Former Prime Minister David Cameron's surprise appointment as the new foreign secretary in the U.K. has once again placed the spotlight on his involvement with Greensill Capital.
Greensill Capital, led by financier Lex Greensill, specialized in supply-chain financing. This type of financing is typically considered low-risk, involving the payment of a seller's claim at a discounted rate, with the aim of collecting on that claim from the initial contractor.
While Greensill had reputable clients like Ford Motor Co. and AstraZeneca, they also took on riskier ones, such as the Gupta Family Group Alliance linked to steel magnate Sanjeev Gupta. However, in 2021, the firm collapsed, prompting an ongoing criminal investigation by the U.K. Serious Fraud Office into the Gupta Family Group Alliance and its financing arrangements with Greensill.
Significant players like Credit Suisse were involved with Greensill, as they distributed funds from securitized claims. The Swiss regulator discovered that credit Suisse "seriously breached" its supervisory obligations, and Greensill's troubles contributed to its near-collapse, eventually prompting UBS to acquire it.
During his time as an adviser for Greensill, Cameron's conduct raised concerns. A parliamentary report in the U.K. criticized his "significant lack of judgment" as he used informal means, such as making 19 calls, texts, and emails in a single day, to lobby the government on behalf of Greensill. Despite his efforts, Cameron failed to secure his client access to the COVID Corporate Financing Facility.
It is worth noting that Cameron had a financial stake in Greensill and enjoyed certain privileges such as using corporate jets. While he acknowledged earning a substantial sum annually, his spokesperson denied the claim made by a BBC program that his total compensation amounted to $10 million.
The parliamentary committee also concluded that Cameron relied too heavily on Greensill's board to guarantee the integrity and financial health of the company. They suggested that Cameron should have conducted a more comprehensive assessment of the business. At the time, Cameron was lobbying the Treasury and others, and there were warning signs that may have prompted a more cautious approach.
As David Cameron returns to the political arena, his involvement with Greensill Capital has brought attention to the company's collapse and the consequent investigations. The ramifications of this scandal continue to unfold, casting a shadow on both Cameron's judgment and the practices of the financial institutions involved.
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