Lex Greensill’s rise to the upper echelons of politics had begun at Morgan Stanley. The young Australian banker had landed at the bank’s Canary Wharf offices with a vigorous work ethic, a firm belief in his own destiny, and the support of David Brierwood, one of the bank’s top executives. He also landed at more or less the same time as another, far more vaunted outsider.
Jeremy Heywood was a seasoned economist and civil servant who’d worked the corridors of power under various governments since the 1980s. He ran the Treasury under Conservative and Labour Chancellors alike. He became Principal Private Secretary to Tony Blair – it is Whitehall folklore that when al-Qaeda terrorists flew hijacked planes into the World Trade Center in New York on 11 September 2001, Blair called Heywood, the one adviser he could truly trust in a moment of deep crisis, and asked: ‘Are you sure there aren’t any aeroplanes flying towards us?’
In the otherwise anonymous civil service organization, Heywood was a rock star. But in 2003, Heywood left the service. During the high-profile Hutton Inquiry into the death of Dr David Kelly, an expert in biological warfare and former UN weapons inspector in Iraq, Heywood acknowledged he had skirted normal procedures and not drawn up minutes for some key meetings. Shortly after, he quit Whitehall for the City, and joined Morgan Stanley’s UK investment banking division.
The Wall Street firm is a colossus. Today, it has more than 60,000 staff worldwide with more than 5,000 in London. Like the other global banking giants, staff from one business unit don’t necessarily mix with their colleagues in another part of the bank. This is partly by design and regulation, to protect the integrity of the bank’s relationship with its clients. It’s also partly because the investment bankers are often seen as a breed of alphas.
Heywood, the former civil servant, was different. He had made a career out of striding through the bureaucracy and red tape in government. He was always deeply curious too. And he spent some of his time at the bank meeting with a broad range of colleagues – grey-haired City veterans as well as eager new associates – across whatever business line or department fascinated him next. He was especially keen to meet people who worked on something innovative or unusual. One of those bankers was Lex Greensill, who was making waves with supply chain finance.
Supply chain finance was exactly the kind of esoteric business that piqued Heywood’s interest. When he met with Lex, Heywood was intrigued by the potential for supply chain finance to help small to medium-sized enterprises (SMEs). He thought Lex was interesting, clever, charismatic in a way, and deeply knowledgeable about the product he was working on.
Though Lex and Heywood were in different spheres, their paths crossed from time to time. At one point, a team of high-level Morgan Stanley bankers were pitching for business with Transport for London (TfL). Heywood was there, and somehow Lex had worked his way into the meeting too. At the end, one of the Morgan Stanley bankers – a well-connected capital markets guru named Piers Harris – asked for a little more time with the TfL executives to explain the bank’s supply chain finance programme. Lex introduced himself as Morgan Stanley’s global head of supply chain finance. His colleagues were astonished – Lex had just made up a global title that gave him a massive promotion.
WITHIN A COUPLE of years, Lex and Heywood had both moved on. Heywood was summoned back to the civil service, first under Labour Prime Minister Gordon Brown, and then as a top bureaucrat serving the government of Tory PM David Cameron. Lex moved first to Citi, and then, in late 2011, he started his own firm, Greensill Capital.
The chance meeting of Heywood and Greensill at Morgan Stanley might have ended there, with Lex occasionally knocking on the door at the civil service, pitching supply chain finance programmes, invoking his brief relationship with the Whitehall mandarin to enhance his own reputation. But then the door opened wide.
The UK economy was struggling to recover from the impact of the financial crisis. The government of Cameron and Chancellor of the Exchequer George Osborne owned stakes in privatized banks and had forced through a package of austerity measures to drive down their costs. The Bank of England, like its peers around the world, was flooding the economy with cheap money. Yet there was barely a ripple. What else could be done?
This was the backdrop to the Breedon report, a months-long government-commissioned research project that looked into non-bank lending as a means of supporting SMEs. The project was set up by the Business Secretary, and the task force behind the report was led by Tim Breedon, then CEO of Legal & General, the giant insurance company. His team included half a dozen of the most powerful finance leaders in the UK, such as London Stock Exchange CEO Xavier Rolet and Dame Helen Alexander, the deputy chair of the Confederation of British Industry. In March 2012, Breedon’s task force issued its findings, in a report headed ‘Boosting Finance Options for Business’. For Lex Greensill, the fifty-page document was a gift from the political gods.
Breedon concluded that the financial crisis had shown UK businesses were too reliant on bank lending – the crisis had shown the danger of that approach, as banks had suddenly and ruthlessly backed away from clients in order to try to save themselves. The report said that ‘there is a need for new mechanisms to support growth in the UK’ – chief among these being SCF.
An entire section was devoted to a version of SCF and reverse factoring, with flow charts and a real-life example from Network Rail of how it could work.
Breedon specifically recommended that the government should, ‘Explore how it can use its power as the biggest purchaser in the UK to encourage its own suppliers to adopt supply chain finance or similar schemes to support their suppliers; and work with banks, industry associations and professional bodies to accelerate adoption of supply chain finance.’
This was a green light – SCF was now official UK government policy, and expertise in this niche corner of the banking world was suddenly in demand.
By this time, Heywood was Cabinet Secretary, the highest-ranking official in the UK civil service. He had also been knighted earlier in the year. It was his job to ensure government policy was implemented. So, when Breedon asserted that the government should promote SCF, Heywood turned to an oddball banker he’d met at Morgan Stanley years earlier, SCF’s passionate advocate, Lex Greensill.
GREENSILL HAD MET with several parts of government over the years, through his roles at Morgan Stanley and at Citi. By early 2012, before the Breedon report had even been released, Heywood helped Lex get a role in Whitehall, on a short-term, unpaid basis to offer advice on supply chain finance. Lex had already left Citi and set up his own firm, Greensill Capital, though it was nascent at this point.
At first, Lex had no special access, no email address or pass to buildings. He was initially given three months inside the corridors of power. But anyone who knew Lex knew that it wouldn’t end there. His initial three-month spell in Whitehall led to a longer one. He soon gained official IT and security access for the Cabinet Office and to Number 10 Downing Street. He carried a Number 10 business card and he had a Downing Street email address.
He began holding meetings inside Number 10 and other government buildings with contacts at tech platforms and in the insurance industry, and with big companies such as Vodafone and Carillion. Often, he’d try to impress guests with a tour of Number 10, whether they wanted one or not. Once, while showing a contact around the prime minister’s residence, and intending to take his guest into the dining room, he instead walked straight into a broom cupboard.
The informal nature of his appointment could have been a hindrance. Lex turned it into an asset. He took on a kind of roving brief, seemingly turning up wherever he wanted. He met with officials in the Ministry of Defence and pitched the idea of using supply chain finance to pay for the maintenance of Voyager air-to-air refuelling plans and the construction of some new Eurofighter Typhoon jets. Another time, he suggested using supply chain finance to pay for a multibillion-pound nuclear submarine. Ultimately, these suggestions didn’t go anywhere, though they did raise eyebrows among Whitehall staffers, who couldn’t see what benefit Greensill’s proposals offered.
Lex continued to work his way through government. He was a whirlwind. He met with officials at Her Majesty’s Revenue & Customs, at the Highways Agency, the Department of Work and Pensions, the Department of Environment, Food and Rural Affairs, and Network Rail.
He eventually got somewhere, following meetings with officials at the Department of Health. Lex suggested a plan to finance payments made to independent pharmacies for prescription drugs. Many of these pharmacies were small businesses and they had to wait weeks to be reimbursed for the drugs they handed out to customers. Officials pushed back on Lex’s idea, arguing that if there was a problem with late payments, then the government should just pay the pharmacies on time. Why did the government need someone else to finance its bill payments? Despite the resistance, the idea ended up in front of David Cameron, who signed off on the pharmacy plan. The programme went into effect, initially run by Lex’s alma mater, Citibank. Later, the contract passed to Greensill Capital.
Although it’s unclear whether Lex’s work had any positive outcomes for the government, he began to reap the rewards of his time there. In 2014, he was appointed a Crown Representative – one of a select group of businesspeople advising the government on economics and trade.
He’d always coveted a formal British title. He’d told his colleagues on the internship programme at Morgan Stanley that he would be knighted. In September 2015, Lex’s supporters in Whitehall began preparing the groundwork to have him rewarded in the Queen’s Birthday Honours, the parade of gongs dished out by the government to those it favours. Heywood was keen to have Lex nominated for a CBE, one step below a knighthood. The rationale was that he had done years of unpaid work advising the government on supply chain finance.
Lex’s nomination hit some resistance – there was opposition based on the view that Lex’s free advice didn’t merit such a top honour. Where was the hard proof that it resulted in anything much?
Lex told acquaintances that he had hired a consultancy based in Mayfair, London that helped wannabe award holders with their nominations and charged as much as £40,000 for services including writing applications, drafting letters of support, and face-to-face meetings to support their application.
In February 2017, a citation from Heywood’s office in support of Lex’s nomination said that ‘over 3,000’ pharmacies used the supply chain finance programme that Lex had helped set up in the UK, resulting in more than £3 billion in early payments, and savings to the government of about £100 million each year. The citation also claimed Greensill had ‘a real impact on the UK economy and saved the taxpayer money especially in the Health and Defence areas.’ (Later, a National Audit Office report largely debunked these claims.)
Sue Gray, the Cabinet Office’s head of ethics, pushed back, saying Lex should settle for a lesser gong, the Order of the British Empire. In a heated email tug-of-war, Gray wrote that ‘Lex must remain an OBE and while we can put him forward for a CBE it will be outrageous if he gets one’.
But the lobbying in Lex’s favour was relentless. Eventually, the honours committee put his name forward in March 2017. A few months later, Lex’s mother flew to the UK. Her son, Lex Greensill from Bundaberg, took her to Buckingham Palace. There, she watched Prince Charles award her son with a CBE.
IT’S HARD TO pinpoint exactly when Cameron’s relationship with Greensill blossomed. The two had crossed paths for years. Lex had once met Samantha Cameron, who had previously been creative director of the upmarket stationery brand Smythson. Sam Cameron mocked Lex’s flimsy Greensill business cards. Lex followed up by having Smythson make the cards for his fledgling firm Greensill Capital. It was an expensive extravagance for a start-up company and there was an echo of a famous episode in Brett Easton Ellis’s postmodern novel American Psycho in which the psychotic banker at the heart of the tale seethes with anger when a rival presents him with a more expensive business card.
When Cameron joined Greensill Capital, in 2019, it hardly caused a stir at first. Just another former politician taking a private sector role. The former PM’s motivation for joining the start-up wasn’t hard to fathom. Many top politicians took highly paid jobs with financial companies. After leaving the prime minister’s office, John Major became a chairman at the leading private equity firm Carlyle Group, while Tony Blair took on a role advising J.P. Morgan, the giant Wall Street bank. Cameron’s own Chancellor, George Osborne, landed several jobs, with the global asset management giant BlackRock and later with the London boutique investment bank Robey Warshaw. Indeed, Osborne’s vigorous and varied post-political career earned him the nickname ‘Nine Jobs George’.
Cameron, though, took a different route, avoiding the kind of established big businesses his predecessors had favoured. Cameron had always been a fan of technology businesses and disruptive start-ups. Tech was cooler than Wall Street for starters. And although you could earn big bucks in banking and investment management, the rewards from holding equity in a hot new tech business could be far more handsome. Pick the right one, and it was like buying a winning lottery ticket.
At Greensill, Cameron was paid several hundred thousand pounds in salary and took home a bonus worth several hundred thousand more. His stock in the company would potentially pay out tens of millions of pounds, depending on what valuation Greensill could achieve. And he might not have to wait for an initial public offering (IPO) or sale of the company – unlike most of the other senior shareholders, part of Cameron’s stock vested every year for three years, meaning he could cash out part of his holding worth millions of pounds. The former PM’s main role was to lend credibility to the business and to open doors. He made introductions to top businesspeople and political leaders alike.
Government broadly became a talent pool that Lex frequently dipped into. He hired several former government staffers to Greensill Capital. Bill Crothers was the government’s commercial chief – he’d appointed Lex as a Crown Representative – before he went to work for Greensill. Sean Hanafin was an adviser on supply chain finance between 2012 and 2014 – he joined Greensill in a senior role a few years later. David Brierwood, Lex’s old mentor from Morgan Stanley, was a Crown Representative from 2014 to 2018, and he began working for Greensill Capital from 2014.
Lex also hired former UK Home Secretary David Blunkett and Australia’s former Minister of Foreign Affairs, Julie Bishop.
How did he get the politicians on board? Some of them might have bought into Lex’s claim that he was ‘democratizing finance’. Typically, those closest to Greensill were given a major financial incentive. The firm was a big payer – salaries were sometimes double the norm. And Lex distributed shares liberally too.
One politician who turned him down was the late Paul Myners, the former UK Treasury minister under Gordon Brown, who passed away in early 2022. Myners was wary of Greensill – especially because of the potential conflicts attached to the politicians who were working for the firm – and raised questions about the company in the House of Lords, where he had a seat. He was also the chair of Edelman, a giant global public relations firm whose subsidiary, Smithfield, counted Greensill as a client. When a Smithfield PR executive set up a meeting between Lex and Myners to clear the air, it only did more damage. Within minutes of the meeting starting, Greensill offered Myners a seat on the board. The politician and businessman took this to be arrogant and a red flag – surely no one credible would pitch such an important role to a person they’d just met. Myners turned Greensill down – and continued to question the firm through his parliamentary role for years thereafter. Emails emerged later that appeared to show Myners on friendly terms with Greensill. But, in my experience, though he was always courteous, he was also highly suspicious of the Greensill business model.
Greensill knew that political connections helped him appear credible. He frequently boasted that he was a senior adviser to the US administration of Barack Obama, and that he’d been introduced to the president by David Cameron. There was even hard evidence – a photo showing Lex meeting Obama at a supply chain finance summit in Washington DC in 2014, sitting in the Greensill office. The reality was somewhat different. The meeting had come about after US Treasury officials working with small businesses asked their UK counterparts about the supply chain finance programmes that Lex had advised on. Lex visited the White House twice and met Obama just once, alongside dozens of other businesspeople. Cameron’s spokespeople later denied he’d made any kind of personal introduction, and the White House never seriously followed up on Lex’s proposals.