The boredom, naivety and chance connections that led David Cameron into scandal
David Cameron faces tough questions about his role in the Australian-owned Greensill company that has collapsed into administration.
In the middle of 2018 – almost exactly two years after leaving office – David Cameron signed on to the books of a then obscure Australian-owned financial company as an obliquely titled “senior adviser”.
The timing was not coincidental. For the previous two years the former British prime minister had been bound by strict government rules that stipulated what he could and could not do for any new employer or business venture.
By July 2018 those rules no longer applied. Cameron did not have to declare the job at Greensill Capital – and with a fair wind it had the potential to make him very rich.
Less than three years on, Cameron is caught in a web of allegations about his role in the company that collapsed into administration in March.
So what was Greensill and how did he ever get involved in the first place?
Those who know the former prime minister say his decision to take on the role was driven in part by money, partly by boredom and partly by an enthusiasm for a venture that would allow him to take on a meaningful role unconstrained by government probity rules.
His initial post-Downing Street venture to set up a UK-China investment fund had gone nowhere; his wife, Samantha, was engrossed in her fashion business; and other than the speaking circuit he did not have much to do.
“If you don’t get a major job or start a thing like [Tony] Blair did – and Dave is basically too lazy to start something like Blair – what do you do?” one person who knows him said.
“He was earning millions from speeches but he wanted to do something – but not very much – to stop being bored.”
Others in the political world claim that Cameron simply wanted to make serious money and be on the same terms as the multimillionaires with whom he associated.
One cabinet minister said: “Wealth is relative. When you’re someone like David Cameron and you mix with very wealthy people, you suddenly realise that you’re just not on the same level. There are two ways of making money. You can make big money which carries a significant risk to reputation, which is what David has done. Or you can take tens of thousands from a bank.”
Friends of Cameron reject this. “I think that’s unkind,” one said. “Dave does not need the money. He was earning millions in speaking engagements.”
Regardless of motivation, how he got involved in Greensill is curious. The company had been founded only seven years earlier by a then 34-year-old Australian banker called Lex Greensill.
His was a compelling story. Brought up on a sugar cane farm, Greensill claimed that the inspiration for his business came from the worries his parents faced as they waited to be paid for their crops.
While working at the investment bank Morgan Stanley, Greensill developed a plan for a finance firm that would support companies to manage their cash flow through so-called invoice finance loans – ensuring that small suppliers were paid on time while helping the bigger company’s cash flow and balance sheet.
Yet his path would almost certainly never have crossed that of the former prime minister if not for a coincidence.
Also working at Morgan Stanley during that time was the future cabinet secretary Jeremy Heywood, who had left government to work in the private sector. He was impressed by Greensill and when he was invited back into government did not forget him.
When Cameron was prime minister and Heywood was cabinet secretary, Greensill held numerous meetings with senior officials and some ministers at the behest of Heywood himself.
Others remember being suspicious of Greensill: “It just didn’t stack up. Jeremy was very keen for me to meet him and for the government to get involved but really it was hard to see what the advantages were for us.”
One friend of Cameron said he would have been aware of Greensill at this time and Heywood’s faith in him: “He would have thought that if Jeremy thought he was a good thing then he must be OK.”
However, another said Cameron had been warned to be careful about Greensill.
Once signed up and out of the public eye, Cameron began opening doors for Greensill, helping the company’s ambitions to expand into new markets. He would be the front man hosting events and giving the company extra legitimacy with investors.
Outside the company alarm bells were ringing, however. One of Greensill’s biggest clients was Sanjeev Gupta, an equally charismatic businessman who was on a debt-fuelled buying spree of steel assets around the world, including in Britain.
He was one of the main clients of Greensill’s supply chain finance loans – that were then packaged and sold on as bonds through blue chip banks such as Credit Suisse.
Critics claim that such loans were not primarily designed to help to pay creditors more quickly; they aimed to keep debt off the company’s balance sheet.
This could make the company appear to be in a better financial position than it was and so carry on expanding. There are also questions as to what extent the loans were being used for genuine supply chain finance.
Greensill’s fate became intricately bound up with Gupta’s. If one went down so, most likely, would the other.
“Greensill, if anything, was naive,” one of his supporters said. “He just flew too close to Gupta’s sun.”
Both companies might still be solvent had it not been for the coronavirus crisis that put unprecedented pressure on an already stretched business.
The steel sector in particular was hit by falling demand. But there was potentially help at hand from the government and the Bank of England’s corporate finance facility – designed to protect large companies that were making a material contribution to the UK economy from going bust.
It was to gain access to this scheme that Greensill put his greatest asset – the former prime minister – to use.
We now know that Cameron texted Rishi Sunak, the Chancellor of the Exchequer (treasurer), on a number of occasions to ask for Greensill to have access to the scheme.
He also lobbied the Bank of England and senior Treasury officials, including Sir Tom Scholar, who worked directly for him in Downing Street when he was prime minister.
For those on the receiving end the approaches were unseemly and awkward. Yet they may have been at least partially successful.
Although Greensill was turned down for the Bank of England scheme it was allowed to participate in CLBILS (the coronavirus large business interruption loan scheme) – through which Greensill channelled hundreds of millions of government-guaranteed loans to Gupta-related enterprises.
Those loans – and who has liability for them – will now have to be unpicked by Greensill’s administrator.
Cameron, meanwhile, faces many questions about what he knew about Greensill’s finances both before and after he lobbied the government for support.
Yet one friend of the former prime minister insisted that however unsavoury it looked, he would have believed he was acting in the best interests of the business.
“He’s just not that sort of guy. He runs for cover the moment there’s trouble on the horizon. He’s not a great one for getting his hands dirty,” they said.
But the friend accepted that Cameron was guilty of naivety, saying: “It’s a lack of judgment on Dave’s part.”
Others said the whole affair would, at the very least, lead to a good deal more boredom.
“He’s a bit toxic now,” one industry insider said. “I don’t think anyone is going to be queueing up to have him on their books.”
Cameron was approached for comment.
With James Hurley
The Times