Fintech contract ‘raises questions over government’s ability to prevent conflicts of interest’
National Audit Office publishes report criticising Greensill Capital engagement
There is “no evidence” the government considered potential conflicts of interest when it handed a contract to fintech firm Greensill Capital, despite its founder having worked as a No.10 adviser shortly beforehand, the UK’s public spending watchdog has found.
In a highly critical report today, the National Audit Office said there was “no evidence that there was any discussion of a potential conflict of interest” when the firm was appointed as a subcontractor on supply chain finance services, about which Lex Greensill had earlier provided advice.
The NAO’s inquiry is the latest in a series of investigations into the work of Greensill Capital, the supply-chain finance firm at the centre of a lobbying scandal involving former prime minister David Cameron, leading up to its collapse in March.
The report also found “no evidence” two early-payment schemes offered by Greensill Capital saved taxpayers any money – despite the Department of Health and Social Care’s prediction they could save £100m a year.
Lex Greensill was a No.10 adviser from 2012 to March 2015, and continued to provide market and pricing advice to government on supply-chain finance for the next two years. His work included attending a key meeting in March 2017 which considered the setting up of a government framework agreement for supply-chain finance.
The firm he founded then became a subcontractor to the financial technology business Taulia, which had won a 2017 bid to provide supply-chain finance services to the public sector.
Greensill Capital supported Taulia’s bid for the contract, an early-payment scheme for pharmacies.
But the Crown Commercial Service told the NAO it “did not consider Lex Greensill’s previous engagement with government sufficient grounds under the regulations to reject Taulia’s bid”, the NAO report said.
Meg Hillier, chair of parliament's Public Accounts Committee, said the NAO report “provides further information on the role of Lex Greensill and Greensill Capital in providing government services”.
“It raises yet more questions over the government’s ability to prevent conflicts of interest and the independence of advice it receives,” she said. “The consequences once again fall squarely on the taxpayer, with increasing risks to value for money and promised savings vanishing into thin air.”
Schemes produced 'no material benefits'
The two Greensill initiatives – the pharmacy payments scheme and another offering salary advances to NHS employees – both suffered from low uptake and offered “no material benefits” to the health service, the NAO said.
It found DHSC was “unable to provide evidence of realised benefits” from a scheme to introduce supply-chain finance into pharmacy reimbursement processes.
In 2012, the Treasury approved DHSC’s business case for the scheme, which it assumed – based on advice provided by the firm’s founder, Lex Greensill – would enable the NHS to save £100m a year in pharmaceutical supplies.
Greensill told MPs on the Treasury Committee in May that the scheme had in fact “saved the taxpayer over £100m a year”.
A DHSC spokesperson noted that both schemes examined by the NAO were voluntary.
“When the issues arose, DHSC protected affected pharmacies from financial difficulties by continuing the payment scheme in the short term and by supporting pharmacies as they move to a new payment timetable,” they said. “Our approach has always been that local NHS employers are best placed to decide how to make use of flexible payment options as part of their overall pay and reward offer for staff.”
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