Gathered at Westminster Abbey in June 2019 to celebrate the life of Jeremy Heywood, former head of the civil service, were five prime ministers — and a banker from Bundaberg.
Lex Greensill, who had arrived in the UK from Australia in 2001 as a 24-year old sugar cane farmer’s son, was now firmly embedded in the British establishment.
He had received a CBE two years earlier and in 2018 hired a fellow member of the congregation: David Cameron, the former premier. Both men had worked with Heywood, the mandarin who served as an eminence grise in Downing Street for a decade.
Today Greensill’s eponymous finance company is on the verge of collapse. Greensill’s lawyers have warned it could trigger a wave of defaults among its clients and 50,000 job losses.
The fall of Greensill also raises awkward questions for his friends and associates in government.
Back in June 2019, questions were already being asked about the Greensill business. The day before the memorial service for Heywood, former financial services minister Lord Paul Myners called on the UK’s financial watchdog to investigate a supply-chain financing fund managed by Switzerland-based GAM Holdings, which had invested in illiquid bonds linked to Greensill, and later developed into a financial scandal.
“Greensill frequently met with civil servants and ministers who seemed at times bewitched by him,” Myners said this week. “There was a failure to ask basic questions about him and how his business had so quickly become a big player in such a significant market.”
Access to power
Senior government figures believe it was Heywood who eased Greensill’s entry into Whitehall’s corridors of power.
Although the former permanent secretary is remembered as the ultimate high-powered, low-key civil servant, he temporarily quit Whitehall for the City of London at the height of the financial boom of the early 2000s.
From 2003 to 2007 he was at Morgan Stanley as co-head of the UK investment banking division, where he worked with the younger Australian and for a time took him under his wing, according to people familiar with their relationship.
After the financial crash the two men took different paths. Heywood returned to government, becoming permanent secretary in Number 10 in 2008 and then cabinet secretary in 2011 until shortly before his death in 2018.
Following a stint at Citigroup, in 2011 Greensill set up Greensill Capital. The origins of Greensill’s vision for his business have become company lore. Growing up in Bundaberg, a town in Australia’s Queensland farming belt — so Greensill would explain — his family had experienced first hand the financial pressure caused by delays in receiving payments for goods sold or services rendered.
Greensill built his business to help companies access working capital more easily through supply-chain finance, particularly focusing on small and medium-sized companies.
He offered advice to the Cameron government on setting up a supply-chain finance initiative, which was launched in 2012. Construction group Carillion made heavy use of the programme, which MPs investigating the outsourcer’s eventual 2018 collapse said allowed it to “prop up its failing business model”.
Greensill’s ambitious plans came at a opportune time for fostering connections in government. During the coalition years of 2010-2015, ministers were keen to bring private-sector expertise into the Cabinet Office, the nerve centre of Whitehall.
It was in that context that the Cabinet Office recruited Greensill in 2014 as one of six new “crown representatives” to help tackle wasteful contracts and ensure suppliers provided best value for money.
Greensill “got huge access and preferment via Jeremy Heywood”, says one former mandarin. From there he mingled with various senior figures.
One official says that Greensill’s level of access was considered “bizarre” at the time, as he sometimes used a Cabinet Office pass to “camp” in the economic and domestic secretariat — one of the most powerful parts of the ministry. “It was really quite weird,” he said.
According to transparency registers, Greensill had a meeting with Matt Hancock, then the Cabinet Office minister, to discuss supply-chain finance policy, and two with John Manzoni, the most senior civil servant in the department. There were no fewer than five with Heywood in just two years from 2016 to 2018, with some badged “regular catch-up”.
One of those meetings with Heywood involved dinner with the board of Greensill in July 2016, according to one senior mandarin.
But Lord Nicholas True, a Cabinet Office minister, has implied that there may have been other, undocumented meetings. He recently said — in response to a peer’s question about Greensill — that “details of internal meetings are not normally disclosed”.
Around that time Greensill poached Bill Crothers, who until late 2015 served as chief commercial officer for the UK government, where he was responsible for managing £40bn of taxpayers’ money.
After starting his role as vice-chairman of Greensill, Crothers still enjoyed meetings inside the Cabinet Office, according to transparency registers, though they do not refer to his role at Greensill Capital.
Crothers’ LinkedIn profile was removed on Tuesday and he referred the FT to Greensill Capital for comment.
A government spokesperson said: “Senior officials and ministers routinely meet with a range of private sector stakeholders. There are robust transparency processes in place to ensure appropriate scrutiny of such meetings.”
The culmination of Greensill’s rise in British society came in 2017 when he was awarded a CBE “for services to the economy”, grinning proudly as Prince Charles leaned down to drape the medal around his neck. “Mum never got to go to my graduation, so in a way today was the graduation that my mother was never able to go to, at Buckingham Palace,” Greensill told journalists at the time.
A variety of government work
Greensill was also involved in high-profile government work. In 2018, for instance, Greensill Capital teamed up with fintech company Taulia to help public-sector bodies in the UK, including the NHS, speed up invoice payments.
Greensill in 2019 boasted on its website that its work with Taulia and the government had earned numerous industry awards, including one for a programme under which pharmacies could access early payment in exchange for a discount against the value of invoices.
Although the Cabinet Office has refused to disclose the full details of meetings between Heywood and Greensill, two meetings were set to discuss the “pharmacy earlier payments scheme”, according to its transparency register.
Greensill was keen for such early-payments solutions to be expanded into other areas of the public sector. At the start of the Covid-19 pandemic, Greensill announced it would work with some of the country’s biggest NHS trusts to offer health workers “instant access” to their pay.
Under the programme, NHS staff could access what the company describes as essentially free short-term loans, which are later repaid by employers on a monthly basis. Greensill waived its fee on the programme, which is managed through Earnd, an Australian fintech company it acquired in March 2020.
Greensill also saw an opportunity in the government’s Covid crisis loans, which were introduced last spring. Under the programme, borrowers are fully liable for their debt, but the government provides accredited lenders with an 80 per cent guarantee against the outstanding loan facility balance.
By June, the British Business Bank had accredited Greensill Capital as a lender to provide financing through the scheme, alongside the likes of Barclays and HSBC.
Shortly afterwards, Greensill lobbied the UK Treasury to quadruple the amount of financing it could offer to borrowers from £50m to £200m. Greensill Capital participated in six phone calls with senior Treasury civil servant Charles Roxburgh between April and June 2020. However, Roxburgh told Greensill that £200m was a “significant exposure”; the cap remained at £50m.
Greensill went on to help furnish companies linked to British steel magnate Sanjeev Gupta with tens of millions of UK government-guaranteed loans.
Greensill Capital and Greensill declined to comment.
A windfall that vanished
Cameron has not commented on Greensill in recent days, either directly or through his spokesperson.
But there is Schadenfreude among some of the ex-PM’s former colleagues. “It seems that everything he touches turns to dust,” said one old friend. “Unlike George [Osborne, the former chancellor], who seems to be making a killing in the private sector.”
After Cameron left Downing Street in 2016, the day after the Remain side lost the Brexit vote, he sought a portfolio post-politics career — writing his memoirs from a “shepherd’s hut” while doing charity roles and taking on only a couple of business ventures.
Aside from Greensill, he agreed to chair a proposed “UK-China Investment Fund”, but that has struggled to get off the ground. Meanwhile his speaking gigs dried up last year because of the pandemic, he has privately complained.
When he took up the part-time job in the summer of 2018, Cameron’s spokesman said that the former Tory leader had “great admiration for Lex Greensill” and he considered Greensill “one of Britain’s many great fintech success stories”.
That role, the former prime minister had boasted to friends, could potentially net him millions of pounds thanks to stock options that Greensill granted to him.
Those options were worth as much as 1 per cent of the company, according to industry figures with knowledge of the matter, a potential windfall with Greensill looking to raise funds last year at a $7bn valuation ahead of a planned initial public offering.
Now, however, the firm’s value is uncertain. One of its most prominent backers, SoftBank, has written off its stake. And Greensill’s contacts among the great and good of the British establishment are also reassessing the value of their relationship.