Labor has written to Education Secretary Nadhim Zahawi asking him to ensure he followed ‘proper processes’ when approving Greensill Capital to participate in the state’s Covid loan schemes .
Shadow Business Secretary Jonathan Reynolds has expressed ‘serious concern’ after the Financial Times revealed a letter from Sanjeev Gupta thanking Zahawi for his ‘personal involvement’ in helping Greensill access major loans.
Greensill, a financial firm whose collapse last year sparked a lobbying scandal that ensnared former Prime Minister David Cameron, has provided £400million in government-backed loans to entities linked to GFG Alliance, the metals group led by Gupta.
GFG and its dealings with Greensill are under investigation by the Serious Fraud Office.
Reynolds expressed concern that Zahawi – then a junior business minister – had used his personal mobile phone without official registration to communicate with Gupta, demanding a full exchange of telephone conversations between the two men.
BEIS, the commercial department, confirmed that an “exchange of text message or phone call” between Zahawi and Gupta took place on an unknown date in relation to Covid loans, but said details of the communication were not available. no longer available on Zahawi’s device.
He said “information held on the communication” indicated that Zahawi explained to Gupta that “requests should be directed to BEIS officials”.
However, according to an FOI request from the FT, on October 5, 2020, Gupta sent a letter to Zahawi, who as business minister was responsible for the steel industry.
The metals mogul thanked him for being “personally instrumental” in helping Greensill gain approval to become an accredited lender for the Covid loan scheme run by the state-run British Business Bank. Zahawi’s spokesperson said the letter was “little more than flattery” on GFG’s part.
The spokesman also pointed out that local Labor MP John Healey was pushing for GFG to access the loan scheme at the time.
In early June 2020, Healey wrote to the state-owned British Business Bank asking Greensill to be accredited for a higher cap on the loan scheme.
Healey, whose South Yorkshire constituency includes one of Gupta’s steelworks, previously told the FT he had no regrets taking the step as “local constituency MP”. Healey noted in his letter that it was essential that due diligence be carried out.
He had also been in direct contact with Zahawi over the matter, according to an official investigation into lobbying after Greensill’s collapse.
A spokesperson for Zahawi said Friday: “Correct processes were followed at all times. If Labor is concerned about support for GFG, they better write to shadow defense secretary Keir Starmer (Healey) who asked.
Text messages Cameron leaked to the Treasury select committee last year said the former prime minister had discussed Greensill’s accreditation with Zahawi.
In mid-June 2020, Cameron texted Zahawi: “Lex Greensill. . . says you are helpful vs HMT and CBILS program”. Zahawi’s response to Cameron was not disclosed, and it later emerged that Zahawi’s text message to Cameron had been deleted.
In his letter, Reynolds said it was “deeply concerning” that Zahawi may have played a significant role in the streamlined processes that led to Greensill gaining BBB accreditation, given Chancellor Rishi Sunak’s assertion that the process was managed independently.
“However, it is even more disturbing that government business involving hundreds of millions of pounds of taxpayers’ money has been conducted on personal cellphones without any publicly available records,” Reynolds wrote. “It seems once again that this government has chosen to treat taxpayers with contempt.
In his letter, the shadow business secretary demanded an explanation of what Gupta meant when he said the minister had been “personally instrumental” in helping with accreditation.