(Bloomberg) -- British lawmakers found that the health department and National Health Service took up ventures involving the failed lender Greensill Capital with “no clear rationale.”
The Department of Health and Social Care had hoped that Greensill's program to pay pharmacies upfront for prescriptions would save 100 million pounds ($136 million) a year for the NHS. The department showed “a considerable lack of curiosity” about how this might work and have given no proof that it saved money, the Public Accounts Committee, which scrutinizes state spending, said in a report Friday.
Another initiative run by Greensill subsidiary Earnd offered wage advances for NHS staff, at no cost to the health service. Both programs collapsed when the lender, run by Lex Greensill, filed for administration last March. Some of the NHS trusts that used the salary advances have since started paying for other providers. Pharmacies are now paid by the state within four business days of submitting invoices.
“The utter failure of controls at DHSC -- at best terribly naive and at worst negligent -- in dealing with Greensill Capital far predate the pandemic,” Meg Hillier, chair of the cross-party committee, said in the report. That fact that the department “is now paying pharmacies more quickly itself begs the question why it ever engaged with ‘supply chain finance' in the first place.”
A spokesperson for the Department of Health and Social Care said both programs were voluntary. “We are supporting community pharmacies up and down the country and took steps to minimize the impact of Greensill Capital's collapse,” they said in an emailed statement.
The proximity of Greensill to parts of the U.K. government has come under the spotlight since the firm's collapse. There are multiple inquiries and investigations into the company's affairs, some of which revolve around lobbying and access to powerful decision-makers in the British establishment.
Lex Greensill advised the government on supply chain finance from 2012 until 2017, while running his finance startup. Bill Crothers, a former senior civil servant, was a director for both Greensill Capital and Earnd. The committee found that the Crown Commercial Service, which helps oversee procurement for the government, failed to manage the conflicts of interest for the appointment of contractors and recommended tightening this process.
Greensill, with the backing of SoftBank Group Corp. and General Atlantic LP, went from a small startup to an estimated $7 billion valuation before its implosion last year. David Cameron, the former U.K. Prime Minister, was an adviser to the firm.
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