Greensill: David Cameron 'made $10m' before
company’s collapse
By BBC
Panorama
Reporting
team
Published17
hours ago
David Cameron made about $10m (£7m) from Greensill
Capital before the finance company collapsed, documents obtained by BBC
Panorama suggest.
The
documents indicate the former prime minister received $4.5m after cashing in
Greensill shares in 2019.
Greensill,
which made its money by lending to businesses, went into administration in
March, leaving investors facing billions in losses.
Mr
Cameron's spokesman said his remuneration was a private matter.
Greensill
collapsed after its insurer refused to renew cover for the loans it was making.
Before its
collapse, Mr Cameron unsuccessfully tried to persuade ministers to invest
taxpayers' money in Greensill loans.
He has
since been cleared of breaking any lobbying rules, but MPs said the former
prime minister showed a "significant lack of judgement".
The details
about Mr Cameron's shares were revealed in a letter from Greensill Capital to
the former prime minister.
According
to the letter, Mr Cameron was going to be paid $4,569,851.60 (about £3.3m)
after tax for a tranche of his Greensill shares.
What did
David Cameron do for Greensill?
Cameron
lacked judgement over Greensill, MPs say
Ex-PM
Cameron cleared by lobbying watchdog
Panorama
has not seen Mr Cameron's signed acceptance of the offer, but the letter records
that he had already agreed to the deal.
As well as
the shares, Mr Cameron received a salary of $1m (£720,000) a year as a
part-time adviser.
The
programme also understands that the former prime minister was paid a bonus of
$700,000 (£504,000) in 2019 on top of his salary.
In total,
it looks like he made around $10m before tax for two-and-a-half years'
part-time work.
Mr
Cameron's spokesman said: "He acted in good faith at all times and there
was no wrongdoing in any of the actions he took."
Panorama
has discovered how the company Mr Cameron promoted has left investors and UK
taxpayers facing huge losses.
Greensill
Capital lent around $5bn (£3.6bn) to GFG Alliance - a group of companies
controlled by the steel magnate Sanjeev Gupta.
GFG employs
35,000 people around the world, including more than 4,000 at steel mills in the
UK.
Internal
documents reveal that Greensill Capital knew GFG was in financial trouble by
the start of 2020 because it was unable to make payments on Greensill loans.
But
Greensill used its own cash to cover repayments GFG could not afford - leaving
investors unaware of the problems.
What is the
GFG Alliance and what does it own?
An email
sent by a Greensill finance officer to a senior manager in April 2020 said that
the unusual payments had been going on for four months.
It said:
"We are constantly plugging holes that GFG cannot afford to repay... It is
not even robbing Peter to pay Paul, it is just recirculation of Greensill
funds."
A second
email sent at the start of May suggests an insolvency practitioner should be
sent in to review Mr Gupta's businesses. It said: "It may well be that
administration is required."
Instead of
raising the alarm about GFG's inability to make loan payments, Greensill
Capital looked for a new investor.
It turned
to the UK government - and David Cameron was sent in to try to make it happen.
Mr Cameron
sent 56 messages lobbying ministers and senior civil servants. He wanted the
Bank of England to invest more than £10bn of taxpayers' money in Greensill's
loans.
The Bank of
England turned Greensill down, but in June 2020 Greensill was approved as a
lender under a government scheme designed to get emergency cash to companies
affected by the coronavirus pandemic.
The
Coronavirus Large Business Interruption Loan (CLBIL) scheme run by the
government-owned British Business Bank allowed Greensill to make loans backed
by an 80% taxpayer guarantee.
Greensill
was only supposed to lend a maximum of £50m to a single borrower or group of
companies under the CLBIL scheme.
But
Greensill Capital lent Mr Gupta's GFG Alliance £350m by making seven
taxpayer-backed loans of £50m to seven of his companies.
Greensill
also made an eighth loan of £50m to another company closely associated with Mr
Gupta.
The
companies have all failed to make repayments on the taxpayer-backed loans.
The
government guarantee has been suspended while the loans are investigated - but
that is being challenged and the taxpayer could still lose £320m.
Mr Gupta's
company, GFG Alliance, and its financing arrangements with Greensill Capital,
are now being investigated by the Serious Fraud Office.
GFG
Alliance said it takes the investigation seriously and that all allegations of
improper conduct are denied in the strongest terms.
The company
said it has been working tirelessly to stabilise the businesses affected by the
collapse of Greensill and deliver refinancing.
GFG said:
"We remain fully committed to UK industry and to a solution that will
enable GFG to repay creditors and create a sustainable future for its UK
businesses."
Lex
Greensill, the founder of Greensill Capital, said the government guarantee on
the loans should not be withdrawn.
"Our
access to any government-backed schemes with respect to funding our clients has
always drawn upon robust advice from leading law firms to ensure Greensill
complied with relevant rules," he said.
He also
said he was not aware his staff had recommended sending in an insolvency
practitioner to GFG.
Mr
Cameron's spokesman said he was not involved in lending decisions and had no
knowledge of GFG's financial situation.
"He
was a part-time adviser to the company - one of several - and had no Executive
or Board responsibilities whatsoever," he said.
"He
made the representations he did to the UK government not just because he
thought it would benefit the company, but because he sincerely believed there
would be a material benefit for UK businesses at a challenging time."
Panorama
has also discovered how investors were misled about Greensill Capital's
investments.
Greensill
made money through supply chain finance - which involves making loans to
companies that are waiting for invoices to be paid by their customers.
When the
invoices were paid, the cash would be there to pay investors back, with
interest.
To fund the
loans, it teamed up with Swiss bank Credit Suisse, which raised $10bn from
investors.
It was the
Swiss bank's job to market and sell the Greensill investments, and to inform
investors about potential risks.
Investors
thought their cash was safe, because it was supposed to be secured against the
unpaid invoices.
But this
year it was revealed that some of the invoices simply did not exist.
US court
papers show how between 2018 and 2021, Greensill lent $850m of investors' cash
to a US coal company called Bluestone Resources.
Only $70m
of that money was secured against real invoices for coal that Bluestone had
actually sold.
Investors
did not know it, but the remaining $780m was only backed by predicted coal sales
that may or may not happen in the future.
Lex
Greensill told Panorama that this type of financing was commonplace in the
financial services industry.
He said the
predicted Bluestone business was all "based upon future trade that is
likely to occur with current customers".
Panorama
discovered that was not true.
The
programme obtained the names of the companies that Lex Greensill said were
current customers of Bluestone.
Six of the
companies said they were not Bluestone customers and they weren't planning to
buy its coal in the future.
Lex
Greensill later told Panorama the coal buyers did not have to be current
customers. Bluestone only had to state it expected to make the sales at some
future point and Greensill was not obliged to make checks, he said.
Mr
Greensill denied misleading investors. He said his company made all the
appropriate disclosures to Credit Suisse and the Swiss Bank was "solely
responsible for making any disclosures to their investors".
He said the
loans were always secured against assets and personal guarantees, and were
backed up by insurance that would pay 100% of any shortfall.
Credit
Suisse says its focus is on returning cash to investors and that 59% has been
returned so far.
Panorama:
David Cameron and the Missing Billions is on BBC One at 19:35 BST on Monday or
later on iPlayer
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