David Cameron has broken his silence over his attempts to lobby government on behalf of the finance company, Greensill Capital, which has subsequently collapsed.
In a statement, the former Conservative prime minister said: “I accept that communications with government need to be done through only the most formal of channels, so there can be no room for misinterpretation.” But he said he had complied with the rules.
Labour is calling for Mr Cameron to appear before parliament.
What did David Cameron do?
The man behind Greensill Capital – Lex Greensill – worked as an unpaid adviser to David Cameron when he was prime minister, and developed a policy designed to ensure small firms got their bills paid faster. The scheme also benefited Mr Greensill’s company.
Mr Cameron went on to work for Greensill Capital after leaving office, and tried unsuccessfully to lobby the government to increase the firm’s access to government-backed loans.
He pressed Treasury officials – including sending Chancellor Rishi Sunak text messages – for emergency funding for the company in which the former prime minister had a financial interest.
In his statement, he said: “Their value was nowhere near the amount speculated in the press.” But he has not given any more details.
In the end, Mr Cameron’s pleas to the Treasury for emergency loans for Greensill Capital were not successful.
The firm has now gone bust, throwing the future of thousands of workers at Liberty Steel, a company backed by the finance firm, into doubt.
Did this break any rules?
They state that: “On leaving office, ministers will be prohibited from lobbying Government for two years.”
Mr Cameron stood down as prime minister in July 2016 and joined Greensill in August 2018.
But former Labour Prime Minister Gordon Brown has said that the rules may need to be strengthened to ban former ministers from lobbying government for five years.
“Former ministers, prime ministers must never be lobbying for commercial purposes – cabinet ministers should not be entertaining such lobbying.”
Why is he still facing calls to be investigated?
In 2012, Mr Greensill was made an unpaid government adviser by Mr Cameron, with a Westminster pass and access to government departments.
He used this access to promote a government-backed loan scheme he had devised.
Mr Cameron and the late Lord Heywood, the most powerful man in the civil service at the time, were fully behind it, believing it would help to deliver on a promise to speed up payments to small firms.
But Mr Greensill also stood to make a lot of money from the scheme, even though the Sunday Times claims many in Whitehall had serious reservations about it.
image captionLex Greensill was an unpaid government adviser
How did Greensill’s scheme work?
Mr Greensill’s specialism was supply chain finance – a service for companies who don’t want to wait months for their bills to be paid.
For a small fee, the finance company pays the seller as soon as the goods are delivered, and get its money back when the bills are eventually paid by the customer.
Mr Greensill’s firm was at one point valued at $7bn (£5bn), with a fleet of four private jets.
He helped to convince the UK government to set up a supply chain finance scheme for pharmacies – paying them early for money they were owed by the NHS. In 2018, Greensill Capital won the contract to run it.
Why did Greensill Capital collapse?
Questions had been asked before about the sustainability of Greensill’s business since at least 2018.
But the final blow came last July when one of its insurance companies withdrew cover that protected some of Greensill’s investors.
Liberty Steel, Britain’s third-largest steel producer employing 3,000 people in England, Scotland and Wales, was receiving financial backing from Greensill.
Its future is now in doubt.
image captionLiberty Steel’s future is in doubt after Greensill Capital’s collapse
Why does any of this matter?
Critics argue that it is too easy for ministers and top civil servants to use their insider knowledge of Westminster to enrich themselves when they leave government. The danger is that decision-makers could have one eye on their next pay day, rather than the best interests of the country.
In 2010, Mr Cameron warned that the “the far-too-cosy relationship between politics and money” was “the next big scandal waiting to happen”.
There is also a question of access. Who gets time with ministers to push their cause?
There are thousands of lobbyists – from trade unions to environmental groups to multinational companies – why do some people appear to get favoured treatment?
What happens now?
Labour wants a full inquiry into how Mr Greensill was given access to the heart of government.
The Committee on Standards in Public Life has said it can’t investigate individual cases, so it may fall to a select committee if it happens at all.