Parliamentary Committees and Public Enquiries
‘No obvious conflicts’ in Greensill appointment, but questions remain over management of financier
An interim report by the Public Administration and Constitutional Affairs Committee pours cold water on the notion that there were conflicts of interest when Lex Greensill was hired by the Government in 2012.
- Read the Report: Propriety of Governance in Light of Greensill: An Interim Report
- Read the Report: Propriety of Governance in Light of Greensill: An Interim Report (PDF 325 KB)
- Inquiry: Propriety of governance in light of Greensill
- Public Administration and Constitutional Affairs Committee
However, the report did raise potential concerns about the management and conduct of the founder of now-defunct Greensill Finance and the consideration of reputational risk in approving senior officials’ second jobs that only then ethics supremo, Sue Gray, can answer. Gray was blocked from giving evidence to the Committee in July by Michael Gove.
Greensill was employed initially as an unpaid consultant, and then as a Crown Representative, to advise the Government on Supply Chain Finance, a means by which Government suppliers could have received faster payments in return for a cut of the invoice value. In the end, it was only used in the Pharmacy Early Payments Scheme.
The interim report, which focuses on the propriety surrounding Greensill’s employment in Whitehall from 2012 to 2015, pointed out that during his tenure, his company’s footprint was mainly in Australia and it was not at the time bidding for public contracts in the UK. Its first public contract in the UK, the Pharmacy Early Payment Scheme, was not won until 2018.
Though it raised eyebrows that Greensill Capital was awarded a contract to deliver a scheme that the company’s founder had helped design, it was within the terms of his consultancy contract. Had he been subject to them, he would have also been compliant with the stricter Business Appointment Rules that dictate that former senior officials must tell authorities of any new roles within two years of leaving Government. On this, Greensill was ‘clearly in full compliance of his contractual obligations’, the report found. However, whether the Rules are sufficiently robust to maintain public confidence is something the Committee will be considering further.
MPs on the Committee agreed that, given his expertise, Greensill’s hiring was justifiable considering what appeared to be Government policy at the time. In 2012, Lord Maude gave a speech on the potential of Supply Chain Finance and evidence to the inquiry shows that at the time David Cameron at least gave tacit support to examining such schemes further.
However, the Committee was ‘surprised’ Greensill appeared to have ‘far greater autonomy’ and was reported to be given greater privileges – such as a Downing Street pass and business cards describing him as a ‘senior advisor’ - than consultants are ordinarily afforded.
Pointed criticism was reserved for Cabinet Office Minister, Michael Gove, who blocked the appearance of a key witness.
Former Cabinet Office ethics chief, Sue Gray, had agreed to speak to the Committee in July after witnesses revealed she had become concerned by Greensill’s status. Mr Gove’s defence of his intervention ‘misconstrued’ the spirit of the internal Government guidance for Select Committee appearances –known as “the Osmotherly Rules” – on which it rested.
MPs on the Committee called into question the way consultants are used and whether the Business Appointment Rules are fit to prevent future conflicts of interest, both of which will be addressed in the next phase of the inquiry as it progresses onto issues surrounding lobbying.
The interim report also found the employment of Bill Crothers as a part-time advisor to Greensill Finance while still a civil servant was above board because, at that time, the firm had no UK public sector practice and was some years away from attempting to win Government contracts in the UK. However, too little consideration appears to have been paid to the potential reputational risk of such a move, as subsequent events have clearly demonstrated.
The interim report recommends that where there is any doubt about propriety, the default position should be for approval from the Advisory Committee on Business Appointments (ACOBA) to be sought. Whether the ACOBA’s remit and powers are adequate is a theme to which the Committee will be returning.
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