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First UK Inquiry Into Greensill Scandal Calls for Extension to Lobbying Ban for Former Ministers and Civil Servants

Summary:
The inquiry also recommends greater transparency and accountability from the government. Unfortunately, the trend is in the opposite direction.  It is a formality of British politics that when a big scandal breaks, a public inquiry is formed. Sometimes a scandal is so bad that it warrants more than one. So far, the Greensill affair, the worst lobbying scandal in a generation, has racked up no fewer than eight separate inquiries. The first to report its “interim” findings — that of the Committee on Standards in Public Life — has recommended that former ministers and civil servants who enter the private sector should be barred from lobbying for up to five years, as opposed to the current two-year limit. Chaired by Lord Jonathan Evans, a former MI5 chief, the committee said the ban should, if

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The inquiry also recommends greater transparency and accountability from the government. Unfortunately, the trend is in the opposite direction. 

It is a formality of British politics that when a big scandal breaks, a public inquiry is formed. Sometimes a scandal is so bad that it warrants more than one. So far, the Greensill affair, the worst lobbying scandal in a generation, has racked up no fewer than eight separate inquiries.

The first to report its “interim” findings — that of the Committee on Standards in Public Life — has recommended that former ministers and civil servants who enter the private sector should be barred from lobbying for up to five years, as opposed to the current two-year limit. Chaired by Lord Jonathan Evans, a former MI5 chief, the committee said the ban should, if possible, be made legally enforceable.

“If an applicant had a particularly senior role, or where contacts made or privileged information received will remain relevant after two years, a longer ban may be necessary to ensure former officials lobbying government are not directly benefiting from their time in office when they do so,” Evans said in his report.

When Lobbying Becomes Stalking

The inquiry has revealed how the former premier David Cameron, who had joined the supply chain finance provider Greensill as an advisor in 2018, blitzed government ministers, including the Chancellor of the Exchequer Rishi Sunak, and officials at 10 Downing Street, the Treasury and Bank of England with around 80 text, WhatsApp and email messages during the first four months of the coronavirus crisis. One member of the Treasury Select Committee likened it more to “stalking than lobbying”.

Cameron was desperate to secure Greensill access to Covid support. Once he had, he tried to increase the amount the company could receive. In June, he urged both Sunak and vaccines minister Nadhim Zahawi to increase the maximum loan Greensill could make under the Treasury’s Coronavirus Large Business Interruption Loan Scheme (CLBILS) from £50 million to £200 million. The difference, Cameron said, was “rather crucial”.

By that time Greensill was on the ropes. A number of its client companies had already collapsed. Attention was shifting to the financial menage á trois Greensill had formed with its primary backer, Soft Bank, and Swiss mega-lender Credit Suisse. Greensill was also under investigation by German banking regulator BaFin and the Association of German Banks, an industry group, over its German subsidiary Greensill Bank’s huge exposure to a single client: UK-based steel magnate Sanjeev Gupta.

The company needed money fast. And thanks to Cameron’s tireless lobbying, it got it. Greensill was able to make loans totalling £418 million under the government’s coronavirus lending schemes, £335 million of which was guaranteed by the British Business Bank. Most of that money ended up going to Greensill’s biggest client, Gupta’s GFG Alliance.

Special Treatment

Greensill Capital was the only non-bank financial firm to administer the emergency coronavirus loan schemes. It was also exempt from the capital adequacy and stress tests that are normally applied to lenders. The only apparent reason for this special treatment was Cameron’s persistent lobbying, none of which was included in departmental disclosures. This patent disregard for transparency and accountability is par for the course in British government today, says the Committee on Standards in Public Life:

“It is too difficult to find out who is lobbying government, information is often released too late, descriptions of the content of government meetings are ambiguous and lack necessary detail, transparency data is scattered, disparate, and not easily cross-referenced, and information in the public interest is often excluded from data releases completely. Reforms are needed to the accessibility, quality, and timeliness of government data and to the scope of transparency rules. The rules and guidance on informal lobbying and alternative forms of communication also require improvement and greater clarity.”

Other recommendations made by the Committee include a two-year ban on ministers and senior officials taking a job in their policy area once they leave office, new guidance on the use of modern forms of communication (texts and WhatsApp messages), closing the loophole on not disclosing “informal lobbying” (such as drinks and/or dinner) and lobbying information being published more regularly and in more detail.

These, of course, are all recommendations; they are not legally binding. Their implementation depends entirely on the government of the day.

Government By WhatsApp

It’s far from clear whether today’s government, with all its skeleton-filled closets, will actually be interested in greater disclosure. If anything, the trend is in the opposite direction. The government is adopting an increasingly hostile response to requests made under the Freedom of Information Act. According to a new report in The Guardian, the disregard for transparency and accountability in government is so widespread that ministers and civil servants are now using self-deleting messages for much of their internal communication.

Ministers and civil servants are allowed to set messages to delete instantly, the government has admitted, amplifying concerns about its transparency and accountability.

The confirmation comes as concerns grow that self-destructing messages are being used to avoid scrutiny of decision-making processes, including on key issues such as the government’s coronavirus response.

A letter from the Department for Digital, Culture, Media and Sport (DCMS) sent to the Citizens, a non-profit organisation, in response to a freedom of information request and seen by the Guardian, says: “Instant messaging (through Google Workspace) may be used in preference to email for routine communications where there is no need to retain a record of the communication.

“Chat messages are retained for 90 days to provide staff with the opportunity to record any substantive conversations, after which time they are permanently deleted. Users can also switch history off, meaning messages will be deleted once a chat session has finished.”…

Transparency campaigners have expressed alarm at a culture of “government by WhatsApp”. The Citizens has threatened legal action, saying use of such functions makes it impossible to carry out required legal checks about whether a message should be archived for posterity. Information that could be useful to a public inquiry, or otherwise fall within the scope of an FOI request, may be lost as a result.

“The stakes are high,” says Martha Dark, the director of Foxglove, a non-profit organisation pursuing what it calls ‘justice in technology’. “We simply won’t be able to hold the government to account for what they do if the evidence is automatically erased within minutes. Disappearing message apps are the modern equivalent of politicians shredding the evidence. It’s the perfect tool for people who just want to get away with it.”

Greensill’s Legacy, Thus Far

The Greensill affair is important for a host of reasons. It has served as yet another reminder of the risks posed by excessive financialization. It has pushed two small banks into bankruptcy — the Greensill Bank in Germany and Milan-based Aigis Banca — and left one very big bank, Credit Suisse, in serious trouble. Greensill’s biggest customer, GFG Alliance, which owns huge chunks of Europe’s steel industry, is also on the ropes as it seeks alternative financing.

The scandal has also revealed just how bad government can be at managing public money — and how easily ministers and civil servants can be seduced by smooth-talking, well-connected financiers, especially when said financiers offer said civil servants or ministers well-paid advisory positions at their firms.

Greensill Capital’s eponymous founder, Lex Greensill, was brought into Whitehall by late mandarin Sir Jeremy Heywood, who ended up sitting on Greensill Capital’s board a few years later. Heywood described Greensill as a “very clever guy”, then employed by Citi, who could find substantial savings for the public sector. Instead, the opposite has happened. The government has racked up big losses as a result of its underwriting of Greensill’s emergency loans. It has also squandered public funds and forced government suppliers to accept lower payments due to its wholly unnecessary use of supply chain finance.

As former Cabinet Office minister Lord Maude told the inquiry, he saw “nothing that suggests that any involvement the government has with supply chain finance actually saved the government money”:

I could not see how Jeremy’s contention that this would save the government a lot of money stacked up, because it is kind of rule 101 of finance that nobody could provide finance more cheaply than a triple-A rated Government, which is what we were.”

The scandal has also revealed the vital — albeit diminished — role investigate journalism can play in shining the light on government. This is particularly important when the government in question is engaging in all manner of corrupt activity while doing everything within its significantly increased powers to conceal that activity and cover its tracks. If it wasn’t for the tireless work of journalists like the FT’s Robert Smith and The Times’ Gabriel Porgrund, it would have taken even longer for the Greensill scandal to break, allowing even more damage to accrue in the meantime.

But the UK government also appreciates this fact. The Greensill affair has caused serious embarrassment to many of its leading figures, past and present. And it is now using and seeking every opportunity to protect itself from further scrutiny, including by escalating its war on whistleblowers and investigative journalists, who are increasingly being treated as one and the same thing.

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