As non-apologies masquerading as apologies go, Cameron’s must win some sort of Missing The Point Award. Apparently, his correspondence with the Chancellor should have been more formal, as if what’s concerning people is him texting rather than taking out his pen and Basildon Bond paper when asking Ministers to look kindly on his employer, Greensill. Still, with the newly announced inquiry into his actions – though it must surely also be into the actions of current Cabinet Ministers when they received the former PM’s entreaties – at least if its intention is to get to the truth – maybe we’ll find out what went on. Or maybe not. It is after all led by an eminent former City solicitor*, with tremendous experience in corporate law, M&A, IPO’s etc rather than investigations. Still, let’s put the world weary cynicism to one side for the moment. There are three aspects to this affair which are of interest, the most worrying of which is receiving the least scrutiny.
The first is how young Mr Greensill got so close to the heart of Whitehall and, in particular, the late Cabinet Secretary, Sir Jeremy Heywood and Cameron. So close in fact that he was able to push through a scheme which, without going to open tender, with no contract and against the very serious reservations of civil servants who wondered why it was needed, benefited the bank he was employed by and subsequently his own operation. Quite what happened and why is unclear but some of the elements found in similar arrangements (which turn out to be either fraudulent or so much hot air) seem to have been present here: a charming, persuasive salesman, an important backer helping to override objections and questions, no real scrutiny, a product sold rather than a genuine need identified, dizzyingly fast expansion, a ludicrous valuation ($7 billion at one point), overlooked red flags (the first collapse of a fund overinvested in Greensill funds was in 2018). There are some serious questions to be answered by the Civil Service for, even more than Cameron, the important backer here seems to have been Sir Jeremy Heywood. If someone that senior becomes entranced by an outsider and his schemes, what checks and balances exist to ensure that he has not had his head turned by the latest “Too Good To Be True” product or individual? (Not all such appointments turn out to be a Kate Bingham, after all) Did they work here and, if not, why not? We cannot let our governance depend simply on the belief that “Top Chaps are Always Good Chaps”.
Second: what did current senior and junior Ministers do in response to Cameron’s requests? Was this right or wrong or, more importantly, wise? Far too much focus has been on what Cameron asked for. Far too little on the response of Ministers who seem to have been willing to give him a hearing that others would likely not have received. Much like the VIP channel for MPs and their friends at the start of the pandemic, there is a whiff of “One rule for us” about it all, of a cosy cartel, those in the know, sharing out the proceeds of power and the fortunes to be made from it, even after they’ve been booed off the stage by the voters. Let’s not be too po-faced: former PMs and Ministers often do have valuable knowledge and experience to share and their contacts are their route to fortune (see, G Osborne, for instance). Plenty of lovable MPs have shilled for some dodgy outfits (K Clarke). Had Cameron been texting on behalf of The Alzheimer’s Society, would he have been criticised? Perhaps he was simply too obvious and needy, too naive about what and who he was selling. But why did Hancock meet with him? Why Dido Harding and the Head of the NHS, Sir Simon Stevens? Why and how did Greensill, the only non-bank financial firm, get approved (apparently without being stress-tested, as others were) to administer the Covid emergency loan scheme, following which £400 million worth of loans (80% guaranteed by taxpayers) – a sum way over the normal per bank limit – were made to Liberty Steel, a company financed by Greensill. How did this happen? Who approved this and why?
It is now more than a decade since the last lot of financial scandals. We are due another set. Some of the ones now coming to light – Greensill, Archegos, Wirecard – are very familiar in their outlines, plots and characters. One of the characteristics is governments and regulators selling their credibility cheaply – BaFin over Wirecard, the UK government over Greensill, BaFin again over Greensill’s German bank. Another is the blind belief in technology as an answer to financial problems. Fintech companies sound trendy but their tech is usually rubbish or bought in and their risk management – the only thing that matters in finance – even worse. Yet another is when products are offered which seem too good to be true. Greensill seems to combine the worst elements of all three.
Was no-one even the teensiest bit sceptical about why Greensill wanted to offer his payment service to the NHS for free? Why would a financial institution do that? Two reasons: it’s in financial difficulties and needs the credibility of a client like the government. Or it is pulling the wool over someone’s eyes and creating a product no-one either needs or understands in order to package it up and sell it to others. This latter is pretty much in summary why banks got in trouble last time. And why governments are left to pick up the pieces, as the British government may well have to do here with both Greensill and Liberty Steel, another Greensill-funded “saviour” of the steel industry making barely veiled threats about why it cannot be allowed to fail. We’ve heard this song before too.
The wider issue is this. It is interesting – and may even be useful – to look at what happened in the past. Someone will utter the ritual incantation that lessons have and will be learnt. Don’t believe a word of this. What no-one will look at is what is happening now. If Greensill’s supply chain finance schemes ( all that “free money“) were of questionable benefit in the past, why is the government currently still planning to use similar schemes? Was Greensill really the problem? Or is there a fundamental issue with these schemes when used by government? Why are they needed? What problem are they seeking to solve and why is government not coming up with its own solution? If there was no rationale for them then, what’s changed now? What is the benefit to taxpayers? And who else will benefit and by how much? Is this value for money?
Who is asking these questions? Not the opposition. Not the Treasury Select Committee. And not the Boardman Inquiry either.
So its only point will be to get the story off the front pages, blame it all on former politicians and long departed civil servants and make the government look as if it is doing something. Job done then. Meanwhile the same stupid mistakes likely get repeated with the same inevitable consequences. It is one return to normality, at least.
*Cyclefree worked for 7 years at the firm where Mr Boardman was then a partner.