Documents report that David Cameron made around $10m (£7m) from Greensill Capital prior to the finance company collapsing.
The documents suggest the former prime minister received $4.5m in 2019 when cashing in shares of the company. However, a spokesman for Mr Cameron says his remuneration is a private matter.
Greensill made its money by lending to businesses, but collapsed following its insurer refusing to renew cover for its loans. When the company went into administration in March, investors faced billions in losses.
Prior to its its collapse, Mr Cameron tried persuading ministers to invest money from taxpayers in Greensill loans, without success. MPs say he showed a “significant lack of judgement”, although he is cleared of breaking any lobbying rules.
A letter from Greensill Capital to the former prime minister revealed details of his shares. It reported that Mr Cameron would receive payment of $4,569,851.60 (approx. £3.3m) after tax. No signed acceptance of the offer has been seen, but the letter states a deal was already in agreement
In addition to the shares, Mr Cameron also received a salary of $1m (£720,000) a year for his role as a part-time adviser. On top of this salary, the former prime minister reportedly received a $700,000 (£504,000) bonus in 2019. He received about $10m in total before tax for two and a half years working part time.
Mr Cameron’s spokesman says: “He acted in good faith at all times and there was no wrongdoing in any of the actions he took”.
‘Recirculation of Greensill funds’
Investors and UK taxpayers are now facing huge losses after the collapse of the company Mr Cameron promoted.
Greensill Capital loaned about $5bn (£3.6bn) to a group of companies controlled by the steel magnate Sanjeev Gupta, the GFG Alliance. GFG employs 35,000 people worldwide, with over 4,000 staff at UK steel mills.
Documents reveal that by the beginning of 2020, Greensill Capital knew GFG was in financial difficulty. This is because it was not able to make payments on Greensill loans. However, investors remained unaware of the troubles because Greensill used its own money to cover repayments GFG could not afford.
In April 2020, an email sent to a senior manager from a Greensill finance officer claimed the unusual payments were happening for four months. It stated it was “constantly plugging holes that GFG cannot afford to repay”, labelling it as a “recirculation of Greensill funds”.
Another email at the beginning of May suggests Mr Gupta’s businesses should undergo review by an insolvency practitioner. It forewarned the likelihood of the requirement of administration. But rather than raise alarm about GFG’s failure to make loan repayments, Greensill seeked a new investor.
David Cameron was used to try and get funds from the UK government, wanting the Bank of England to invest over £10bn of taxpayers’ money in Greensill’s loans. The former prime minister lobbied ministers and senior civil servants, sending around 56 messages. The Bank of England turned the proposal down. But Greensill received approval as a lender in June 2020 under The Coronavirus Large Business Interruption Loan (CLBIL) government scheme. The scheme was created to ensure companies impacted by the Covid pandemic received emergency money.
Taxpayer-backed loans
The government’s CLBIL scheme run by the British Business Bank enabled Greensill to give loans backed by an 80% taxpayer guarantee. It was meant to lend a maximum of £50m to a single borrower or group of companies. But Greensill Capital loaned GFG Alliance £350m, with seven of the companies each receiving £50m in taxpayer backed loans. Another £50m loan was also made to an eighth company linked to Mr Gupta.
All of the companies have failed to repay the taxpayer-backed loans.
The government guarantee is now suspended while the loans are under investigation by the Serious Fraud Office. However, the taxpayer could still face losing £320m.
GFG Alliance is taking the investigation very seriously and strongly deny any allegations of improper conduct. It is working to stabilise the businesses affected by the collapse of Greensill and deliver refinancing. The company are committed to UK industry and to finding a solution to repay creditors and create a sustainable future for businesses.
Greensill Capital want the government guarantee on the loans reinstated. It says the company draws on advice to comply with relevant rules.
Mr Cameron’s spokesman argues the former prime minister had no involvement in lending decisions and did not know about GFG’s financial situation. He was only a part-time adviser, not an executive or board member. Mr Cameron “sincerely believed there would be a material benefit for UK businesses at a challenging time”.
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