Labour has written to education secretary Nadhim Zahawi seeking assurance that he followed “proper processes” during Greensill Capital’s approval to take part in Covid state loan schemes.
Jonathan Reynolds, shadow business secretary, expressed “grave concern” after the Financial Times exposed a letter from Sanjeev Gupta thanking Zahawi for being “personally instrumental” in helping Greensill access large loans.
Greensill, a financial firm whose collapse last year sparked a lobbying scandal that ensnared former prime minister David Cameron, provided £400m of government-backed loans to entities linked to GFG Alliance, the metals group run by Gupta.
GFG and its transactions with Greensill are being investigated by the Serious Fraud Office.
Reynolds expressed concern that Zahawi — then a junior business minister — had used his personal mobile phone with no official record to communicate with Gupta, asking for a full exchange of phone conversations between the two men.
BEIS, the business department, confirmed a “text exchange or phone call” between Zahawi and Gupta had taken place at an unknown date in relation to Covid loans but said details of the communication were no longer available on Zahawi’s device.
It said “information held about the communication” indicated that Zahawi had explained to Gupta that “requests would need to be directed through BEIS officials”.
However, according to an FOI request by the FT, on October 5 2020, Gupta sent a letter to Zahawi, who as business minister was responsible for the steel industry.
The metals tycoon thanked him for having been “personally instrumental” in helping Greensill secure approval to become an accredited lender for the Covid loan programme managed by the state-run British Business Bank. Zahawi’s spokesman said the letter was “little more than flattery” from GFG.
The spokesman also pointed out that local Labour 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 to ask for 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 in making the pitch as “the local constituency MP”. Healey noted in his letter that it was vital due diligence was conducted.
He had also been in direct contact with Zahawi about the issue, according to an official inquiry into lobbying following Greensill’s collapse.
A spokesman for Zahawi said on Friday: “The correct processes were followed at all times. If the Labour party is concerned about the support provided to GFG, they would be better off writing to Keir Starmer’s shadow defence secretary (Healey) who requested it.”
Text messages disclosed by Cameron to the Treasury select committee last year indicated that the former prime minister had discussed Greensill’s accreditation with Zahawi.
In mid-June 2020 Cameron texted Zahawi: “Lex Greensill . . . says you are being vs helpful over HMT and CBILS programme”. 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 worrying” that Zahawi may have played a significant role in the streamlined processes that led to Greensill gaining accreditation by the BBB, given chancellor Rishi Sunak has claimed the process was run independently.
“However, it is even more worrying that government business involving hundreds of millions of pounds of taxpayer money was conducted on personal mobile phones without any publicly available record,” Reynolds wrote. “It appears yet again this government has chosen to treat taxpayers with contempt.”
In his letter, the shadow business secretary asked for an explanation for what Gupta meant when he said the minister had been “personally instrumental” in helping the accreditation.