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‘No evidence’ conflicts of interest were considered in Lex Greensill contracts – NAO

Lex Greensill

‘No evidence’ conflicts of interest were considered in Greensill contracts – NAO

Whitehall’s independent watchdog has found “no evidence” that ministers or officials considered potential conflicts of interest before giving the disgraced financier Lex Greensill government contracts just months after he had left a job as a No 10 adviser.

The National Audit Office said Greensill left a job as an adviser to David Cameron, then the prime minister, in 2017. Eight months later, his firm was involved in a bid for a large public sector contract.

A report released on Friday said the two projects involving Greensill Capital – an early-payment scheme for pharmacies and a salary advance facility for employees of NHS trusts – did not receive the expected uptake and offered no material benefits to the NHS.

Greensill Capital collapsed in March 2021, triggering a series of investigations examining the financier’s close links with the government and Cameron’s lobbying activities.

Meg Hillier, chair of the Commons public accounts committee, said: “This report provides further information on the role of Lex Greensill and Greensill Capital in providing government services.

“It raises yet more questions over the government’s ability to prevent conflicts of interest and the independence of advice it receives.

“The consequences once again fall squarely on the taxpayer, with increasing risks to value for money and promised savings vanishing into thin air.”

Auditors said Greensill advised ministers and officials on supply chain finance in various roles from 2012 to 2017.

He attended a “key meeting” in March 2017, his final month advising the government, which considered the setting up of a framework agreement for supply chain finance.

By November 2017, Greensill Capital was a subcontractor to a firm called Taulia as part of a bid to provide supply chain finance to the public sector, ultimately landing the pharmacies deal.

The scheme allowed chemists to be paid for dispensing prescriptions earlier than they would have under NHS systems.

“We have seen no evidence that there was any discussion of a potential conflict of interest in relation to Greensill Capital being appointed as a subcontractor for supply chain finance services, about which Lex Greensill had earlier provided advice,” the NAO said.

The report found there is “no evidence that the predicted benefits and savings” from the pharmacies deal were ever realised.

The collapse of Greensill resulted in the government stepping in to pay pharmacies for predicted dispensing activity, although the cost to taxpayers was “minimal”.

Greensill’s salary advance scheme for NHS trust workers – Earnd – resulted only in “limited employee uptake”, the NAO said.

After the firm failed, some NHS trusts switched to a paid-for salary advance scheme, rather than the free version that had been offered by Greensill.

A government review by the corporate lawyer Nigel Boardman into the Greensill scandal called for a new code of conduct and greater clarity about who is funding lobbying in Whitehall.

The extent of the lobbying efforts, which included Cameron contacting the chancellor, Rishi Sunak, on his private mobile phone, were initially revealed by media reports rather than official records. The scandal raised concerns over the way private businesses have been able to hire and use former officials to try to gain preferential access to government contracts.

Boardman recommended in his review that the “transparency of lobbyists be strengthened”, including by “requiring lobbyists to disclose the ultimate person paying for, or benefiting from, their lobbying activity”.

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UK’s Truss defends economic plan that sent pound tumbling

UK’s Truss defends economic plan that sent pound tumbling

British Prime Minister Liz Truss on Thursday defended her economic plan and shrugged off the negative reaction from financial markets, saying she’s willing to make “difficult decisions” to get the economy growing.

In her first public comments since the government’s announcement of billions in uncosted tax cuts roiled markets and drove the pound to record lows, Truss said Britain was facing “very, very difficult economic times.” But she said the problems were global and spurred by Russia’s invasion of Ukraine.

She spoke after the Bank of England took emergency action Wednesday to stabilize U.K. financial markets and head off a crisis in the broader economy after the government spooked investors with a program of unfunded tax cuts, sending the pound tumbling and the cost of government debt soaring.

Truss told BBC local radio that “we had to take urgent action to get our economy growing, get Britain moving and also deal with inflation.”

“Of course lots of measures we have announced won’t happen overnight. We won’t see growth come through overnight,” she said. “What is important is that we are putting this country on a better trajectory for the long term.”

In a series of interviews, Truss said her government’s decision to cap energy bills for households and businesses would help tame inflation and help millions of people facing a cost of living crisis.

But it was not that decision that alarmed the markets. It was the government’s announcement on Friday of an economic stimulus program that included 45 billion pounds ($48 billion) of tax cuts and no spending reductions — without an independent economic assessment of the cost and impact.

The Bank of England warned that crumbling confidence in the economy posed a “material risk to U.K. financial stability,” and said it would buy long-term government bonds over the next two weeks to combat a recent slide in British financial assets.

The bank’s former governor, Mark Carney said that the government and the central bank appeared to be pulling in different directions.

“Unfortunately having a partial budget, in these circumstances — tough global economy, tough financial market position, working at cross-purposes with the Bank — has led to quite dramatic moves in financial markets,” he told the BBC.

The pound traded at around $1.08 on Thursday, above its record low of $1.0373 on Monday. It has lost some 4% of its value since Friday.

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Stimulus Packages Provided During Pandemic Triggered Inflation- CBN

The Central Bank of Nigeria (CBN) has attributed the rising inflationary rates to the stimulus packages provided to citizens during and after the pandemic.

It added that although this increased spending, it also created global supply challenges.

CBN’s director, Monetary Policy Department, Hassan Mahmoud, said this on Wednesday at a post-MPC briefing tagged: “Unveiling Facts behind the Figures’’.

The Monetary Policy Committee had on Tuesday, unanimously voted to increase interest rate to 15.5 per cent.

“A lot of households and small businesses were injected with stimuluses; the U.S did two trillion dollars, Nigeria did about five trillion Naira, these increased the ability of people to spend.

“But the supply side could not meet up with the demand because that volume of injection was far more than the regular intake for those economies, this made prices go up,’’ he said.

Mahmoud also blamed the Russian-Ukraine war, as well as the resurgence of COVID-19 in China for the rise in global inflationary trend.

“That region accounts for more than 50 per cent of global commodity supply and 38 per cent of global oil and gas supply. The war resulted in some shortages which made prices go up.

“Then the COVID-19 lockdown in China. The country is the largest importer of commodities across the globe,’’ he added.

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China’s yuan slides to 14-year low against US dollar

China’s yuan slides to 14-year low against US dollar

China’s yuan fell to a 14-year low against the dollar Wednesday despite US central bank efforts to stem the slide after U.S. interest rate hikes prompted traders to convert money into dollars in search of higher returns.

A weaker yuan helps Chinese exporters by making their goods cheaper abroad, but it encourages capital to flow out of the economy. That raises costs for Chinese borrowers and sets back the ruling Communist Party’s efforts to boost weak economic growth.

The yuan fell to 7.2301 to the dollar, its lowest level since January 2008. One yuan was worth about 13.8 cents, down 15% from its March high.

The yuan has exceeded expectations it might fall to 7 to the dollar after the Federal Reserve started aggressive rate hikes to cool inflation that is at a four-decade high. The Fed has raised rates five times this year and says more increases are likely.

By contrast, the People’s Bank of China has cut interest rates to boost growth that fell to 2.2% over a year earlier in the first six months of 2022 — less than half the official 5.5% target.

The yuan is allowed to fluctuate up or down 2% from its starting price each day in tightly controlled trading. That prevents big daily swings, but down days can add up to a big change over time.

To shore up the exchange rate, Beijing cut the amount of foreign currency deposits Chinese banks are required to hold as reserves to 6% from 8% as of Sept. 15. That increases the amount of dollars and other foreign currency available to buy yuan, which should push up the exchange rate.

Still, that reserve cut is unlikely to stop a slide that is driven by “a strong U.S. dollar and the expectation of more Federal Reserve hikes,” said Iris Pang of ING in a report.

“Less aggressive rate hike talk” might help the yuan rally, but it might weaken further “if the Fed maintains its very hawkish tone” into next year, Pang wrote.

Chinese officials have previously promised to avoid “competitive devaluation” to gain an advantage in trade.

The yuan sank in 2019 during trade tension with then-President Donald Trump. That prompted suggestions Beijing was trying to reduce the impact of U.S. tariff hikes, but there was no official confirmation. The currency later strengthened.

Other governments also are struggling to manage capital flows under pressure from Fed rate hikes. On Friday, Vietnam’s central bank raised a key interest rate in what economists said appeared to be an effort to stop an outflow of money in search of higher returns.

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