The taxpayer could be on the hook for the £2m paid out to Greensill employees after the finance company went into administration.
Kevin Hollinrake, a junior minister in the Department for Business and Trade (DBT), said the government’s Redundancy Payment Service (RPS) had paid out £2,004,511 to employees of Greensill Capital Management Company (GCMC) after it went into administration in March 2021.
The RPS pays people who are made redundant when the company they work for collapses. If this money cannot be recovered from the failed business, the loss comes from the National Insurance Fund, paid for by National Insurance contributions.
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A request for this money was sent by the government to GCMC’s administrators Grant Thornton UK LLP in April this year, Mr Hollinrake said – but no money has yet been sent so far, and Grant Thornton has said it cannot guarantee the debt will ever be paid in full.
It is normal for companies which go bust to be unable to pay their creditors back in full – sometimes only providing pennies on the pound.
The administration process – especially for complex companies like Greensill – can take many years to complete.
Grant Thornton currently says it expects to finish its work in 2025, having been appointed in March 2021.
The Greensill structure was complicated – with ultimate control resting in an Australian company.
Two companies – Greensill Capital (UK) Limited and GCMG – were the main ones in the UK.
According to the latest report from Grant Thornton in September, the Greensill empire had trade assets worth $17.7bn (£14bn) in March 2021, and administrators have so recovered $9.3bn (£7.35bn).
Administrators for Greensill UK have recovered $114m (£90.14m) of this.
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The RPS is low down the pecking order when it comes to getting money from administrators, as its lending had no collateral.
Of the 569 people employed by GCMC at the time of collapse, 555 have been made redundant.
Nick Smith, Labour’s shadow deputy leader of the House of Commons, asked the DBT about what steps were being taken to recoup the money from Greensill.
Mr Hollinrake said: “The government’s Redundancy Payments Service seeks to recover all monies paid out from the National Insurance Fund to the employees of an insolvent company.”
He added: “Any funds available for distribution in an insolvent company will be paid out by the administrators in accordance with the statutory order of priority for creditor payments.”
A spokesperson for the administrators at Grant Thornton UK LLP said: “As noted by the minister, any funds available for distribution in an insolvent company will be paid out by the administrators in accordance with the statutory order of priority for creditor payments.
“As the highly complex administration process continues, no payments have been made to unsecured creditors, including the Redundancy Payments Service, and it would be too early to estimate the quantum of any final payments to such creditors.”
Greensill Capital provided finance services to companies, and collapsed in 2021.
After the company went into administration, it emerged Lord Cameron, now the foreign secretary, had advised the business.
Lex Greensill, who set up the business, worked for Mr Cameron when he was in Downing Street.
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During the pandemic, Lord Cameron tried to get UK government help for Greensill by texting and calling government ministers. He was ultimately found to have not breached lobbying rules.
Mr Smith told Sky News: “Lord Cameron should say what pay, bonuses and stock options he received when he was the public face and senior adviser of Greensill Capital.
“Now he’s a public servant again, transparency is important.
“I wrote to Lord Cameron earlier this month to urge him to disclose this information, however I haven’t had a reply yet.”
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When he was appointed last month, Lord Cameron dismissed criticism of his former role at Greensill, saying: “As far as I am concerned, that is all dealt with and in the past. I now have one job, as Britain’s foreign secretary.”
A spokesperson for Lord Cameron said: “David Cameron deeply regrets that Greensill went into administration and is desperately sorry for those who have lost their jobs. As he was neither a director of the company, nor involved in any lending decisions, he has no special insight into what ultimately happened. He acted in good faith at all times, and there was no wrongdoing in any of the actions he took.
“He made the representations he did to the UK government not just because he thought it would benefit the company, but because he sincerely believed there would be a material benefit for UK businesses at a challenging time. He had no idea until December 2020 that the company was in danger of failure.”
The Insolvency Service and Greensill have been approached for comment.
