The plane truth about Dave

Britain has plenty to worry about over political corruption and standards in public life. But what bothers me most right now is our former prime minister's lousy judgment

For those new to these emails, a brief explanation. I have taken to using this Substack newsletter service for three purposes: as a way to put down my thoughts roughly every Monday on a topic in the news that is bothering me, generally in global affairs broadly defined; to share the English originals of my articles published in translation in Japan (chiefly Mainichi Shimbun and Nikkei Business) and Italy (chiefly La Stampa and Avanti!); and sometimes to distribute the blog I write as chair of the Japan Society of the UK, if it looks to be of wider interest. Comments and criticisms would be more than welcome, whether publicly or privately, since for every topic I write about there will be many people on this mailing list far more expert on it than I am. I will probably have added you to the mailing list for exactly that reason, when writing about something I know you specialise on.

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We in Britain (or, like me, we Brits writing from Ireland) have got Lulu Lyttle wallpaper paid for in mysterious ways, we’ve got huge NHS contracts going to Tory donors and friends, we’ve got civil servants moonlighting for private companies, we’ve got official investigations into ministerial malpractice being shrugged off by the prime minister, we’ve got clear evidence that when he was London’s mayor Boris Johnson channelled public funds to a girlfriend. So why am I exercised by the collapse of a bank, Greensill Capital, and the role played in getting the firm meetings with Treasury officials by David Cameron, who younger readers may not recall was Johnson’s predecessor-but-one at 10 Downing Street? The bigger and more current examples will, I hope, eventually explode — or, at the very least, blow a huge raspberry — in the face of the government. But right now, what stands before us is the conduct and judgment of a previous Conservative prime minister. And not only was that judgment appallingly bad on the lobbying he did, it was naive and blinkered in the extreme about the business he was working for and hoping to get rich(er) from.

Much of the attention during David Cameron’s toe-curlingly embarrassing and awkward appearances before two parliamentary committees this week about Greensill was devoted to the manner in which Mr Cameron sought to lobby the Chancellor of the Exchequer and Treasury officials on behalf of his employer. This is important, and it is abundantly clear that the rules governing lobbying by former ministers and prime ministers are woefully inadequate. The always deliciously and forensically vicious Marina Hyde gave a typically and enjoyably withering account of the hearings and Mr Cameron’s defence in the Guardian.

But the old business journalist in me says they — and certainly our former prime minister — missed the biggest tell of all as to why Greensill was a highly dodgy, even if not yet known to be outright fraudulent, business. It was Greensill Capital’s ownership of four — yes, four — private planes.

An old saw in business coverage and indeed investor analysis held that a good clue to when a company was heading for trouble was when it built a fountain on its forecourt, or else some other extravagance in its HQ. But that’s so cheap and old-fashioned. Today, the better clue is the private plane or, in other contexts, the yacht.

What on earth was a merely 10-year-old company, operating in a pretty low-margin form of financial services, doing with four private planes? Political and media attention has been devoted to the fact that Mr Cameron used these planes from time to time to travel to and fro from his holiday home in Cornwall, chiefly as evidence that he was not the loosely affiliated adviser he has claimed but rather a rather deeply involved employee, one very close to Lex Greensill, the bank’s founder and CEO. But surely the right question to have asked Mr Cameron was what did he think of the company, when he was sitting cosily in one of its planes? Didn’t he ponder, just for a moment, what might really have been going on?

Someone less in thrall to wealth and power would, certainly should, have asked questions about the planes. Mr Cameron told Parliament that he had no inkling that Greensill was in financial difficulty. Perhaps not, but he did know how Greensill was spending other people’s money — chiefly, the big investments made in the bank first by General Atlantic, an American investment fund, and then by the huge Japanese investor, Softbank — and this should have raised alarm bells.

The story of Greensill’s rise and fall is one as old as boy meets girl, or, for another parallel, as old as Anthony Trollope’s 1875 novel “The Way We Live Now”, about how a high-flying bank turns out to have been a house of cards. The Financial Times has a rather good video telling the story. Essentially, Greensill’s “supply-chain finance” business model was nothing more than the centuries’ old business of “factoring” invoices so that firms could get early cash by selling the debts owed to them, dressed up by the illusion that somehow artificial intelligence and other digital wizardry could make the business more efficient. That kind of technology-decorated pitch is pretty common these days, most notoriously in the collapse last year of the German payments company Wirecard, which did reveal outright fraud. In Greensill’s case the illusion of rapid growth was created not, as claimed, by serving a myriad small and medium-sized businesses that hitherto had little access to factoring, but rather by taking spectacular exposures to just one fast-growing large company, Sanjeev Gupta’s Liberty Steel.

If General Atlantic and Softbank’s Masayoshi Son were taken in by Lex Greensill’s pitch that this ancient business could be disrupted by technological means we can perhaps forgive a politician whose only previous exposure to business was a job acting as press officer for Carlton Television. But then there’s the planes. Politicians may be naive, but if they are any good they should at least have well-tuned antennae for danger. To my mind, there are very few good reasons why any company should own jet aircraft. Perhaps a giant firm with mining or manufacturing operations in far-flung places can justify them. Perhaps occasionally it will make sense to rent private jets to move groups of executives or customers around, and to exploit fractional ownership. But a factoring business? And especially one claiming to be a technological disruptor, disintermediating conventional finance. No, this was evidently an entrepreneur who thought he deserved to act like a plutocrat and decided that rather than waiting until he had built and floated the company and actually become super-rich he would rather spend his investors’ money now on his chosen plutocrats’ playthings, the private planes. That was his real form of disintermediation.

He wasn’t the first and he won’t be the last. But David Cameron should have noticed. Mind you, this is the man who, in order to protect his political party, gambled Britain’s strategic future on the 2016 Brexit referendum and lost. Lionel Barber, the former editor of the Financial Times, reports in his memoir “The Powerful and the Damned” on the verdict given by Barack Obama after a visit to Britain in 2008 during which he met Tony Blair, Gordon Brown and David Cameron. Blair, said Obama reportedly, was “sizzle and substance”; Brown (then the incumbent prime minister) was “substance”; Cameron, then leader of the Tory opposition, was merely “sizzle”. To which we can now add: sizzle without judgment.