The collapse of the firm providing financial backing to Sanjeev Gupta’s Liberty group is threatening to bring down much more with it. The financial backer Greensill is sinking into deeper trouble by the day over allegations of lobbying on its behalf by former prime minister David Cameron.

Top political leaders and senior civil servants who corresponded over these dealings face an inquiry. Behind the Greensill collapse questions have arisen who all backed the backer, and for what gain.

David Cameron, and Chancellor of the Exchequer Rishi Sunak are both due to testify before an inquiry now underway.

The inquiry itself is slipping into murky waters. The opposition Labour Party has called for a transparent inquiry led by members of parliament. Prime Minister Boris Johnson has turned down that demand and ordered instead a handpicked inquiry. Labour is now confronting the ruling party with allegations of chumminess and coziness among interested players extracting juicy contracts out of the government. The party has accused the government of “sleaze, cronyism and corruption.”

It has emerged that Cameron, who went on from Prime Minister to join Greensill, lobbied ministers and senior officials for a package of support to help the firm ride over a financial crisis caused in large measure by Covid. Cameron is known to have sent text messages, made phone calls and held meetings with ministers and civil servants to secure support for Greensill.

In the end, this did not save Greensill. The firm filed for insolvency protection last month, placing Liberty Steel of Sanjeev Gupta in jeopardy. Gupta sought 170 million pounds in government funds to fill the gap created by the Greensill collapse. That was turned down. The government spoke of an “opaque” structure within Liberty and its parent company, the GFG Alliance.

Sanjeev Gupta has since declared that he will secure the future of Liberty, and an estimated 5,000 jobs there, through money from his operations outside of Britain. Sanjeev Gupta’s Liberty is most affected by the collapse of Greensill which was the main financial backer of Liberty Steel.

The government is looking at a larger problem—that of conflict of interest. Labour is accusing Cameron and through him other Conservative leaders of failing to declare that he had business connections for which he was lobbying at a political level.

Cameron has denied he broke lobbying rules but admitted that he should have communicated with the government “through only the most formal of channels.” That clarification has only raised further questions. How many senior members in the Conservative party know informally what Cameron was seeking? And how many sought to intervene as a result of his informal communications?

Rishi Sunak

Chancellor of the Exchequer Rishi Sunak was among them, and some of the questions have come to hover over him and his role. As finance minister, he would be in the thick of decision-making over any major rescue of Greensill.

The dispute runs down the line to failed safeguards over lobbying. Top civil servant Bill Crothers joined Greensill in 2015 while he was still employed by the government—which meant he could as a government employee rule over matters moved by a private firm that also employed him. The government has promptly ordered all civil servants to immediately declare any such interests arising from any double employment.

The inquiry now ordered is expected to cover the period back to 2010-2016 when Cameron was PM and his relationship with the 44-year-old Australian financier Lex Greensill. The Sunday Times has reported that Cameron gave Greensill exceptional access to government records, leading to the creation of a loan scheme from which Greensill benefitted. Greensill was later appointed an adviser at Downing Street.

After he left Downing Street following the Brexit vote, Cameron was employed as an adviser to Greensill. He is alleged to have actively lobbied top government officials and ministers on behalf of Greensill since then. Cameron sought to persuade several government leaders to grant emergency loans to Greensill Capital.

Rishi Sunak has confirmed that Cameron lobbied for Greensill, and that he had intervened following communication from Cameron that has been kept confidential while the inquiry is on. But Sunak’s office released a message that he sent Cameron in reply: “I think the proposals, in the end, did require a change to the market notice but I have pushed the team to explore an alternative with the Bank that might work. No guarantees, but the Bank are currently looking at it and Charles should be in touch.”

That these moves did not finally bring the results Cameron sought puts Rishi Sunak in the clear. But questions continue to swirl around over how much Rishi Sunak knew of Cameron’s efforts for the firm that Cameron favoured when in office and lobbied for when out of office.

—London Eye is a weekly column by CNBC-TV18’s Sanjay Suri, which gives a peek at business-as-unusual from London and around.

Read his other columns here

(Edited by : Ajay Vaishnav)