finance

Political capital reform is needed in wake of Greensill scandal


Don’t let the buggers get you down. The phrase, and its cod-Latin translation illegitimi non carborundum, were once considered emblematic of the dangers of mixing business with politics.

A watch inscribed with the message triggered the sequence of events that led to the resignation of Conservative minister Michael Mates in 1993. It was a gift for Asil Nadir, the fugitive financier and Tory donor, as a token replacement for the gold Blancpain removed from his wrist by bankruptcy officers raiding his London home.

Mates had first tried to ride out the storm that followed the collapse of Nadir’s Polly Peck empire by staying silent about his links to the company. Leaks of his purported lobbying of the attorney-general on behalf of Nadir became an embarrassment to the government. His resignation came soon after he was spotted having dinner with Nadir’s publicity adviser, from whose company he had borrowed a second-hand Volvo car.

The Polly Peck affair and the Greensill Capital scandal have more differences than similarities. Yet the moral has changed little in almost three decades: it pays to be wary of entrepreneurs who seek out politicians for the purpose of reputation laundering.

Boris Johnson this week ordered a formal inquiry into lobbying by David Cameron, one of his predecessors, on behalf of Greensill, the collapsed finance company. The independent investigation might provide an explanation, so far lacking from Cameron himself, about how company founder Lex Greensill gained privileged access to Whitehall, as well as examining whether the former prime minister used his influence responsibly after leaving government.

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It might also offer an opportunity to reconsider the ministerial code on how businesses and politics interact.

Whether it will deliver on any of those goals is another question entirely. Officials have been vague about the remit given to Nigel Boardman, the retired Magic Circle lawyer and government adviser who will head the inquiry, which has been a licence for cynicism. Yet the Greensill case is a clear demonstration of the reforms needed to rebuild trust and slow the revolving door between government and industry.

Cameron joined Greensill as a paid adviser in 2018, as soon as the cooling-off period defined by the Ministerial Code had expired. Ministers are currently prohibited from lobbying government for two years after they leave office and in the interim period must take the advice from an independent advisory committee about any job offers.

Even Britain’s PR industry self regulator, the Public Relations and Communications Association, wants this bar on paid-for lobbying roles extended to five years. It called this week for a rewrite of the “unfit for purpose” Lobbying Act, introduced in 2014 when Cameron was PM, to hold public officials to higher standards. All former ministers should be held to the Nolan Principles, the ethical standards expected of all public office holders, the PRCA says.

Tougher rules would hinder the private sector from using politicians for their access and connections, as exemplified by former chancellor George Osborne’s recently accepted role at takeover adviser Robey Warshaw. Monetising their gravitas, such as when commodities trader Glencore enlisted Tony Blair to smooth over the concerns of major shareholder Qatar’s sovereign wealth fund about the company’s planned merger with Xstrata, might also become more tricky.

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The more intractable problem is when businesses seeking a sheen of respectability enlist former ministers who see the corporate boardroom as a post-politics retirement plan.

Lex Greensill’s motivations for courting Cameron were unlikely to be based on his lobbying abilities alone. One stateside parallel is with Theranos founder Elizabeth Holmes, who in 2015 had recruited to its board notables including Henry Kissinger and George Shultz, both former US secretaries of state, and ex defence secretaries James Mattis and William Perry. Holmes now faces a dozen charges of criminal fraud.

Polling by Ipsos Mori finds that 16 per cent of the British public trust government ministers to tell the truth, whereas 33 per cent trust business leaders. Only advertising executives, flacks and corporate spinners, score worse. There should be no more worrying an indicator than when entrepreneurs seek out politicians to improve their reputation.



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