Bill Crothers was one of Greensill’s top lieutenants. The Belfast-born accountant had spent most of his career at the management consultancy Accenture, where he had a reputation as an aggressive and skilled negotiator. He sat on the firm’s UK board and had been a leading partner at Accenture during one of its most controversial UK projects, a £300 million-plus contract to implement a new billing system for British Gas in the early 2000s that was beset by a series of failures, leading to a deluge of customer complaints and an embarrassing and protracted legal battle. The affair had led to tens of millions of pounds’ worth of legal wrangling, and was one of several bungled projects that had tarnished Accenture’s name in the mainstream media.
After that, Crothers became a civil servant. He told The Guardian in a 2012 interview that he joined the public sector ‘to travel less and because of a sense of wanting to give something back to society.’ In the post-financial crisis world, when austerity was the keystone of government policy, Crothers became chief procurement officer with a mission to extract big savings from billions of pounds of government contracts. (Crothers later rebranded his role as the more all-encompassing and altogether more impressive-sounding chief commercial officer.) Sponsored by Francis Maude, the former Morgan Stanley banker who was minister for the Cabinet Office, Crothers shook up the government’s procurement process, drove private sector-style reforms and claimed billions in budget savings. But he also created a whorl of animosity. Other civil servants queried his savings claims and referred to him as ‘Wild Bill’, after the famed Western gunslinger, for his tendency to shoot from the hip, firing off missives and making snap decisions and only asking questions later.
In 2014, Crothers had also appointed Lex to the Crown Representatives programme, which recruits private sector experts to help the government work with suppliers. Just one year after that, Crothers turned around and joined Greensill – initially part-time while he still worked in government before he took on a full-time role. By 2019, Crothers had a stake in Greensill that was worth well in excess of £5 million, had he been able to cash it all in.
At Greensill, one of Crothers’ goals was to find ways to ingratiate the company with government agencies, particularly the NHS. Government organizations had vast swathes of suppliers, steady cash flows, and billions of pounds’ worth of transactions – all of which could be bundled up into securities and sold off to investors. What’s more, if Greensill became more deeply embedded in government, that could potentially save it from disaster. Greensill could become too important to fail.
NOT LONG AFTER Crothers officially landed at Greensill, one of the cornerstones of Greensill’s relationship with the NHS was put in place.
The Pharmacy Earlier Payment Scheme, known as PEPS, had been launched by the Department of Health and Social Care a few years earlier, in 2013, to streamline payments to small pharmacies. The idea had partly come out of Lex’s own work for the government. Citi, the giant US bank where Lex had briefly worked, was awarded the first PEPS deal under an existing government contract without a structured procurement process. In 2018, the PEPS contract was up for renewal. Executives at Citi thought they’d won it again – they believed they had been told as much by government contacts – only for bidding to be reopened. Greensill swept in and offered to run the programme at a slightly lower cost, undercutting Citi at the last moment.
In effect, it meant Greensill had been awarded a contract to provide a supply chain finance programme to the public sector that Lex himself had proposed while working inside Whitehall. Regardless, it was a major coup. Lex frequently invoked the NHS pharmacies contract as a sign of Greensill’s credibility and scale.
In truth, the PEPS business was doing little to help Greensill’s bottom line – and little to help the small pharmacies that were supposed to benefit from it either. Although Greensill was processing more than £100 million of pharmacy-related payments monthly, PEPS was not a success. A government investigation in 2021 found that far fewer pharmacies than anticipated had taken part in the programme, and that those that did were more likely to be larger pharmacy chains rather than small, family-run pharmacies that most needed help. The same investigation also found there was no evidence that the much-vaunted savings to the NHS – which were calculated based on Lex’s estimations and advice – ever resulted.
PEPS was not the only NHS business at Greensill.
Almost everything SoftBank had put into Greensill in October had gone out of the company, either to Greensill Bank or to the pockets of the founder shareholders. But not all of it. In late 2019 and early 2020, Lex was in acquisition mode.
FreeUp was a small start-up founded by a group of entrepreneurs who wanted to give employees access to their salary in real time. There were several similar businesses around. The idea is this: each of us who works for a wage and is getting paid fortnightly or monthly is effectively providing a kind of credit to our employers. We supply our work up front, and the employer pays later. A clutch of fintech believers say that the traditional payroll process is deeply unfair, woefully outdated and ripe for disruption. Instead, businesses like FreeUp aimed to let workers draw down their salary whenever they wanted – even daily.
Most of the companies that do this charge a fee – maybe £2.50 for each withdrawal. It’s a bit like the fee you reluctantly pay at some ATMs for withdrawing cash from your bank account. The companies that provide this service often portray themselves as a better, fairer alternative to payday lenders, which have been heavily criticized by poverty action groups and government inquiries for charging exorbitant rates to desperate customers. But the fees that these alternative payroll companies charge can still be costly.
FreeUp’s small group of founders came from big tech and consulting backgrounds and had also worked in quasi-governmental and non-profit organizations. They were backed by the venture capital investor Public, which is run by a former Number 10 policy adviser. As well as being a fintech, FreeUp was one of a new breed of so-called ‘GovTech’ firms that were pushing new technologies into the public sector around the world. The company’s name, FreeUp, signalled that its founders wanted to find a business model that would allow workers to draw down their salary without incurring any fees at all. It was a socially conscious organization, not just another company out to make huge profits.
Although FreeUp was little more than an idea – it had no customers at this point – the company had been noticed by Bill Crothers.
Crothers met with the founders. He was clearly impressed. FreeUp had plenty of potential. Imagine if it could be integrated into the NHS. The UK’s health service is one of the world’s largest employers, with 1.4 million staff and an annual payroll of more than £50 billion. Between them, FreeUp and Greensill could turn that into a gold mine.
Crothers introduced the business to Lex. He was interested. He saw it as similar to supply chain finance but, instead of transactions between suppliers and buyers, FreeUp dealt with payments between employers and their staff. Those payments, the obligations to pay staff, could be bundled up into securities and sold in the market just like supply chain payments.
Lex quickly made an offer to buy out FreeUp. At first, the shareholders rejected him. They were interested in having Greensill provide some funding to turn the idea into reality, but they weren’t looking to sell. If they lost control of the company, they would lose control of its mission-driven agenda too. Lex came back with another offer – £5 million. It was an extraordinary bid, given there really was no business at that point. FreeUp’s founders said yes.
Characteristically, Lex lavished FreeUp with grandiose praise. Combining Greensill and FreeUp had ‘the potential to revolutionize the way workers are paid around the world’, he said at the time.
But it soon became clear that the new venture would need a lot more development to deliver any meaningful income. In March, Lex sought to hasten that along. Greensill went out and bought Earnd, an Australian start-up that was in the same field. The Sydney company had been started less than two years earlier by a couple of entrepreneurs with a similar socially conscious mission to the founders of FreeUp. The big difference was that Earnd already had about twenty business customers and it was used by about 10,000 people.
But things didn’t go to plan. First, merging FreeUp and Earnd into one business was not straightforward. Second, the Greensill vision did not match the ethical purpose of the founders. Lex planned to give it away for free to employees of the NHS, sure. But there were good commercial reasons for that. It would give the service enormous credibility to be working with such a huge employer – in effect, the free NHS service was a massive marketing cost. Also, Greensill wanted to use the service as a kind of loss leader. It could be used to seal a relationship with a client – including the NHS or other government agencies – and then upsell them loans or supply chain finance programmes. And finally, the service worked via an app, which could be furnished with a range of pop-up ads and other offerings, like insurance or remittances services or shopping discounts. Employees who drew down their pay would immediately be bombarded with ads and tempting ways to spend their money. This didn’t seem anything like the ethically driven service the founders had envisaged. Several of the key executives involved in the business more or less immediately lost interest.
Still, Crothers began approaching NHS Trusts directly, asking them to adopt the Earnd service. Because the service was offered free, he told the trusts, there was no requirement to go through a formal tender process. In a handful of cases, Crothers was successful.
He wasn’t the only cheerleader for Earnd. David Cameron was an especially proactive supporter of the business. He personally wrote to hundreds of business chiefs, asking them to adopt Earnd for their employees. Greensill also hired a high-profile advisory board for the business that included David Blunkett, the UK’s former Home Secretary under Prime Minister Tony Blair; Dame Louise Casey, a parliamentarian and prominent advocate for homeless people; and Stephen Greene, an American ‘social entrepreneur’ who had been one of the leading lights of David Cameron’s ‘Big Society’ policy efforts, aimed at integrating free-market thinking with volunteerism and social awareness. Blunkett took his role to heart, even weighing in on a branding and logos discussion with Greensill’s marketing team, suggesting his own ideas for how the designs should look.
But Earnd was going nowhere fast. At the handful of NHS Trusts who had taken the service on, only a tiny group of employees were using it – barely 2,000 in total across the entire NHS. They were hardly drawing down any funds either, and opened the app very rarely. There were other problems. The trusts had put measures in place to prevent employees from drawing down so much that they got into financial trouble, putting a cap on how much they could draw or limiting when they could get access to their money. Still, a handful of employees who had left the NHS were able to draw down more than they were owed before they left. This was an issue the NHS Trusts had brought to Greensill even before Earnd was implemented, but nothing had been done to address it. In at least one case, Greensill agreed to pay the trust to compensate.
By early in 2020, just weeks after buying the two businesses, Greensill planned to write down to zero the value of its investment. An internal Greensill memo said that the product was likely to generate ‘negative revenue’ in 2020 as it was offered to governments for free, and because there was commission payable to an NHS agency for helping to get it launched. Earnd had attracted only a tiny handful of users and a meaninglessly low volume of assets.
Greensill’s official position was still characteristically optimistic. It was budgeting for 2.8 million users of the platform by 2024 and $126 billion of assets flowing through the programme. Yet by 2021, in the chaos following Greensill’s collapse into insolvency, Earnd in the UK simply disintegrated. The entire staff and business of Earnd in Australia was picked up for a bargain price by Wagestream, a competitor.
Greensill had promised Earnd would revolutionize employer payments. Like most of what Lex and Bill Crothers did with the NHS, it turned out to be time-consuming, expensive and fruitless.