The first phase report of the government’s independent review into the Greensill Capital lobbying scandal has been dismissed as “a whitewash” by Labour after it found that existing checks and balances “worked well”.
Nigel Boardman’s fact-finding report into financier Lex Greensill’s introduction to government and his creation of a supply-chain finance firm that counted David Cameron and ex-civil service chief commercial officer Bill Crothers on its team is critical of both the former PM and late cabinet secretary Jeremy Heywood.
Boardman is also dismissive of the relevance of supply-chain finance to the public sector. He said he shared HM Treasury’s “institutionally sceptical” stance on the issue and described Greensill’s arguments to the contrary as “not valid”.
Nevertheless, Boardman – a non-executive director at the Department of Business, Energy and Industrial Strategy – said it was “clear from the evidence” he had reviewed that that “Greensill had a privileged – and sometimes extraordinarily privileged – relationship with government”.
Boardman has stepped away from his BEIS role for the duration of the review, the second part of which will include recommendations for reform.
His report says Greensill was brought into government in 2011 by Heywood, who was a friend and former colleague at investment bank Morgan Stanley, as an “unpaid” adviser on supply-chain finance. Boardman said he was advised that Greensill’s subsequent formal appointment was effectively a “direct ministerial appointment” seemingly approved by then Cabinet Office minister Francis Maude.
Greensill was later granted secuirty passes giving him access to the Cabinet Office and 10 Downing Street, business cards and a Cabinet Office laptop and Blackberry. The review said it had taken until late 2012 for Greensill to be granted the necessary security clearances, and so his IT requests were "approved on the basis of a waiver from the departmental security officer". It added: "There is no record of the reasons why the waiver was granted."
Boardman said it was “clear” that Heywood – subsequently Lord Heywood of Whitehall – respected Greensill’s capabilities. “It is also evident from Lord Heywood’s decision to place Mr Greensill in the economic and domestic secretariat in due course and to propose him for a CBE, that he had a high regard for Mr Greensill’s integrity.”
Heywood died from cancer in 2018 at the age of 56, and Boardman makes repeated reference to the review’s inability to glean the former cab sec’s personal perspective on the Greensill scandal.
But the review also states that by 2015 it “should have been apparent to Lord Heywood and others involved that Mr Greensill was building a supply chain business in the UK” and the potential for conflicts of interest should have been considered.
“It is unclear why Mr Greensill was permitted to remain an adviser to government on supply chain finance under these circumstances,” the review says.
Bill Crothers cleared over “double-hatting”
Boardman’s review does not chastise former chief commercial officer Bill Crothers for taking on a role with Greensill Captial in 2015 at a time when he was still a civil servant.
“It would be unfair to criticise Mr Crothers for this dual employment from September until November 2015 as he was exiting the civil service, given that he discussed his possible routes for his exit with Sue Gray, the director general for propriety and ethics, and understood he had received the approval to this arrangement from Lord Heywood and Sir John Manzoni,” Boardman said.
“Mr Crothers would already have had access to all the information and contacts from his position and therefore the damage to government confidential information from permitting these overlapping roles will have been negligible, especially as Mr Crothers then did not start to pitch for government business for a further two years.”
Boardman added that Manzoni, then Cabinet Office perm sec and civil service chief executive, had told the review that he had wanted Crothers to complete a particular piece of work before his departure. “This was therefore a pragmatic solution to a particular issue,” Boardman said.
However Boardman said Crothers had been wrong not to seek approval from watchdog the Advisory Committee on Business Appointments when he subsequently became a director at Greensill Capital in 2016, because this was a “new appointment” after he left the civil service.
He added that it was “regrettable” that Crothers had later claimed his appointment as a Greensill director had been “formally cleared and approved by Acoba” as part of a marketing pitch to the Ministry of Justice.
Cameron ‘understated nature’ of Greensill work to officials
Former prime minister David Cameron has come under repeated fire in recent months over the extent and persistence of his lobbying of ministers and senior officials at HM Treasury, in an ultimately unsuccessful bid to win Greensill a place on the government’s Covid Corporate Financing Facility support scheme.
In a 6 March 2020 text message to Treasury perm sec Sir Tom Scholar, Cameron wrote: “I am riding to the rescue with supply chain finance with my friend Lex Greensill.” It was one of more than 70 texts targeted at recipients including chancellor Rishi Sunak and second perm sec Charles Roxburgh.
Boardman said the former PM had not been entirely straight with HM Treasury as part of his lobbying campaign, but said officials involved had nevertheless made the right choices.
“David Cameron, when seeking to influence HM Treasury’s decisions about the CCFF, on occasion understated the nature of his relationship with Greensill Capital,” Boardman said.
“However, it is worth noting that, while there are improvements to be made, the current system and those operating within it worked well. In spite of the efforts of representatives of Greensill Capital to persuade government to buy their products, by the time Greensill Capital was declared insolvent earlier this year it was only providing finance for the pharmacy early payment scheme and offering wage-advance system Earnd in some NHS trusts.
“This low take up of supply chain finance by government attests to the fact that ministers and civil servants made the proper analysis of the products being offered to them and did not allow their judgment to be influenced under the pressure being applied by Greensill Capital.”
In evidence to MPs probing the Greensill scandal in May, Cameron repeatedly declined to divulge how much he was paid to lobby on behalf of the firm, although he admitted it was a “generous annual amount” which was “far more” than he earned in Downing Street.
Earlier this month, the Financial Times reported that Cameron’s salary at Greensill Capital was £720,000 a year in return for an expectation of 25 days’ work – equivalent to £28,800 a day. Cameron's salary as prime minister was £150,000 a year when he left office in 2016.
“Cover-up and whitewash to protect the government”
Labour Party deputy leader Angela Rayner dubbed the Boardman review a “whitewash” and said the Greensill scandal had proved “beyond doubt” that rules that were supposed to regulate lobbying were in need of “radical and immediate overhaul”.
She said a Labour government would ban former ministers from lobbying government for at least five years after they left office, and create an Integrity and Ethics Commission that would “close the revolving door and stamp out sleaze”.
Rayner said: “This report was set up as a classic Boris Johnson cover-up and whitewash to protect the government – a government non-executive director whose firm worked with the Treasury on corporate financing and had previously campaigned against lobbying reforms was appointed to lead a review, with the terms of reference specifically limited to avoid a wider investigation of lobbying, privileged access and the revolving door between Whitehall and business.
“The Acoba system and current rules regulating lobbying do more harm than good by giving a veil of legitimacy to the rampant cronyism, sleaze and dodgy lobbying that is polluting our democracy under the Tories.”
“They’ve been trying to set up my husband”
Lady Suzanne Heywood, widow of Lord Heywood, said her requests for representation for her late husband in the review had been “completely denied” by Boardman.
She told BBC Radio 4’s Today Programme that Boardman had told her he was only prepared to take evidence from eye witnesses, which she said went against precedent for formal inquiries and was “a very convenient way” to exclude perspectives from people close to the late cabinet secretary.
“Its been a travesty of a process, they’ve been trying to set up my husband as far as I can see, to divert attention from things that happened much later after he died,” she said.
Lady Heywood said Lex Greensill had been brought into government to advise ministers on a topic they had expressed interest in, but the review had “effectively gagged my husband in order to scapegoat him in this process”.