The most interesting thing about the Tory sleaze scandal is not the Boris Johnson vs Dominic Cummings grudge match, enjoyable though that is. Everyone knows these are two thoroughly unscrupulous and unpleasant individuals.
No, what’s really interesting is the political-financial underworld Lex Greensill inhabited. He got his feet under the table in Whitehall thanks to Sir Jeremy Heywood, cabinet secretary and head of the civil service until he died in 2018.
In 2011 Heywood arranged for Greensill to have a desk in the Cabinet Office. They had met when Heywood was seconded to the giant Wall Street bank Morgan Stanley in 2003-7.
Greensill was also working there before he left to set up his own company, Greensill Capital.
The Financial Times has revealed that Heywood tried to help other Wall Street pals when he returned to Whitehall. Most notably he helped Sir Simon Robey, his boss at Morgan Stanley, who also has his own firm.
Heywood went out of his way to facilitate the 2016 takeover of the chip designer Arm Holdings by Japanese conglomerate SoftBank, which was advised by Robey.
The Financial Times quoted “a former mandarin… ‘Jeremy was down in the weeds of the Arm-SoftBank deal… there was amazement in Whitehall that he was doing that’.
“One former colleague remembered him… being ‘star‑struck’ by his former banking colleagues. ‘At some point he did drink the private sector Kool-Aid... there was a certain naivety, that the private sector could solve every problem.’”
But this wasn’t a personal eccentricity of Heywood’s. During the heyday of neoliberalism under New Labour and Cameron, the assumption became entrenched that private capital could do things better than the state.
This was the mentality that led to the waste of public money during the pandemic as crucial contracts for PPE and test-and-trace were given to Tory business cronies.
And Heywood wasn’t the only senior civil servant to benefit from the revolving door between Whitehall and the private sector. A particular flagrant example is provided by Bill Crothers. It turned out a couple of weeks ago that he was still chief government procurement officer while Greensill Capital employed him as a part-time adviser.
Crothers played an important role in Greensill’s campaign—spearheaded by Cameron—to penetrate the NHS.
Greensill Capital specialised in supply chain finance. This involves making early but reduced payment to suppliers in exchange for the invoices they issued for whatever goods or services they provided.
Where the recipient of the goods or services is sure to pay, the invoices are a profitable financial asset.
Greensill started on the NHS with Earnd, a scheme that allowed employees to be paid early. This was offered free but, as the Financial Times reported, “A presentation given to one trust in December 2019—titled ‘Adding Value to the NHS’—was explicit that the free funding was a foothold for Greensill to offer more complex and profitable financial products.”
The article further reported that, “Employee early payment is just the start.”
Happily, another “more complex and profitable product” of Greensill’s has blown his firm up. He borrowed heavily to lend billions to the metal trader Sanjeev Gupta, who bought up a big chunk of the British steel industry.
But it turns out that some of the invoices on which these loans were secured were fake, and others were issued by Gupta’s employees and cronies.
The Sunday Times has revealed that a pro-Trump lobbyist called Malin Baker Bogue worked for Johnson’s Tory leadership campaign while on Gupta’s payroll. Gupta also cultivated Labour and Scottish Nationalist politicians.
The unravelling of the financial web they spun together will probably wipe out Greensill and Gupta.
This was a lucky escape for the NHS. But when we need it most, its vast resources will attract more vultures and there will be more of the likes of Heywood to invite them in.