Rishi Sunak wonders why bankrupt finance company Greensill Capital was chosen to provide emergency Covid loans, despite not being as tightly regulated as banks.
Greensill Capital, which counted David Cameron as a senior advisor, was the only non-bank finance company chosen by the government to administer the emergency coronavirus loan programs.
The company went bankrupt weeks ago, leaving UK taxpayers at the mercy of hundreds of millions of loans.
Greensill has not been subjected to the same stress tests as other banks, which see companies being tested by the Bank of England to see if they would be able to stay afloat in an economic downturn.
Phantom Chancellor Anneliese Dodds told The Times that “the public will be appalled to learn how much their money has been put at risk by the government allowing an unregulated financial services company to lend money on collateral. of taxpayers ”.
It comes as the German Private Banking Association today announced that it has paid around 2.7 billion euros ($ 3.17 billion) to more than 20,500 Greensill customers under its guarantee program. deposits after the bank collapsed last month.
The banking association said only a few clients have yet to receive compensation under the protection fund, which protects individuals but not institutional investors.
Greensill has offered a niche finance product called supply chain finance and its downfall threatens to lead to Sanjeev Gupta’s Liberty Steel operations in the UK, which were funded in part by Greensill, in the administration too.
The payment news came as lobbying on behalf of the failing bank came under closer scrutiny in the UK.
Labor today called on the government to tighten lobbying laws amid continuing controversy over Cameron’s activities on behalf of Greensill Capital.
Shadow Cabinet Minister Rachel Reeves said ministers should include legislation in next month’s Queen’s Speech to expand the lobbyist registry to cover so-called “inside” lobbyists like the former prime minister.
Under the existing rules, Cameron did not have to make a statement when he went to work for Greensill after leaving office because he was not an outside “consultant” lobbyist.
There have been growing questions about his business after he used his contacts to pressure Sunak to support the company through the government’s Covid business funding mechanism.
Read more: Greensill: What is David Cameron lobbying?