Greensill scandal puts Heywood’s business dealings under spotlight

Jeremy Heywood, the UK’s former top civil servant, was valued by successive prime ministers as a brilliant government fixer. “Whatever the issue was, Jeremy always sorted it and time and time again,” said former prime minister Theresa May at his funeral in 2018.

Behind the scenes, the cabinet secretary was also seen by business leaders as the go-to figure when they needed solutions to problems. “He was very accessible,” said one senior industry figure. “If you had a company that wanted to go to the prime minister, you would arrange it through Jeremy.” 

Heywood’s dealings with business are coming under scrutiny after the Financial Times revealed he provided Lex Greensill, founder of the eponymous supply-chain finance group, with wide-ranging access to Whitehall.

As well as highlighting the lax nature of rules surrounding government lobbying, the Greensill Capital scandal has fuelled concerns about civil servants making use of a “revolving door” to move between government and private sector jobs.

Questions are notably being raised about whether Heywood, who spent about three decades in the civil service, kept an appropriate distance from some former colleagues from his stint at Morgan Stanley between 2003 and 2007.

Last month it transpired that in 2011 Heywood gave a desk in the Cabinet Office to Lex Greensill, a former colleague at the Wall Street investment bank. Greensill conducted a review of supply-chain finance that ultimately led to a UK government contract for his company.

Heywood also stayed close to his former Morgan Stanley boss Sir Simon Robey, a successful dealmaker. Robey now runs his own boutique investment banking firm, Robey Warshaw, which recently hired former chancellor George Osborne.

Heywood, previously known as “the man who really runs the country”, played a pivotal role in the government’s approach to at least two major deals involving his friend Robey: the failed merger between BAE Systems and EADS in 2012, and SoftBank’s takeover of Arm Holdings in 2016. 

Jeremy was down in the weeds of the Arm-SoftBank deal. I don’t know why: there was amazement in Whitehall that he was doing that

Former Whitehall mandarins suggested it was “unusual”, although not unprecedented, for a cabinet secretary to get heavily involved in mergers and acquisitions.

Jill Rutter, a former senior civil servant, said Heywood was valued by prime ministers for his problem-solving abilities — notably during the rocky years of David Cameron’s coalition government — in contrast to his more managerial predecessors.

“There is no one particular way of doing the cabinet secretary job . . . ministers looked to him more for policy advice and because of his banking experience he may have felt he could bring more value to those situations than his predecessors,” she added.

But Tamasin Cave, a transparency campaigner, said: “When you have a cabinet secretary interacting regularly with his former boss from an investment bank — in ways that could potentially benefit that business — it raises questions about whether he is always serving the public interest.”

As cabinet secretary, Heywood did not recuse himself from the two major deals involving Robey: the aborted BAE-EADS merger and SoftBank’s takeover of Arm. 

Indeed, Heywood played a key role in the £23bn Arm deal, where SoftBank was advised by Robey Warshaw.

May became persuaded the Japanese conglomerate’s plan to buy the British chip designer would prove the UK was “open for business” after the country voted to leave the EU in the 2016 referendum.

Heywood invited SoftBank founder and chief executive Masayoshi Son to Downing Street to help facilitate the deal and arranged a meeting with the then chancellor Philip Hammond. 

A former mandarin said: “Jeremy was down in the weeds of the Arm-SoftBank deal. I don’t know why: there was amazement in Whitehall that he was doing that.”

But one ally of Robey said Heywood was known to be an “appropriate first port of call” on government matters and would always assemble a relevant Whitehall team.

Back in 2012, when Cameron backed the proposed merger of BAE with EADS, Heywood was also “supportive” of the sensitive aerospace and defence deal, according to people involved in the planned transaction.

They said Heywood was heavily involved in preparing the government’s response, and held multiple meetings with BAE and Morgan Stanley, which was advising the UK defence company.

Robey, then at the US bank, was hired by BAE in part because of his perceived ability to “manage” the prime minister’s office, said one person involved in the failed deal.

The proposed merger ultimately failed because of opposition from the German government.

The Robey ally said Heywood was involved in the government’s “consideration” of the BAE-EADS deal but insisted there was no “pivotal liaison” between the two men. 

However, David Davis, a former Tory cabinet minister, said Heywood should have stayed out the transaction.

“If you were in government and something came along which involved your former employers, you would recuse yourself, you wouldn’t intervene, you would do the opposite . . . if only for reasons of perceived propriety,” added Davis.

Some time after the aborted BAE-EADS deal, Heywood pressed Robey to introduce Greensill to Robey Warshaw’s clients. One meeting took place between Lex Greensill and BAE involving Robey.

One senior political figure said he believed Heywood kept close to his old banking colleagues as a potential “parachute” if he left the civil service.

But there is no suggestion he benefited financially from his banking friendships while in government.

One former colleague remembered him instead being “star-struck” by his former banking colleagues. “At some point he did drink the private sector Kool-Aid . . . there was a certain naivety, that the private sector could solve every problem,” he said. 

The Heywood family said he was always looking for new ideas “both inside and outside government” to improve policymaking. 

“His well-known lack of interest in personal financial gain meant he saw his time at Morgan Stanley simply as another way to increase his knowledge and experience better to serve the civil service on his return,” said the family. 

“He would be horrified at the suggestion that any relationships — professional or personal — ever clouded his ability to provide ministers with objective, valuable and appropriate counsel.”

Robey, who was a pall bearer at Heywood’s funeral, said: “In his role as cabinet secretary, he would rightly want to be involved in corporate transactions that affected the national interest . . .

“But when he was made aware of these transactions, Jeremy never cut corners and insisted on proper and professional process . . . To suggest otherwise is false and a disservice to the memory of a great public servant.”

Bernard Jenkin, Conservative chair of the House of Commons liaison committee, which regularly questions prime ministers, said there was merit in civil servants obtaining experience in the private sector but added those “zigzag careers” needed careful management.

“Jeremy Heywood may have made some misjudgments but I have no doubt that he always had the best of intentions,” he added.