Government officials emailed the British Business Bank eight times for updates on Greensill Capital’s Covid loan requests, MPs have been told, raising further questions about the failed finance firm’s influence across Whitehall.
The Bank’s head of operations told the parliamentary scrutiny committee on Tuesday that the Department for Business, Energy and Industrial Strategy (BEIS) had asked for multiple “progress” updates on Greensill’s application to the coronavirus large business interruption loan scheme.
The supply chain finance firm – which counted David Cameron as an adviser and shareholder – was hoping to lend hundreds of thousands of pounds to its customers through the programme, which came with an 80% government guarantee that meant it would only have to cover 20% of the losses if borrowers failed to repay their debts.
Greensill reportedly handed £400m of those loans to one of its largest borrowers, the Liberty Steel owner GFG Alliance, in a move that may have breached scheme rules and is now being investigated by the British Business Bank (BBB).
The fact that BEIS – then run by Alok Sharma – was inquiring about Greensill’s success in the second-largest Covid loan scheme will raise further questions over Greensill’s sway in Westminster, which is already grappling with the largest lobbying scandal in a generation.
The scandal followed revelations that Cameron relentlessly lobbied Treasury and Bank of England officials to give Greensill access to the largest Covid loan scheme – known as the CCFF – sending 56 texts, WhatsApp messages, emails and phone calls in the process. It emerged on Tuesday that Cameron was interviewed by Nigel Boardman, the chair of the Cabinet Office’s inquiry into the Greensill scandal, earlier this month.
The BBB’s chief operating officer, Patrick Magee, told MPs on the BEIS committee that the Bank – which was in charge of vetting lenders before they could issue Covid loans – received “eight email inquiries about the Greensill application” from “officials within the BEIS deal team”.
The Guardian understands that the emails were sent over a four-month period, after Greensill’s application to the scheme on 23 April 2020. While BEIS initially asked for progress updates on Greensill’s accreditation, later emails asked whether Greensill would be allowed to offer loans worth more than £50m, which required special permission and was ultimately denied.
BEIS is also understood to have been concerned about getting money to companies including Liberty Steel UK, which employs about 3,000 people in the UK and is now facing an uncertain future after Greensill’s collapse in March.
The BBB ended up approving Greensill for the scheme in June 2020. However, Magee insisted that they “were not influenced” by the business department’s constant queries. “We reached our own balanced commercial decision [in light of] the eligibility criteria of the scheme,” he said.
The BBB ultimately suspended Greensill’s government guarantees in October 2020, just four months after its application was approved. It launched an investigation into how it had been distributing loans to one of its largest customers, GFG Alliance, the loose umbrella of companies owned by the metals magnate and Liberty Steel owner Sanjeev Gupta. That investigation is ongoing.
By March 2021 Greensill had collapsed, after insurers refused to renew contracts that underpinned billions of pounds worth of customer loans and helped keep its complex financial operation afloat.
A National Audit Office report into Greensill’s accreditation and involvement in the Covid-19 loan scheme is expected in July, Magee said.
A BEIS spokesperson said: “BEIS officials engage regularly with British Business Bank as the Department responsible for business finance. All decisions taken by the British Business Bank are made independently of ministers in accordance with the Bank’s usual procedures.”
