The Greensill scandal – what was it and what went wrong?

Why did Greensill fail?The recent Greensill scandal has rocked the business world and exposed the shady underbelly of the global financial system.

At the center of the controversy is Greensill, a London-based startup that raised over $1 billion in funding from investors across the globe through misleading claims about its financial health and strategic vision.

Despite raising such massive sums of money, it appears that Greensill failed to have even a basic understanding of the principles underlying sustainable financing, as evidenced by its willingness to offer low-cost financing to companies linked to human rights abuses, environmental destruction, and critical infrastructure development in countries with unstable political environments.

The scandal surrounding Greensill represents a disturbing trend within today’s business environment: namely, corporations focusing more on profits than on ethics or social responsibility. It is clear that we need stronger regulations in place to prevent this type of abuse in the future and ensure that companies operate responsibly and lawfully at all times.

If we don’t take action now, we can only expect scandals like this one to become even more common and devastating in the years to come. After all, as Greensill itself unfortunately proved, there are those who will stop at nothing for a quick buck.

In the UK, the most significant controversy regarding government lobbying and cronyism for years has unfolded. We want to cover what has happened and inform you on everything that went wrong.

Who are Greensill Capital?

Greensill is a financial services company that specializes in providing working capital to businesses. The company was founded in 2011 by Lex Greensill, an entrepreneur who saw an opportunity to provide financing to businesses that were struggling to obtain traditional lines of credit.

Greensill provides its customers with a simple and efficient way to free up cash flow and improve their liquidity position. The company has developed a unique financing model that allows it to offer very competitive rates and terms.

Lex Greensill’s company provided financing to many large companies, including General Motors, Airbus, and Boeing. In addition, the company has partnered with major banks such as Credit Suisse and Goldman Sachs to provide financing to their clients.

What did Greensill Capital actually do?

In March 2021, Greensill Capital fell into administration after providing payment services such as invoice discounting and supply chain financing. However, the company did not offer particularly noteworthy or innovative services, although the firm positioned itself as part of the “fintech” revolution. We need a broader perspective in order to understand Greensill and other providers.

A common payment problem is solved by supply chain financing (or “reverse-factoring”). An invoice is traditionally issued by businesses to customers after they have supplied goods or services to them. Despite the supplier’s preference for immediate payment, the customer might want to defer payment.

Customers who are influential and large might demand their suppliers wait two months or more. Financial institutions offer to step in to pay suppliers earlier on behalf of their customers, minus a small discount they take as their fee. Usually, four or five months after an agreed date, the customer settles with the financial institution. All parties are happy on paper, and no risks are seemingly involved.

The world in which we live doesn’t always agree with textbook definitions, however. Reverse factoring has recently gained in popularity because of the potential it offers for creative accounting, as it’s called euphemistically. During the fair-value revolution, creative accounting has flourished as accounting rules have evolved towards a more market-based outlook.

Doing your accounts has essentially shifted from a valuation of past transactions to an evaluation of future cash flows.

The value of many assets is no longer determined by their purchase price, but by the market value or even by estimating their future cashflows. Profits are booked according to future expectations for some contracts as well. Accounting in this manner leaves room for discretion, subjectivity and speculation. Companies are arguably better able to “recognize” profits than to earn the actual cashflows required to support them. In these circumstances, supply chain financing can be misused.

Carillion, the outsourcing company that folded in 2018, was characterized by a gap between its cashflow and profit. Carillion retained its cash through reverse factoring for a longer period of time, leading to higher net operating cashflows. A portion of executive director pay was determined using this accounting trick, which resulted in a higher “cash conversion rate” (the profits realized as cash). In addition, Carillion disguised its debt through its accounting treatment of supply chain financing.

In 2016, Carillion owed banks £148m in overdrafts and loans, but it owed £498m in supply chain financing obligations. As a result, Carillion looked healthier than it was.

Unlike many other large firms, Carillion became a kind of portal that could move income and costs according to projected economic outcomes. With supply-chain financing, it was able to produce operating cashflow figures that helped give credibility to its profit figures. This loophole may be exploited by many other firms in a market estimated to be worth $3.5tn (£2.5tn).

In contrast, Greensill did not participate in Carillion’s factoring arrangement, but had a similar arrangement with other large firms. Direct factoring is when a business sells its invoices or receivables to a third party at a discount, as opposed to reverse factoring which offers early payments to a company’s suppliers. The collateral backing transactions with some of these companies seemed to be speculative as Greensill sought growth. Investigatory work has revealed that Greensill not only lent against invoices for previous transactions, but it also lent against the future “prospective receivables” the company would produce.

Essentially, it would lend money to companies that have never done business with its clients, lending money against transactions that have never taken place.

The Cameron story must be understood within this unsettling context. The NHS payment system negotiations carried a lot of risk for Greensill. If Greensill had been able to secure the deal, it would have provided an extremely large, virtually risk-free income stream. However, if the company became an integral part of the public sector payment system, it might have created substantial too-big-to-fail problems.

Is the state required to bail out or support Greensill if the risky private endeavours the company undertakes lead to solvency issues that threaten to disrupt nurse and doctor wage payments? Despite not being awarded this deal, Earnd was able to gain some traction with pharmacies through its app and supply-chain financing. The extent to which Earnd will become involved in public provision remains to be seen.

The supply chain finance system provides many benefits, but it may be mishandled when it is used as a temporary fix for a surreal, holographic form of capitalism. There is no way Greensill’s model can be sustainable long-term because debts must be settled at some point. Nevertheless, despite its long-term sustainability, Greensill Capital – and perhaps some of its clients – gained a great deal of wealth.

In addition, the blurring of the boundary between government and private providers is being discussed. There is considerable controversy as to whether such companies help the state with its service delivery problems, or whether the state helps them with their risk and profitability issues.

Why did Greensill fail?

There are a number of factors that likely contributed to the failure of Greensill, a prominent global financial company. Perhaps the most obvious factor was the company’s lack of financial oversight and management. Greensill was known for its laissez-faire approach to business and relied heavily on charismatic founder and CEO Stephen Major.

Major had an impressive track record, with over 20 years of experience in finance and banking, but he lacked formal training and ultimately proved unable to deal with the challenges that the company faced.

In addition, Greensill spent recklessly on various projects, leading to mounting debt and increasing pressure from investors. Ultimately, these strategic missteps led to its downfall, making it one of many companies that ultimately fell victim to the 2008 financial crisis.

While no single factor can be solely blamed for its downfall, we can say without question that Greensill failed due to a combination of poor management decisions and bad luck.

How was David Cameron involved?

Jeremy Heywood, who was cabinet secretary at the time, reportedly brought Greensill into government work when Cameron was prime minister. Cameron joined Greensill Capital in 2016 after leaving office. Tens of millions of pounds in share options were granted to him.

What did Cameron do?

Several years ago, Greensill Capital requested government-backed loans through the Covid corporate financing facility, or CCFF, by sending “multiple” texts to Rishi Sunak, the chancellor, and “informally” calling two other Treasury ministers. A No. 10 aide also lobbied him, and, in 2019, he took Health Secretary Matt Hancock out for a “private drink.”

Lobbying by David Cameron

Several months before Greensill Capital collapsed, Cameron lobbied the government to allow the firm to join the COVID Corporate Financing Facility, which enabled it to issue government-guaranteed loans to support companies during the COVID-19 pandemic, which impacted the economy heavily.

Cameron sent a series of text messages to Chancellor of the Exchequer Rishi Sunak. Both parties made at least one phone call, the nature of which was not disclosed. Cameron’s requests on behalf of Greensill were denied.

Also, on behalf of Greensill, Cameron lobbied a German government official. To discuss Greensill’s products with the German ambassador, he took part in a virtual call in November 2020.

Greensill’s lobbying by Cameron did not violate any rules of conduct, according to the man himself.

Greensill –

Greensill met with permanent secretaries Tom Scholar and Charles Roxburgh ten times between March and June 2020.

Civil servants –

In addition to lobbying for David Cameron, Greensill had ties to a number of senior civil servants and private companies.

From 2012 to 2015, Bill Crothers served as the UK Government’s Chief Commercial Officer, earning up to £149,000. As a crown representative, he had access to government procurement strategies in his role, according to The Times.

He became a director of Greensill in August 2016 after serving as an advisor while a civil servant. ACOBA vets private sector appointments of former senior civil servants and government ministers and he did not disclose his association with the ethics watchdog.

What did David Cameron say at the time?

For roughly a month, nothing. A few days later, he issued a statement insisting he did nothing wrong, although he accepted that his communications with ministers should have taken place “through only the most formal of channels, so there is no room for misinterpretation”. He declined to say how much his share options would have been worth, despite reports of their value having been exaggerated.

What was the government response?

According to Sunak’s 2019 responses, released after a freedom of information request, he notified Cameron that he had “pushed the team” in the Treasury to see if he could obtain full access to the CCFF loans in April a couple of years ago.

Treasury officials met with Greensill Capital several times but ultimately denied it access to the CCFF, according to other documents. After being approved for the Coronavirus large business interruption loan scheme (CLBILS), the company was able to offer government-backed loans of up to £50 million.

Who else was involved?

Bill Crothers – while still employed in the civil service – began working as an adviser for Greensill Capital in 2015 while also employed by the government as its chief commercial officer. Somehow the move was approved by the government.

Later, Boris Johnson refused to rule out the possibility that other officials may have been involved.

What are the main concerns about all this?

A number of them exist. There are several reasons for Greensill’s prominence in Cameron’s Downing Street; one is that Haywood nominated him for a CBE. He had a business card from No 10 calling him a “senior adviser.”

The use of supply chain finance by the government, which does not have cashflow issues, has also raised questions.

Particular attention is being paid to Cameron’s role. In order for a company in which he owned a financial stake to receive preferential treatment, he appears to have used his personal contacts.

The statement that Sunak had “pushed the team” to help raised eyebrows as well.

Furthermore, Crothers’ dual role has led to concerns of a revolving door between Whitehall and private companies that receive government contracts.

Responsibilities have to be considered

David Cameron is the target of the most damning observations in the Treasury select committee’s report on the lessons from Greensill’s failure with admirable clarity. A committee responsible for holding the finance ministry to account criticized the former prime minister for his actions on behalf of Lex Greensill and his company.

Even though his behaviour conformed to the rules, the report concludes that the rules need to be tightened.

As Coronavirus first spread across Britain, sending the country into lockdown and leading business owners to worry about how they would pay bills without money coming in, Cameron lobbied the government to give his employer Greensill a bigger role in providing finance to struggling companies.

Even though the company never achieved access to the Bank of England’s emergency Covid lending program, revelations made after the collapse of the company earlier this year, concerning how the former Conservative leader lobbied, shed light on the murky world of lobbying and raised a number of questions regarding the appointment of former officials to lucrative lobbying positions in the private sector. Nevertheless, the report, released on Tuesday morning, does not spare those who are still in office.

In its report, the committee noted that the Treasury recognized that Greensill’s offers to support the Coronavirus and supply chain were merely sales pitches and that its claim to be a “fintech” was simply marketing. Even so, the committee finds that the Treasury could have responded more effectively to Cameron’s lobbying: Once the Treasury became aware of Cameron’s financial motivations with Greensill, he was no longer permitted to continue using the informal networks he had established as prime minister.

The committee is surprised by the Treasury’s assertion that Cameron is treated like any other lobbyist.

It was possible for the Treasury to insist on having an arm’s-length relationship with Cameron, no matter what the rules were. Rather than contemplate the possibility that in how it dealt with this case, the Treasury may have made better decisions, the report concludes. Providing “free” services had a problem, too. It appears there were no consequences for spending on Earnd, a free service Greensill provided to some NHS trusts that allowed staff to claim a part of their wages early.

Even though the contract might enhance Greensill’s reputation, it still had consequences for the use of public funds, the report concludes, and the Treasury should exercise greater control going forward. When it comes to procurement and lobbying, it is important to remember that there is no such thing as a “free lunch”.

The failure of Greensill poses few risks to the overall stability of the financial system, but it does raise questions about the regulation of non-bank lenders, such as Greensill itself.

Greensill is listed between the Bank of England, its Prudential Regulation Authority, and the Financial Conduct Authority in the report, indicating an overlap of regulatory authority, as well as gaps in existing regulation, including how securitization is handled. The TSC’s harsh words toward Cameron are justified, but there is more to be done than tightening lobbying rules.


Lobbying registrar in the UK –

As of 25 March 2021, the UK lobbying registrar had launched a formal investigation into whether David Cameron’s work for Greensill had violated lobbying laws. Cameron was cleared of any wrongdoing by the investigation, which found that his activities did not meet the criteria for registration.

Cabinet Office –

In April 2021, the Cabinet Office announced an investigation into lobbying activity performed on behalf of Greensill. The investigation will be led by Nigel Boardman, a non-executive board member who sits on the Business, Energy and Industrial Strategy department’s board. A 141-page report published by the Cabinet Office inquiry was released on 21 July 2021.

Jeremy Heywood, then Cabinet Secretary, was criticized in it. Lex Greensill was identified as the person most responsible for getting a role in government and “extraordinary privileges” at 10 Downing Street. Additionally, it found that Cameron did not violate current lobbying rules or commit any unlawful acts, and that he understated at times the nature of his relationship with Greensill Capital.

House of Commons Treasury Committee –

Treasury Committee of the House of Commons announced on 14 April 2021 that an investigation would be held. They released the report of their inquiry into lessons learned from the failure of Greensill Capital on 20 July 2021. During the inquiry, Cameron was found not to have broken any rules regarding lobbying by former ministers.

The report also said that the current rules were “insufficiently strong”, and that they should be “further strengthened” and that Cameron had acted with a “significant lack of judgement” in lobbying Greensill.

Lessons to learn from the scandal

There are many things we can take away from the scandal. We will now highlight the key areas we can learn lessons from and ensure a similar predicament is not landed upon once again.


In order to influence policy, interest groups must be able to show their methods to the public. Ministerial code requires meeting minutes to be kept and published, but what about the plethora of other communication channels? The ex-PM sent nine messages to Rishi Sunak via WhatsApp, his preferred method of communication. Angela Eagle, a member of the Treasury Select Committee, has likened the sheer volume of texts, emails, and phone calls to ‘stalking’ rather than lobbying.

The public still would not have been made aware of the lobbying activities without the work of investigative journalists. As a result, departments have generally only published information about meetings when they are held in-person, but not about letters, emails, and other electronic communications.

Matt Hancock, Secretary of State for Health, was reported to have met David Cameron and Lex Greensill, founder of Greensill Capital, for a drink. They discussed the implications of Greensill’s new payment scheme, Earnd, for the NHS during their meeting.

If ministers discuss official business during social occasions, their department should be notified. Despite Matt Hancock’s claim that he submitted the details of the meeting to his department, for some unknown reason the meeting was not included in the department’s official disclosure, so we must rely on his word that it was.


Data about transparency must be readily accessible and published in a timely and complete manner in order to serve as an effective accountability tool for the public. Updates to publishing formats over the last few years have greatly improved accessibility, but standards are falling when it comes to data timeliness and completeness.

Meetings must be published quarterly by departments. However, most of the government’s recent disclosures covering Q4 2020 took over half a year to be released. These records haven’t been published for the longest time since 2014. When was that? The third quarter of 2020. We have a seven-month delay between the occurrence of the meeting and when the transparency returns were published for two of the most recent sets of transparency reports.

Due to the government’s communication ‘grid’, these disclosures are continually delayed. Ultimately, however, they are at the discretion of the government. This discretion has been utilized to its best advantage. Journalists and ethics watchdogs didn’t exactly expect Q4 2020 to be released on a Friday after 6pm. The day was also a day when local election results were being discussed.

That’s interesting. During a time when the media and public were distracted, it could be interpreted as an intentional attempt to bury this data.

The Foreign, Commonwealth and Development Office and the Attorney General’s Office have not yet published data for the period October-December 2020. It has been observed by civil society before that some departments, such as the Ministry of Justice, consistently withhold information. As a result, the data are incomplete.


The departments are required to summarize the meetings, and while the term “general discussion” is discouraged, the descriptions are often vague or limited. Only meetings with the Treasury Permanent Secretary are available as public records of Greensill lobbying the government and the description of these meetings is a few words – “Discussion of eligibility for Covid support packages” – which does not adequately convey the full intent that Greensill had or the complexity of the issues on which they were advocating.

In the absence of official information, how can the public be aware of lobbyists’ intentions? Without compulsory disclosure of this information, civil servants would never be able to know what the people seeking to influence government are actually trying to accomplish.


Meeting data is also difficult to analyse because of how it is released. The meetings held by each department are published separately. The frequency of meetings a company has with the government as a whole cannot be determined. That must be determined by examining each department’s disclosure. Because of inconsistent publications and inconsistencies in how departments register organizations (is it ‘National Housing Federation’ or ‘NHF’?) basic analysis is unnecessarily time-consuming.

These are gathered into one place, but we have to do a lot of data processing in order to do so, which would not need to be done if the government published them in one place and in one file.

The current state of Greensill Capital

On 8th march 2021, Chris Laverty, Trevor O’Sullivan and Will Stagg of Grant Thornton UK LLP were appointed as joint administrators of Greensill Capital (UK) Limited and Greensill Capital Management Company (UK) Limited.

Administrators are trying to untangle Greensill Capital’s dealings and return money to creditors after the company went into Administration last March. The company was arranging more than short-term loans to help speed up payments, as it turned out. The company did engage in such activities, but a great deal of its debt was backed by forecasts rather than invoices.

It’s been reports in the FT that Grant Thornton has informed creditors of Greensill Capital that it expects to charge almost £21m in its first year as administrator of the collapsed lender’s UK operations.

Former staff members say the company also placed big bets on companies in shaky industries, and its theorised risk-assessment technology offered little value. Additionally, Greensill Capital’s riskier loans were partly financed by investors and even bank depositors looking for safe investment options

Where is the director of the company now?

Lex Greensill lives in a remote English village about four hours north of London, the village of Saughall, since his $6 billion supply chain finance firm collapsed abruptly last March. As it has unfolded, the Greensill scandal has cast an uncomfortable spotlight into many corners.

Owner of Whyalla Steelworks in South Australia, mercurial metals magnate Sanjeev Gupta, is struggling for survival. David Cameron’s reputation was trashed; the reputation of Japanese investment firm SoftBank was sullied; and Credit Suisse executives were brutally attacked.


The collapse of Greensill Capital can be attributed to a complex interplay of factors that ultimately led to its downfall. Once regarded as a pioneer in supply chain finance, the company faced significant challenges that exposed fundamental flaws in its business model and operations.

One of the key factors contributing to Greensill Capital’s demise was overreliance on a narrow customer base. The company heavily concentrated its efforts on providing supply chain finance solutions to a few large clients, particularly in the steel and commodities sectors. This lack of diversification made Greensill Capital vulnerable to disruptions in these industries and left it susceptible to adverse economic conditions.

Additionally, the firm’s aggressive expansion and reliance on complex financial products, such as its so-called “provisional payment” method, raised concerns about risk management practices. Greensill Capital’s pursuit of rapid growth and profit seemed to outpace prudent risk assessment and mitigation measures. The lack of adequate controls and transparency in their financial operations heightened the risk of insolvency.

Furthermore, the company’s close ties to certain high-profile individuals and political figures raised questions about potential conflicts of interest and preferential treatment. Such associations led to heightened scrutiny, regulatory concerns, and reputational damage, further undermining investor and client confidence in the company.

In early 2021, the loss of insurance coverage for some of Greensill Capital’s securities through the sudden bankruptcy of a major insurance provider, exposed the fragility of the firm’s financing structure. This event triggered a liquidity crisis, leaving the company unable to meet its financial obligations and forcing it to file for insolvency.

Lastly, the lack of adequate oversight and regulatory scrutiny over the supply chain finance industry as a whole contributed to Greensill Capital’s unchecked growth and potential risk-taking behavior.

In conclusion, the downfall of Greensill Capital was the result of a combination of factors, including overreliance on a limited client base, aggressive expansion without appropriate risk management, potential conflicts of interest, and the sudden loss of insurance coverage triggering a liquidity crisis. The case of Greensill Capital serves as a cautionary tale for the financial industry, highlighting the importance of robust risk management, diversification, transparency, and effective regulatory oversight to ensure the stability and sustainability of financial institutions.

Business Finance specialist at Invoice funding | + posts

Seasoned professional with a strong passion for the world of business finance. With over twenty years of dedicated experience in the field, my journey into the world of business finance began with a relentless curiosity for understanding the intricate workings of financial systems.

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