Tackling Fraud and Preventing Government Waste — House of Commons, 2022-02-01
Topic: Domestic Commerce
Siobhain Ann McDonagh (Labour, Centre-left): On the Chancellor’s watch, £4.3 billion of covid business support has been stolen by fraudsters—£4.3 billion. Of course we recognise the scale of the covid support schemes and the speed with which they had to be developed, but upon their formation HMRC made it crystal clear that those schemes would be targets abroad. How right it was: 8.7% of furlough payments, 8.5% of the eat out to help out scheme and 2.5% of support for freelancers and entrepreneurs has all fallen into the hands of fraudsters and been written off by the Treasury. It is a complete disgrace However, from the evidence that I have heard in the Treasury Committee, we should add another half a billion pounds to the list of wasted funds. I am talking of Greensill Capital. At the height of the pandemic, Government Departments were infiltrated by the desperate lobbying of a former Prime Minister, phoning friends for Lex Greensill, the founder of Greensill Capital and the originator of a Ponzi scheme, a derivative of supply chain finance, known as prospective receivables. Twenty-five texts, 12 WhatsApp messages, eight emails, 11 calls and nine meetings with senior Ministers and officials—David Cameron was WhatsApping his way around Whitehall on the back of a fraudulent enterprise, based on selling bonds of high-risk debt to unsuspecting investors. It was all under the guise of so-called supply chain finance, but the reality is that 90% of Greensill’s business was nothing more than clairvoyancy, lending against transactions that had never happened and might never happen—companies did not even know that they were involved—and then selling that as a low-risk investment, half the time without any invoice evidence that anything had ever happened There was overwhelming evidence that this was a business based on deception, years before. In 2019, Reuters published articles highlighting the precise reasons why Greensill would collapse two years later. At the time of those articles, Greensill sued Reuters and lost. Meanwhile, the late Lord Myners, a former Treasury Minister, was asking questions about the Greensill business model in the House of Lords Again, at the beginning of 2019, the Bank of England’s Prudential Regulatory Authority began an investigation into Wyelands Bank, the banking arm of GFG Alliance, Greensill’s principal partner. In February 2020, the Bank even set out its concerns to the Serious Fraud Office and the National Crime Agency. It is inconceivable that this was not detected or known. Greensill was a crook parading a Ponzi scheme in plain sight, but was introduced across the highest levels of Government. It is an embarrassment for Britain’s financial reputation The biggest loser in this whole sorry saga is the British taxpayer. Our Committee’s concerns were batted away by the Treasury, which insisted that it had rejected Greensill’s attempts to secure funding. As ever, the devil is in the detail. The Treasury declined the lobbying with one hand but with the other palmed the organisation to the British Business Bank—a public institution backed by taxpayers’ money—which handed out £400 million of loan guarantee funds. As Mrs Thatcher famously said: "There is no such thing as public money; there is only taxpayers’ money." Instead of unlocking finance for small businesses, it unlocked finance for fraudsters. Fraudulent organisations such as Greensill were able to lucratively lobby and receive hundreds of millions of pounds while many businesses and hard-working families in my constituency, and every constituency across the country, were left with nothing. Waste is not just happening in private business dealings; it is also happening in the scheme for the Prime Minister’s promised 40 new hospitals. The wild west of NHS South West London is recklessly plotting to downgrade Epsom and St Helier University Hospitals by moving the A&E, intensive care, maternity unit, children’s services and 62% of beds to healthy, wealthy Belmont. As I have repeated time and again to the Government, however, using allocated funds to improve services where health is poorest has been proven to save up to £200 million. That sum would not clear the Greensill balance sheet, but no doubt it would go some way to doing so.