The demise of Greensill Capital has sparked arguably one of the biggest political crises in a decade.
Britain's former prime minister and current chancellor have both been dragged into probes over ethics and possible impropriety after it emerged that Greensill — until weeks ago a little-known firm working in a sleepy corner of finance — had access to the heart of Downing Street and the NHS.
Greensill was a finance company once worth around $30bn (£26bn) that went bust in March, putting 440 jobs at risk. Its demise has caused red faces for the investors who back it, banks that worked with it, and sparked a political crisis in Britain.
Senior politicians, including former prime minister David Cameron, lobbied on behalf of Greensill. Multiple official inquiries have been launched into whether this was proper, implicating current chancellor Rishi Sunak and many other UK officials.
Watch: Government Lobbying Scandal Explained
Conservative MP William Wragg, who chairs a House of Commons committee on business appointments, said the affair was a "tasteless, slap-dash and unbecoming episode for any former prime minister."
For those not following the day-to-day developments, the minutiae of the story can be confusing. Here's what you need to know.
What did Greensill Capital do?
Greensill Capital was a company that lent money to businesses to pay their suppliers faster — a corner of finance known as supply chain finance.
It was founded in 2011 by the now notorious Lex Greensill, and had grown exponentially ever since. Recent reports have emerged that it was eyeing a £22bn ($30bn) float.
Greensill went bust last month after losing insurance coverage for a key part of its business. It followed months of reporting by the Financial Times that questioned the true risks behind Greensill's business.
While supply chain finance is relatively low risk, after Greensill's collapse it emerged the company was involved in far more high risk financing activities that many investors were unaware of. The Wall Street Journal reported that Greensill had considered using supply chain finance to pay for nuclear submarines, for instance — a far cry from paying a farmer for his meat early.
At the time of its collapse, Greensill said its largest client — GFG Alliance — had started to default on its debts. GFG is run by controversial steel tycoon Sanjeev Gupta, whose business is now facing financial difficulties of its own due to Greensill's collapse.
Japanese firm Softbank's Vision fund lost money from Greensill's demise. According to Wall Street Journal reports from March, the Vision Fund injected at least $400m into Greensill Capital at the end of last year. The cash injection was on top of the $1.5bn the Vision Fund had invested in in 2019 and was part of a number of increasingly complicated financial arrangements between the company and the lender, people familiar with the matter told the Journal.
Watch: Cameron/Greensill row: The seven inquiries looking into government lobbying
How was David Cameron involved?
David Cameron appointed Lex Greensill as an unpaid adviser during his time as prime minister and gave him access to the heart of government. This week it emerged that Greensill was granted access without a contract, in an apparent major breach of protocol. He carried a business card embossed with the Downing Street insigne.
While advising government, Greensill developed a scheme that would help small firms get paid quicker by government departments — a scheme that his company later benefited from.
The scheme was effectively planned as a lever to secure other more lucrative work with the NHS, people familiar with the matter told the FT. The company had reportedly gone from NHS trust to NHS trust attempting to parlay the scheme.
After his term as prime minister finished, Cameron was employed by Greensill. Cameron had a commercial interest and potentially stood to make millions if the business went public. According to reports by the Sunday Times, he could have made as much as £60m.
When the COVID-19 pandemic hit, Cameron lobbied the government on behalf of Greensill to try and get access to government-backed loan schemes. Cameron contacted chancellor Rishi Sunak, Treasury ministers Jesse Norman and John Glen, and health secretary Matt Hancock, among others.
The Bank of England said earlier this month that Greensill and Cameron contacted the Bank and the Treasury on a number of occasions to lobby for £20bn in taxpayer money. The Bank and the Treasury declined, saying Greensill was not eligible.
On 11 April, Cameron issued a 1,558 word statement to the press, breaking a weeks-long silence and saying he had effectively done nothing wrong.
Why is all this controversial?
The scandal is part of a wider conversation about the role of the private sector in public services and how firms win lucrative public contracts — an issue that has been particularly thorny during the COVID-19 crisis.
In a hearing on Monday, Simon Case, the cabinet secretary gave evidence saying he could not explain the lack of paperwork associated with Lex Greensill's position as an adviser to Cameron.
"It looks like there were conflicts and we’re not clear on how they were managed. From our cursory look, we can’t see the evidence … That doesn’t look right,” he said.
The Greensill affair also shines a light on the opaque world of government lobbying, unveiling some nasty secrets in the process.
It has emerged that the government's former chief procurement officer, Bill Crothers, worked part-time for Greensill while still working for the civil service in 2015. He joined Greensill full time after leaving Whitehall.
Lord Eric Pickles, the chair of the Advisory Committee on Business Appointments (Acoba) and a former cabinet minister, told a committee of MPs he was “very worried” about Crothers' appointment.
“His particular position, in terms of running procurement and working for a commercial organisation, is something that does require a full and frank and transparent explanation," Pickles said earlier this month.
Despite what looks like obvious conflicts of interest, Cameron and Crothers do not appear to have breached any rules. But critics say the very fact that rules weren't broken shows the rules are not fit for purpose.
The Labour party has said investigation so far have "all the hallmarks of a Conservative cover-up."
What is being done about it?
Eight official probes have been announced across parliament, Downing Street, the civil service and Whitehall's spending watchdog, among others.
Parliament's influential Treasury Select Committee begins its investigation on Wednesday. Sunak and Cameron have been summoned to appear before the inquiry it to answer questions, as have Lex Greensill, Bank of England governor Andrew Bailey and the CEO of the FCA, Nikhil Rathi.
Conservative party MPs had originally moved to block the Treasury Committee inquiry — a decision that was reversed as the scandal grew.
The probes will examine how Greensill became so embedded in Downing Street, why the government needed to use supply chain finance (even in the absence of a cashflow issue), and whether the work with Greensill delivered value for money.
Probes will also look at Cameron's role in procuring and negotiating contracts — both when he was in Downing Street and after he left.
Cameron has denied breaking codes of conduct or current government rules on lobbying. The government has repeatedly said discussions on Greensill's proposals to take part in COVID-19 loan schemes were not granted.
Watch: Dodds calls for transparency in Greensill lobbying review