As the waters gather over the head of Greensill Capital, and Sanjeev Gupta surveys the ruins of his GFG business empire, a collective shudder is running through the world of investment banking.
Having until only very recently celebrated the genius of the ‘saviour’ of the steel industry for his record of buying up a string of struggling metals businesses and ‘turning them around’, the lords of finance capital have ‘suddenly’ tumbled to the fact that the GFG empire was built on sand, the buyouts were all funded by loans, and Gupta’s path to fame and fortune was greased by political corruption that went all the way to the top of the ministerial food chain.
Who would have thought it?
Getting rich on empty promises and public money
The reality is that Gupta’s rake’s progress is not an isolated case but follows a familiar pattern. The real scandal is that those in authority, whilst knowing exactly what goes on, do nothing to prevent it – or, indeed, willingly assist it.
As one incensed Financial Times reader commented online: “The most ridiculous thing about this is the length of time he got away with it. His big promises and vacuous politicking never amounted to anything in a single UK business he owned. He talked a great game but invested almost nothing whilst getting tax rebates, subsidies and kudos from his political chums.
“Those who worked within the industry joked for years about the ‘Gupta Ponzi scheme’ and when it would unravel. The real crime here is the apparent lack of any due diligence from Welsh, Scottish and English governments in their dealings with him and his ‘empire’.
“Remember at the end of all this Mr Gupta will swan off with his money and property intact whilst those employed in his companies will lose their livelihoods.” (How Sanjeev Gupta sold his green revolution to Britain’s politicians, Financial Times, 25 April 2021)
What bourgeois commentators cannot publicly admit, of course, is that wideboys like Gupta are simply the natural scum that accumulates on stagnant, glutted markets when the limited opportunities for productive investment drive footloose capital into ever more speculative adventures. So far from being ‘rogue’ exceptions to an otherwise orderly market, they are the quintessence of moribund, parasitic capital personified.
The nightmare for the ruling class is the fear of this reality being grasped by the population at large at the very time when the latest economic crisis is taking an axe to what remains of the postwar consensus.
Whilst the highly lucrative job David Cameron enjoyed with Greensill, badgering Rishi Sunak et al to engineer a government bailout, has justifiably dominated headlines, the corruption doesn’t stop there – as detailed usefully in the FT article that triggered the above reader’s comment.
For example, it appears that Gupta’s Welsh operations did well out of the pandemic, copping £200,000 in government support as well as a £40,000 infrastructure grant for its Newport steel mill. Coincidently (or not), Carwyn Jones, a former Welsh first minister, joined GFG’s advisory board in 2020. Another former Welsh minister for economy, Edwina Hart, landed a seat on the Greensteel Council (set up by GFG).
And Gupta’s buying spree did well in Scotland, too. The deal to scoop up Britain’s last aluminium smelting plant in Lochaber along with two neighbouring hydropower plants was underpinned by a government guarantee worth £575m.
It can have done GFG’s Scottish ventures no harm that GFG enjoyed regular access to the SNP’s rural economy minister Fergus Ewing. Ewing dined with GFG’s chief investment officer Jay Hambro four times in six months, and on one occasion the faces around the table included Gupta and Lex Greensill, suggesting a rather cosy coincidence of interests.
Revolving door highlighted (again)
The Greensill debacle has also opened a can of worms in the upper reaches of the civil service, where the time-dishonoured ‘revolving door’ between big business and Whitehall – described in detail by VI Lenin all those years ago in his book on imperialism – is spinning more merrily than ever.
In all the noise around the Greensill demise, it has also come to light that in 2011 Lex Greensill was given a desk in the Cabinet Office, where he conducted a review of supply-chain finance, the outcome of which was the award of a juicy contract to Greensill Capital.
The man who invited Lex Greensill to operate within the Cabinet Office was the then top civil servant Jeremy Heywood (since deceased). And how did the two men come to work together? Because the pair of them were former colleagues working for investment bankers Morgan Stanley.
This cosy relationship between Heywood the civil servant and Greensill the investment banker was not challenged at the time – probably because such informal networking (corruption) is universally recognised as par for the course.
Nor (until now) was any quibble raised about the top civil servant working in cahoots with Simon Robey, his former boss at Morgan Stanley, in joint pursuit of several high-profile merger-and-acquisition ventures, including a failed merger between BAE Systems and EADS in 2012 and SoftBank’s takeover of Arm Holdings in 2016.
Only now, with the Greensill scandal lifting the rock on the worms beneath, are pious ‘doubts’ being raised about influence peddling.
The truth is that the web of influence that is woven between Whitehall’s mandarins and the lords of finance capital, connecting the capitalist state bureaucracy by a thousand threads to the interests of finance capital, is what keeps the whole class-rule show on the road.
When insiders dubbed Heywood ‘the man who really runs the country’ they were not all that wide of the mark.