13:06 GMT18 April 2021
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    The former prime minister, David Cameron, is reportedly under investigation for allegedly lobbying officials of the ruling Conservative government on behalf of a company financing Britain's third-largest steelmaker Liberty Steel. But what was Greensill Capital and why is Mr Cameron’s role so controversial?

    Greensill Capital is the company at the heart of allegations that former British Prime Minister David Cameron lobbied the government - led by his friend and former colleague Boris Johnson - on behalf of a steel producer.

    The Financial Times has claimed Cameron lobbied the government to increase Greensill’s access to COVID-19 loan schemes only a few months before the company collapsed.

    ​"The Registrar of Consultant Lobbyists is investigating whether Mr David Cameron has engaged in unregistered consultant lobbying", said the eponymous body in a statement on Thursday, 25 March.

    Business minister Kwasi Kwarteng told MPs on Thursday: "Officials often meet with a range of businesses affected by policy changes, that's part of policy development, but it's always done with proper and due consideration".

    On Wednesday, 24 March, Boris Johnson said he had no knowledge of Cameron lobbying Downing Street officials on behalf of Greensill.

    Last week, several newspapers claimed Mr Cameron had lobbied the Chancellor, Rishi Sunak, directly.

    Greensill was founded by an Australian former sugar cane farmer, Lex Greensill, in 2011 and filed for insolvency protection earlier this month.

    ​On Greensill’s website a statement says Chris Laverty, Trevor O’Sullivan and Will Stagg of accountants Grant Thornton were appointed joint administrators of Greensill UK on 8 March 2021.

    The statement goes on to say: "The joint administrators are in continued discussions with an interested party in relation to certain Greensill Capital assets. As these discussions remain ongoing it would be inappropriate to comment further at this time."

    It is thought these assets may include steelworks run by Liberty Steel.

    Greensill made much of its money by offering short-term loans to companies with cashflow problems. In return it was paid large fees.

    ​Greensill’s collapse puts into question the future of Liberty Capital, which owns 12 steel plants in Britain, including steelworks in Rotherham, Newport Motherwell and Stocksbridge, near Sheffield.

    Liberty Steel was already struggling as a result of a big downturn in demand for specialist steel from aerospace and other manufacturers.

    The Financial Times says Lex Greensill, a former banker, “made his name by devising ingenious ways for companies to pay their bills faster”.

    In 2017, Greensill was presented with a CBE by the Prince of Wales for “services to the economy”.

    The following year Mr Cameron, who had been replaced as prime minister by Theresa May and had stepped down as Conservative MP for Witney in Oxfordshire, signed up as an “adviser” to Greensill.

    Japan’s SoftBank invested US$1.5 billion in Greensill Capital in 2019, excited by the company’s prospects.

    Trouble started brewing when the pandemic struck in the spring of 2020 and in July of last year Tokio Marine and several other Japanese insurers withdrew cover for US$4.6 billion of its working capital after learning risk limits had been exceeded.

    The City of London and other big financial investors had begun to get twitchy about Greensill’s complicated financial products, perhaps fearing something similar to the sub-prime mortgage fiasco of 2008.

    ​The wheels really came off on 1 March 2021 when Credit Suisse, which had US$10 billion invested in Greensill’s products, pulled the plug.

    A week later, Lex Greensill had no choice but to put the company and its Australian sister company into administration.

    On 15 March, Greensill was sued for fraud by Bluestone Resources, a US coal mining company owned by the Republican Governor of West Virginia, Jim Justice.

    According to the Wall Street Journal, Bluestone borrowed US$850 million from Greensill Capital in 2018 and claims in federal court documents it was the victim of a “continuous and profitable fraud.”

    ​It is alleged Mr Cameron lobbied Mr Sunak in late 2020 in a bid to obtain a loan from the British government.

    The Bank of England, which administers the Covid Corporate Financing Facility, has published details of which companies benefited but it has not yet given details of who profited from the Coronavirus Business Interruption Loan Scheme or the Coronavirus Large Business Interruption Loan Scheme.

    The Shadow Chancellor, Anneliese Dodds, has insisted details of those schemes be published and told the Financial Times: “When public money is at stake, then the default should be to disclose where money is going”.

    Tags:
    Rotherham, steel, Boris Johnson, David Cameron
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