finance

MPs hear Whitehall ethics chief had concerns over Lex Greensill role


Whitehall’s former ethics chief raised concerns about how the late cabinet secretary Lord Jeremy Heywood secured a government advisory job for his friend Lex Greensill, according to testimony to a parliamentary select committee on Tuesday.

Greensill has been in the public spotlight since the collapse in March of his finance company Greensill Capital, which employed former prime minister David Cameron as an adviser. The company had a “symbiotic relationship” — in Cameron’s words — with GFG Alliance, a metals group now being investigated by the Serious Fraud Office.

Questions have been asked about why Greensill was given an unpaid advisory role within Whitehall by the Cameron government in 2012, where he pushed “supply-chain finance”, a form of factoring.

Before setting up Greensill Capital, the Australian financier had worked closely alongside Heywood at Morgan Stanley, the US investment bank.

Heywood arranged for Greensill to have his own desk, security pass and four civil servants within the Cabinet Office.

But Sue Gray, then Whitehall’s ethics adviser, was “uncomfortable” about the informal advisory role, Bill Crothers, a former senior civil servant who later joined Greensill Capital, told the House of Commons Public Administration and Constitutional Affairs select committee.

Gray argued that Greensill should be given a more formal position as “crown representative”, which occurred in 2014. “She had raised concerns with Jeremy Heywood about his [Greensill’s] position. She was uncomfortable with his position,” Crothers said. “She had been told by Jeremy he was insistent that Lex should continue.”

Lord Francis Maude, former Cabinet Office secretary, told the committee that Heywood had invited him to meet Greensill, saying he was “a very clever guy who is going to help you to save lots of money”.

Maude said he was unimpressed by the idea that government departments could borrow more cheaply through a third party.

“I didn’t see how Jeremy [Heywood]’s contention that this would save us a lot of money would stack up,” he told the MPs. “Rule 101 of finance is that no one can provide finance more cheaply than a triple A-rated government.”

But Maude said he initially agreed to a temporary three-month arrangement for Greensill to be an adviser inside the Cabinet Office, at the behest of Heywood. “I didn’t want to have a fight with him [Heywood] unnecessarily.”

Maude added that it was “surprising” that Greensill was brought into the government given “how hard it usually is to bring in people with genuine expertise”. In addition, he sent a “stroppy email” to Heywood protesting at Greensill’s counter-productive ideas.

Sir John Manzoni, former Cabinet Office permanent secretary, told the committee that Greensill had been given the role by Heywood and “he did not go through an open recruitment process”.

Greensill Capital subsequently went on to win a contract to provide financing for pharmacies in 2018 through a competitive tender.

Manzoni approved an arrangement whereby Crothers, former head of procurement, in 2015 took a part-time job at Greensill while still working for the civil service.

Manzoni said this arrangement was approved by Gray, then head of propriety and ethics at the Cabinet Office, whom he said was known as “the Bible of propriety”.

He told the MPs that at the time Greensill Capital was a small start-up business that had no UK public sector practice at the time and was mostly working overseas: “There didn’t seem to be any conflict.”

Manzoni said people needed a more balanced perspective: “I don’t dispute it’s murky, it’s complicated, it’s difficult . . . but I don’t accept it’s quite as outrageous as it’s easy to conclude and take the moral high ground.”

But he conceded that the government probably should have imposed tighter restrictions on Crothers as he left the civil service.

Manzoni himself controversially held a non-executive directorship at SABMiller, the brewing giant, while also heading the government’s Major Projects Authority in 2014.

Crothers said he was first introduced to Greensill by Heywood. When he decided to leave the civil service and join Greensill Capital, that was partly because Heywood had recommended the Australian financier as a “man of the highest integrity”, Crothers told the committee. That was a “clear influence on me deciding to join his company and become a director”.

The former Accenture executive, whose shares in Greensill were at one point worth £5.7m, denied he had been recruited by Greensill to try to sell its services to the public sector.

His simultaneous work for the civil service and Greensill — which is the subject of a current internal investigation — has been dubbed “double-hatting”. But he said the role was cleared by Gray. “Conflicts of interest were never discussed with me as a concern,” he said.



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