Boris Johnson has ordered a review into Greensill Capital following the David Cameron lobbying controversy – as Rishi Sunak was asked to appear before parliament to explain his involvement.
Top lawyer Nigel Boardman will lead the investigation into the now-collapsed finance firm’s activities in government and the role its founder, Lex Greensill, played.
The Whitehall review will look at how government contracts were secured by Greensill Capital as well as the actions of Mr Cameron.
Hours after Monday’s announcement, Labour‘s shadow chancellor Anneliese Dodds was granted an urgent question about the row.
The chancellor does not have to appear in parliament himself and could send a Treasury minister to answer questions Labour has about the situation.
Confirming a review had now been ordered after weeks of allegations about the links between Mr Greensill, Mr Cameron and government ministers and officials, Mr Johnson‘s official spokesman told reporters: "As you know, there is significant interest in this matter.
"So the prime minister has called for the review to ensure government is completely transparent about such activities and that the public can see for themselves if good value was secured for taxpayers’ money.
"This independent review will also look at how contracts were secured and how business representatives engaged with government."
Last week, the chancellor released text messages he sent to former prime minister Mr Cameron last April in which he said he had "pushed" his officials to explore how to help Greensill Capital access to COVID Corporate Financing Facility (CCFF).
Mr Cameron wanted Greensill, who he was working for, to be able to issue loans using taxpayer cash through the scheme.
He could reportedly have made millions of pounds through his shareholdings in the firm before its eventual collapse last month.
The company’s demise has threatened thousands of jobs in the UK steel industry, as Greensill was a major financier of Liberty Steel’s owner GFG Alliance.
Greensill’s proposals were ultimately rejected by the Treasury after consultation and it was not given access to the CCFF scheme.
It was allowed access to tens of millions of pounds of taxpayer money to issue loans under a separate pandemic support scheme known as the Coronavirus Large Business Interruption Loan Scheme (CLBILS).
However, the chancellor said the accreditation process is "run independently" by the British Business Bank, with no involvement by the Treasury.
In a letter to Ms Dodds last week, Mr Sunak said: "HM Treasury had no role and was not involved in the CLBILS accreditation decision for Greensill Capital."
Mr Cameron was cleared of any wrongdoing by the official watchdog in March 2021 on the basis he was a Greensill Capital employee rather than a third-party lobbyist.
He insisted he broke "no codes of conduct and no government rules", but having "reflected on this at length" accepted there were "lessons to be learnt".
But Labour warned the chancellor’s actions could constitute breaches of the ministerial code.
Ms Dodds said she will demand answers over the lack of transparency over Mr Sunak’s conversations with Mr Cameron about Greensill and the "alternative" he "pushed the team to explore" in one of his texts to Mr Cameron.
She also wants to know about discussions Mr Sunak held with the British Business Bank about whether Greensill Capital should get access to CLBILS after it was rejected for CCFF. Mr Sunak said last week he, nor the Treasury, had any involvement.
The shadow chancellor will also ask if accreditation criteria for the CLBILS scheme was changed to allow Greensill Capital access to it and why the firm was the "only supply chain firm" accredited to the scheme "after it got so much access to the Treasury".
Labour said Mr Sunak has been absent from parliament since 9 March.
Ms Dodds said: "The chancellor can’t keep ducking scrutiny of his decision to put hundreds of millions of pounds of taxpayer money in the hands of an unregulated lending firm with links to a former Conservative PM.
"That’s why we have asked him to come to parliament to explain himself.
"We need to know what he "pushed" his officials to do to help Greensill access one of his COVID loan schemes. And we need to know why he then simply opened the door for them to lend through another one.
"Public money was put at risk by the Conservatives’ crony connections to Greensill Capital. That’s why we urgently need a full, transparent and thorough investigation into this affair."