UK Inquiry Tracker

Lessons from Greensill Capital

Public Accounts Committee Closed Inquiry

Opened: 5 Jul 2021 Closed: 21 Jan 2022 Parliament page

In response to the COVID-19 pandemic the government launched a series of schemes providing financial support to businesses of all sizes. Of these, the Coronavirus Large Business Interruption Loan Scheme (CLBILS) provided support to the largest businesses—those with a minimum turnover of £45 million. Commercial lenders (for example, banks, building … Read more

9 Recommendations

19 Conclusions

1 Report

2 Oral sessions

4 Letters

2 Events

Activity timeline 8 events

9 Mar
2022

Correspondence

Correspondence from Catherine Lewis La Torre, Chief Executive, British Business Bank, re British Business Bank (the Bank) review, dated 2 …

21 Jan
2022

Report published

Treasury minutes: Government response to the Committee of Public Accounts on the Twenty Sixth report from Session 2021-22

18 Jan
2022

Correspondence

Correspondence from Sarah Munby, Permanent Secretary, Department for Business, Energy & Industrial Strategy, re PAC recommendations – “Less…

20 Nov
2021

Report published

Twenty-Sixth Report - Lessons from Greensill Capital: accreditation to business support schemes

16 Nov
2021

Correspondence

Correspondence Catherine Little, Director General, Public Spending Head of Government Finance Function, re Lessons from Greensill Capital, …

22 Jul
2021

Oral evidence

Lessons from Greensill Capital

6 Jul
2021

Correspondence

Correspondence from RT David Cameron, Former prime minister of the United Kingdom, re follow up to Greensill, dated 25 June 2021

13 May
2021

Oral evidence

Lessons from Greensill Capital

Oral evidence sessions 2 sessions

22 Jul 2021

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Lessons from Greensill Capital

Catherine Lewis La Torre · British Business Bank Charles Roxburgh · HM Treasury Patrick Magee · British Business Bank Sarah Munby · Department for Business, Energy and Industrial Strategy Sir Tom Scholar · HM Treasury

13 May 2021

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Lessons from Greensill Capital

Rt Hon David Cameron

Reports 1 report · click to expand

Title	HC No.	Published	Items	Response
Twenty-Sixth Report - Lessons from Greensill Capital: accreditat…	HC 169	20 Nov 2021	28	Responded

Recommendations & Conclusions

6 results

2 Recommendation Not Addressed

Twenty-Sixth Report - Lessons from…

The Department and the Bank struck the wrong balance between making decisions quickly and protecting...

The Department and the Bank struck the wrong balance between making decisions quickly and protecting taxpayer interests. We have previously found that the need to work at speed in responding to the pandemic has in some instances resulted in increased … Read more The Department and the Bank struck the wrong balance between making decisions quickly and protecting taxpayer interests. We have previously found that the need to work at speed in responding to the pandemic has in some instances resulted in increased risk and potentially exposed the taxpayer to huge losses. The Bank’s approach to assurance consists of: the initial accreditation of lenders; post-lending assurance; and legal and contractual protections within the scheme guarantee agreement. The Bank’s decision to follow a streamlined accreditation process when assessing Greensill’s application—as with other non-bank lenders— placed greater reliance on post-lending audits and legal protections rather than performing detailed upfront due diligence. The Bank asserts that it adopted a tiered approach to accreditation, which differentiated between regulated banks and non-bank lenders. For example, regulated banks and lenders with which the Bank had an existing relationship underwent an accelerated process. The Bank accepts that delivering at speed has exposed it to risk, but it considers the interests of the taxpayer to be very well protected through its contractual arrangements with each lender. While the Bank has legal protection in preventing a guarantee being called if it believes scheme rules have not been followed, this is by no means a certain outcome—Greensill’s administrators have stated their belief that Greensill is compliant with the scheme rules. With more time and due diligence, the Bank might have reached a different decision on Greensill’s accreditation. 6 Lessons from Greensill Capital: accreditation to business support schemes Recommendation: The Bank should write to the Committee by the end of the year setting out how it will better balance between speed of delivery and value for money in future and what trade-offs it is prepared to accept. The response should detail how the Bank will identify these trade-offs early, perform scenario analysis of potentia Show less

Government Response

The government agrees with the conclusion but the response focuses on the Department's existing value for money assessment processes and commitment to improve future reporting transparency, rather than the Bank outlining its plan for balancing speed and value as requested.

HM Treasury

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3 Recommendation Not Addressed

Twenty-Sixth Report - Lessons from…

The Bank’s approach to due diligence in accrediting Greensill was woefully inadequate.

The Bank’s approach to due diligence in accrediting Greensill was woefully inadequate. The Bank took comfort in Greensill having raised significant funding from global investors and its activities in managing billions of pounds in lending. In doing so, the Bank … Read more The Bank’s approach to due diligence in accrediting Greensill was woefully inadequate. The Bank took comfort in Greensill having raised significant funding from global investors and its activities in managing billions of pounds in lending. In doing so, the Bank has placed too much reliance on the work of others in accrediting Greensill, including Greensill’s auditors, whose work is currently being investigated by the Financial Reporting Council. The Bank has accepted much of the information provided by Greensill in its application at face value, including its statements of who Greensill would lend to. It seems clear that had the Bank been more curious and sceptical in its accreditation process, Greensill’s application would have raised many more questions. Greensill’s default rates and exposure to key clients have both been the subject of press reports prior to, and during, Greensill’s accreditation, yet the Bank did not cast its net widely enough in gathering evidence on Greensill. For example, the Bank did not make enquiries of the companies Greensill proposed to lend to under CLBILS. The Bank also did not explore what other government departments and regulators knew about Greensill – including those who were also assessing it for access to other schemes. Neither did it make any enquiries of Greensill’s credit insurers. While there was no proven fraud at the point of accreditation, several parties subsequently raised concerns about Greensill. Ultimately, the Bank’s inadequate due diligence has put public money at risk. Recommendation: The Bank should, by the end of February 2022, review its accreditation process, particularly for non-bank lenders and write to us with the results. The review should include the Bank’s approach to: • The principles applied to streamlining an accreditation process, and how post-accreditation checks seek to deal with any risks that arise as a result; • challenging and verifying information lenders provide regarding who they plan to len Show less

Government Response

The government's response discusses general supplier performance management, cost assurance, and risk apportionment in contracts, with a commitment to write to the Committee on these topics by May 2022, but does not address the specific recommendation for the Bank to review its accreditation process for non-bank lenders by February 2022.

HM Treasury

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4 Recommendation Not Addressed

Twenty-Sixth Report - Lessons from…

The Bank has been insufficiently curious when identifying where money lent through the schemes, including...

The Bank has been insufficiently curious when identifying where money lent through the schemes, including by Greensill, has ultimately gone. Companies have borrowed around £30 billion under CBILS and CLBILS. The schemes’ rules require these funds be used to support … Read more

Government Response

The government's response discusses cost savings and project delivery within the Ministry of Defence, entirely failing to address the recommendation regarding the Bank's monitoring of funds lent under COVID-19 business support schemes.

HM Treasury

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6 Recommendation Not Addressed

Twenty-Sixth Report - Lessons from…

The Department’s enquiries of the Bank during Greensill’s accreditation created a damaging perception of interference,...

The Department’s enquiries of the Bank during Greensill’s accreditation created a damaging perception of interference, though the Bank asserts that this did not affect its judgement. The Department had eight email exchanges with the Bank between April and September 2020 … Read more

Government Response

The government's response discusses defence funding, the Integrated Review, and the formation of the UK Health Security Agency, entirely failing to address the recommendation on establishing principles for correspondence with the Bank or cross-government principles for arms-length bodies.

HM Treasury

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8 Conclusion Not Addressed

Twenty-Sixth Report - Lessons from…

The Bank accredited Greensill to lend under both CBILS and CLBILS.

The Bank accredited Greensill to lend under both CBILS and CLBILS. As Greensill was not PRA regulated nor did it have a pre-existing relationship with the Bank, it was initially 6 Qq 17, 19; C&AG’s Report para 2, 2.4 7 … Read more The Bank accredited Greensill to lend under both CBILS and CLBILS. As Greensill was not PRA regulated nor did it have a pre-existing relationship with the Bank, it was initially 6 Qq 17, 19; C&AG’s Report para 2, 2.4 7 C&AG’s Report, para 2.6, Figure 9 8 Q 14 9 Committee of Public Accounts, Covid-19: Bounce Back Loan Scheme, 33rd Report of Session 2019–21, HC 687, December 2020 10 Q 19 11 Q 18; C&AG’s Report, para 10 12 Q 29; C&AG’s Report, para 2.6 13 Q 29, C&AG’s Report, paras 2.2, 2.6 12 Lessons from Greensill Capital: accreditation to business support schemes subjected to the Bank’s standard accreditation process, with subsequent applications completed through the accelerated process. The Bank undertook limited due diligence on Greensill’s application—as with other non-bank lenders—accepting key information at face value. The Bank did carry out some cross-referencing of Greensill’s application with its 2018 audited accounts, but important figures, such as Greensill’s stated £120 billion of financing in 2019, could not be verified using publicly available information. The Bank told the NAO that the purpose of its due diligence was not to conduct a detailed assessment of Greensill’s financial position, but to confirm that lenders could reliably deliver money to borrowers, in line with government’s objectives for the scheme.14 We therefore asked the Bank what it had done to satisfy itself that the information provided by Greensill was accurate. The Bank told us that it “would imagine” this £120 billion figure was accurate, adding that while there was no single source to verify it, there was “plenty of evidence” that Greensill had “run very significant debt investment programmes for significant global investors across the world”.15 It explained that while it did not have a commercial relationship with Greensill prior to CBILS and CLBILS, it was aware of the organisation and “knew them as a leading player in the UK finance market” and “had observed their work in the Show less

Government Response

The government response consists of boilerplate text listing relevant reports and does not engage with the committee's conclusion regarding the Bank's accreditation of Greensill or its due diligence process.

HM Treasury

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27 Conclusion Not Addressed

Twenty-Sixth Report - Lessons from…

We asked what lessons had been learnt or what could have been done differently as...

We asked what lessons had been learnt or what could have been done differently as a result of Greensill’s access to these taxpayer-backed schemes. The Treasury told us that it wanted to review all the reports and inquiries, such as … Read more

Government Response

The government's response states it agrees with 'the recommendation' and commits to a multi-year evaluation of COVID-19 loan schemes and publishing a lessons-learned report by Summer 2022, but this does not directly address the committee's conclusion outlining what the Treasury had *said* about reviewing reports.

HM Treasury

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Government Response AI assessment · 28 of 9 classified

Accepted 14

Acknowledged 6

Deferred 2

Not Addressed 6

Total 9 recs + 19 conclusions

Correspondence 4 letters

9 Mar 2022 Correspondence from Catherine Lewis La Torre, Chief Executive, British Business Bank, re British Business Bank (the Bank) review, dated 2 March 2022

Parliament page

18 Jan 2022 Correspondence from Sarah Munby, Permanent Secretary, Department for Business, Energy & Industrial Strategy, re PAC recommendations – “Lessons from Greensill Capital”, dated 13 January 2022

Parliament page

16 Nov 2021 Correspondence Catherine Little, Director General, Public Spending Head of Government Finance Function, re Lessons from Greensill Capital, dated 7 September 2021

Parliament page

6 Jul 2021 Correspondence from RT David Cameron, Former prime minister of the United Kingdom, re follow up to Greensill, dated 25 June 2021

Parliament page