First UK Inquiry Into Greensill Scandal Calls for Extension to Lobbying Ban for Former Ministers and Civil Servants

The inquiry also recommends greater transparency and accountability from the government. Unfortunately, the trend is in the opposite direction. 

It is a formality of British politics that when a big scandal breaks, a public inquiry is formed. Sometimes a scandal is so bad that it warrants more than one. So far, the Greensill affair, the worst lobbying scandal in a generation, has racked up no fewer than eight separate inquiries.

The first to report its “interim” findings — that of the Committee on Standards in Public Life — has recommended that former ministers and civil servants who enter the private sector should be barred from lobbying for up to five years, as opposed to the current two-year limit. Chaired by Lord Jonathan Evans, a former MI5 chief, the committee said the ban should, if possible, be made legally enforceable.

“If an applicant had a particularly senior role, or where contacts made or privileged information received will remain relevant after two years, a longer ban may be necessary to ensure former officials lobbying government are not directly benefiting from their time in office when they do so,” Evans said in his report.

When Lobbying Becomes Stalking

The inquiry has revealed how the former premier David Cameron, who had joined the supply chain finance provider Greensill as an advisor in 2018, blitzed government ministers, including the Chancellor of the Exchequer Rishi Sunak, and officials at 10 Downing Street, the Treasury and Bank of England with around 80 text, WhatsApp and email messages during the first four months of the coronavirus crisis. One member of the Treasury Select Committee likened it more to “stalking than lobbying”.

Cameron was desperate to secure Greensill access to Covid support. Once he had, he tried to increase the amount the company could receive. In June, he urged both Sunak and vaccines minister Nadhim Zahawi to increase the maximum loan Greensill could make under the Treasury’s Coronavirus Large Business Interruption Loan Scheme (CLBILS) from £50 million to £200 million. The difference, Cameron said, was “rather crucial”.

By that time Greensill was on the ropes. A number of its client companies had already collapsed. Attention was shifting to the financial menage á trois Greensill had formed with its primary backer, Soft Bank, and Swiss mega-lender Credit Suisse. Greensill was also under investigation by German banking regulator BaFin and the Association of German Banks, an industry group, over its German subsidiary Greensill Bank’s huge exposure to a single client: UK-based steel magnate Sanjeev Gupta.

The company needed money fast. And thanks to Cameron’s tireless lobbying, it got it. Greensill was able to make loans totalling £418 million under the government’s coronavirus lending schemes, £335 million of which was guaranteed by the British Business Bank. Most of that money ended up going to Greensill’s biggest client, Gupta’s GFG Alliance.

Special Treatment

Greensill Capital was the only non-bank financial firm to administer the emergency coronavirus loan schemes. It was also exempt from the capital adequacy and stress tests that are normally applied to lenders. The only apparent reason for this special treatment was Cameron’s persistent lobbying, none of which was included in departmental disclosures. This patent disregard for transparency and accountability is par for the course in British government today, says the Committee on Standards in Public Life:

“It is too difficult to find out who is lobbying government, information is often released too late, descriptions of the content of government meetings are ambiguous and lack necessary detail, transparency data is scattered, disparate, and not easily cross-referenced, and information in the public interest is often excluded from data releases completely. Reforms are needed to the accessibility, quality, and timeliness of government data and to the scope of transparency rules. The rules and guidance on informal lobbying and alternative forms of communication also require improvement and greater clarity.”

Other recommendations made by the Committee include a two-year ban on ministers and senior officials taking a job in their policy area once they leave office, new guidance on the use of modern forms of communication (texts and WhatsApp messages), closing the loophole on not disclosing “informal lobbying” (such as drinks and/or dinner) and lobbying information being published more regularly and in more detail.

These, of course, are all recommendations; they are not legally binding. Their implementation depends entirely on the government of the day.

Government By WhatsApp

It’s far from clear whether today’s government, with all its skeleton-filled closets, will actually be interested in greater disclosure. If anything, the trend is in the opposite direction. The government is adopting an increasingly hostile response to requests made under the Freedom of Information Act. According to a new report in The Guardian, the disregard for transparency and accountability in government is so widespread that ministers and civil servants are now using self-deleting messages for much of their internal communication.

Ministers and civil servants are allowed to set messages to delete instantly, the government has admitted, amplifying concerns about its transparency and accountability.

The confirmation comes as concerns grow that self-destructing messages are being used to avoid scrutiny of decision-making processes, including on key issues such as the government’s coronavirus response.

A letter from the Department for Digital, Culture, Media and Sport (DCMS) sent to the Citizens, a non-profit organisation, in response to a freedom of information request and seen by the Guardian, says: “Instant messaging (through Google Workspace) may be used in preference to email for routine communications where there is no need to retain a record of the communication.

“Chat messages are retained for 90 days to provide staff with the opportunity to record any substantive conversations, after which time they are permanently deleted. Users can also switch history off, meaning messages will be deleted once a chat session has finished.”…

Transparency campaigners have expressed alarm at a culture of “government by WhatsApp”. The Citizens has threatened legal action, saying use of such functions makes it impossible to carry out required legal checks about whether a message should be archived for posterity. Information that could be useful to a public inquiry, or otherwise fall within the scope of an FOI request, may be lost as a result.

“The stakes are high,” says Martha Dark, the director of Foxglove, a non-profit organisation pursuing what it calls ‘justice in technology’. “We simply won’t be able to hold the government to account for what they do if the evidence is automatically erased within minutes. Disappearing message apps are the modern equivalent of politicians shredding the evidence. It’s the perfect tool for people who just want to get away with it.”

Greensill’s Legacy, Thus Far

The Greensill affair is important for a host of reasons. It has served as yet another reminder of the risks posed by excessive financialization. It has pushed two small banks into bankruptcy — the Greensill Bank in Germany and Milan-based Aigis Banca — and left one very big bank, Credit Suisse, in serious trouble. Greensill’s biggest customer, GFG Alliance, which owns huge chunks of Europe’s steel industry, is also on the ropes as it seeks alternative financing.

The scandal has also revealed just how bad government can be at managing public money — and how easily ministers and civil servants can be seduced by smooth-talking, well-connected financiers, especially when said financiers offer said civil servants or ministers well-paid advisory positions at their firms.

Greensill Capital’s eponymous founder, Lex Greensill, was brought into Whitehall by late mandarin Sir Jeremy Heywood, who ended up sitting on Greensill Capital’s board a few years later. Heywood described Greensill as a “very clever guy”, then employed by Citi, who could find substantial savings for the public sector. Instead, the opposite has happened. The government has racked up big losses as a result of its underwriting of Greensill’s emergency loans. It has also squandered public funds and forced government suppliers to accept lower payments due to its wholly unnecessary use of supply chain finance.

As former Cabinet Office minister Lord Maude told the inquiry, he saw “nothing that suggests that any involvement the government has with supply chain finance actually saved the government money”:

I could not see how Jeremy’s contention that this would save the government a lot of money stacked up, because it is kind of rule 101 of finance that nobody could provide finance more cheaply than a triple-A rated Government, which is what we were.”

The scandal has also revealed the vital — albeit diminished — role investigate journalism can play in shining the light on government. This is particularly important when the government in question is engaging in all manner of corrupt activity while doing everything within its significantly increased powers to conceal that activity and cover its tracks. If it wasn’t for the tireless work of journalists like the FT’s Robert Smith and The Times’ Gabriel Porgrund, it would have taken even longer for the Greensill scandal to break, allowing even more damage to accrue in the meantime.

But the UK government also appreciates this fact. The Greensill affair has caused serious embarrassment to many of its leading figures, past and present. And it is now using and seeking every opportunity to protect itself from further scrutiny, including by escalating its war on whistleblowers and investigative journalists, who are increasingly being treated as one and the same thing.

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  1. Jesper

    Greensill provided loans without getting any collateral and that is not something new or innovative. The interest-rates charged for unsecured loans are usually quite high as it is seen as high-risk. Reducing the interest-rate charged is a sure way of getting business but it is risky as evidenced by the collapse.
    So another description of what Greensill did might be that it provided unsecured loans. Doing so might make Greensill seem less innovative and the ones who lost out might look foolish but…

  2. David

    There are (at least) two separate points here.
    One is the arrival of social media technology in government in the last 15-20 years. As often, this has supplemented, rather than replaced, traditional means of communication, especially for transient and minor issues. I’d get emails or chats from people thirty seconds walk away, asking if they could come and see me, whereas in the past someone would poke their head round my door. Telephone calls also tended to be replaced by messaging, meetings could be organised on line, duty rosters put together and so forth. Roughly 99.99% of this material is of absolutely no interest to anyone, anymore than a similar percentage of telephone calls would have been. The DMCS guidance thus seems perfectly reasonable: anyone who’s worked a lot with email is well aware of what happens when your in-box is jammed with email chains of twenty people discussing the best date and time for the next meeting, and the amount of space this takes up on servers. “Can I come and see you now?” and “Could you leave it ten minutes?” and “Just to let you know I’m not in tomorrow” are not, in general, the kind of things one preserves for the historical record. In any event, to do so would be the equivalent, thirty-five years ago, of taping and transcribing every telephone call and bugging every government office and making a transcript of casual conversations: even the most paranoid government-hating campaigner would not, I suspect, have demanded that. By contrast, all important decisions in government are more or less obliged to have a proper paper-trail behind them.

    Government departments used to throw away huge amounts of data anyway, when it was all on paper. The test (which I think is still used) is whether the material is objectively important and whether it might interest historians. Many years ago I had to do this as a very junior civil servant, and the volume of paper, even from the 1950s, was enormous. Then came the photo-copier. The problem is that “transparency campaigners” may know little about government, but they have a business model to feed, and grants to retain, which requires a constant supply of scandals, which in turn requires access to as much data as possible. It’s a truism that in any sufficiently large body of data (your tax records, for example, or the collected emails of transparency campaigners) there will be information which, if used selectively, can be presented as suspicious. And the experience of Freedom of Information Acts in the UK and other countries has been that if “transparency campaigners” are convinced that there is compromising material available, no amount of negative evidence will satisfy them, and they will claim that “you’re hiding something” because their business model depends on that.

    The other is that, of course, this is a very important and worrying scandal, and it needs to be dealt with rapidly to preserve whatever remains of the traditional culture of integrity the British system had. But the ritual demands for more “transparency” and “oversight” are just that, ritual demands designed to increase the power of certain lobbies: they don’t make things better, and indeed the evidence is that they make things worse, for two reasons. First, it’s qualitatively much easier to hide things than it is to find them, so such policies are rarely effective. Secondly, telling people that they are dishonest and need to be continually scrutinised not only destroys their morale, it actually creates a climate where dishonesty is expected, and so paradoxically but not surprisingly becomes more common.

    The answer, if there is one, is analogous to the idea of Situational Crime Prevention, where you don’t wait for crimes to be committed, you try to make committing crime more difficult in the first place. In the past, the UK had a good SCP system without realising it, because most services were carried out by government itself, the scope for lobbying was much more limited, and there was a convention that retired politicians and officials shouldn’t go into significant jobs in the private sector (Thatcher, to her credit, respected this rule). The biggest thing you can do, of course would be to attempt to create the traditional model of integrity which only started to fray in the 1990s. But there’s no money in that. In then meantime, the government is in the position of leaving doors unlocked and windows open, writing down passwords and leaving them lying around, and then when there’s a robbery, employing expensive security contractors to investigate.

    1. PlutoniumKun

      I was once told by a civil servant about ‘post it note’ records. Essentially, sometimes the little ‘aside’ to a dull agenda or memo was a comment on a post it note which, it was understood, went into the bin while the other material went on file. I sometimes wonder if whatsapp messages are the more advanced version of this.

      One thing that occurred to me reading about this is that informal messaging has enabled certain types of corruption. In Ireland, it was well known that before and after formal meetings involving politicians, there were certain pubs where meetings would take place that were not recorded. If you were ‘in the loop’, you could casually turn up at one of those meetings and perhaps make a suggestion to someone. It even spawned the name of a school of economics, the ‘Doheny & Nesbitt’ school, named after a pub where public economic advisors mixed with bank staff (I don’t think there was corruption involved, it was more a case of likeminded people coming to a particular concensus off the record). In my first job in the UK, I found out that private boxes at certain Premiership clubs performed that particular role in some local governments. In my personal experience of those, civil servants avoided them, but mid level politician and senior local government staff often were more than happy to accept an invite ‘from a friend’.

      I do think that social media has an enabling role in this creep towards more overt forms of corruption, in the UK anyway. Previously you had to arrange an off-the-record meeting or some such, and it always would have a furtive element. Simply passing on messages on private phones is a good way to draw someone into crossing the line, even inadvertantly. Since so many politicians, even if well meaning, are generally not very bright, and often vain, its not exactly a difficult task for hardened operators to draw them into corruption.

  3. Alex Cox

    Interesting quote from Francis (“Lord”) Maude: “it is kind of rule 101 of finance that nobody could provide finance more cheaply than a triple-A rated Government.” Yet Tony Blair and Gordon Brown embraced public private partnerships in which the private sector borrowed the money, built the building, and then rented it back to the Government. This was an absurdly expensive way of doing anything: the justification was that it kept the expenses “off the books.” PPPs and private finance initiatives have saddled the UK taxpayer with huge ongoing bills and it’s interesting to see Maude observe that they were a lousy idea.

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