroness, Lady Smith. But my question is focused on the UQ itself. There are many press reports that the British Business Bank is now taking a look at the loans that Greensill made under the CBILS programme, but what investigation is going on to understand how on earth a company with as many red flags as Greensill was accredited to the CBILS programme in the first place? We all know that the British Business Bank told us, when we questioned why there were such long delays in many of the challenger and alternate lenders getting approval to make loans under CBILS, that it was a very thorough accreditation process, so we need some proper answers to that. Can he also tell us whether Greensill was put at the front of the queue for getting accreditation, along with any other companies that came with recommendations from Government or Conservative Party members, in the same way as the VIP system for procurement of PPE worked earlier in the year, which the Government have acknowledged?

The noble Baroness makes a number of allegations that are not supported by the facts. Greensill’s applications for accreditation to both CBILS and CLBILS were assessed independently by the British Business Bank on the basis of the separate criteria for those schemes, which were designed to be accessible to a range of lenders in accordance with the goal of supporting lending to businesses impacted by Covid-19. A number of similar companies went through the same process and were also accredited to the schemes.

My Lords, I agree with the noble Baroness, Lady Kramer, about the surprising nature of the Minister’s response to the noble Baroness, Lady Smith. Is the Greensill scandal not a sign of a systematic problem going back decades through successive Governments, arising from an ideological desire to bring for-profit business ideologies into what should be decision-making for the public good? Is it not now clear that business and the Civil Service should be two separate schemes of employment, without a revolving door between them? Given the current level of embarrassment, will the Government consider legislation so that Ministers, particularly Secretaries of State and Prime Ministers, are limited by statute not to take any paying role that enables them to use for personal enrichment the knowledge and contacts acquired during what should be a period of public service?

I just do not agree with the fundamental point the noble Baroness makes. Of course it is important that all decisions taken by Ministers and civil servants are taken independently, but I return to my original point that it is a good thing that people have experience of the private sector—and that people in the private sector have experience in the public sector. There should not just be two distinct career paths which never meet. As long as the appropriate propriety and transparency are followed, it is a good thing.

My Lords, early last year three of Greensill’s major clients—NMC Health, BrightHouse and Agritrade—collapsed. This provided a reminder of the precariousness of its business model. We know that Greensill was not subject to capital adequacy tests by the FCA or the PRA, so how did the Government perform due diligence checks before approving it as a lender? Can the Minister give a firm commitment to publish all documents relating to Greensill’s designation as a lender?

I remind the noble Lord of the answers I gave to earlier questions. These decisions were taken not by the Government but by the British Business Bank, and there were also other non-bank lenders accredited under CLBILS. These were loans which the Government put in place in emergency conditions to save viable businesses. The whole object was to try to preserve jobs and employment in the economy. I am sorry if the Opposition do not think that is a good thing, but I think it is good that jobs are being preserved.

My Lords, the Greensill affair was a scandal waiting to happen. Lobbying has tainted our politics for too long—those are not my words, but those of former Prime Minister Cameron 11 years ago. He even described how it works: the lunches, the hospitality, the quiet word in your ear, the ex-Ministers and ex-advisers for hire. It has worsened since then, as it appears that current civil servants can now be hired also. This is an opportunity to do what the former Prime Minister should have done: shine a light on the whole sorry business. Can it really be true that Bill Crothers, who worked in Whitehall for eight years and founded the Crown Commercial Service, controlling more than £15 billion of purchases, was at the same time employed by Greensill Capital? It beggars belief and needs to be rooted out. Can the Minister assure your Lordships’ House that all documents and records involved in this serious allegation of high-level cronyism will be published in due course?

The Prime Minister has announced a review into this matter. I have seen the media reports the noble Lord refers to, but the Boardman review will cover all available facts. The Government will provide all necessary documentation to that review, and all participants have said that they are willing to provide the appropriate information as well. The noble Lord should give him a chance to do his work and see what he comes up with.

My Lords, the Prime Minister has said that the Greensill inquiry has carte blanche, so could the Minister assure the House that it will be able to look into the Scottish Government’s failed deal with Gupta and Greensill for the Lochaber smelter, which has lost the taxpayer half a billion pounds? Will it also look into the private meetings over dinner which Scottish Minister Fergus Ewing had with them, of which no records were kept and which were not reported to the Civil Service? The Cameron sleaze seems to have crossed the border to the Scottish Government.

The noble Lord is nothing if not firm in the points he makes. I can speak only for the British Government on this, as I suspect he knows very well. I cannot comment on or speak for the Scottish Government on their dealings. Our review will examine matters for which the UK Government are responsible. Perhaps he could take up his concerns about what happens in Scotland with the First Minister.