Ministers were warned of a potential scandal surrounding informal government advisers like Lex Greensill who are not covered by ethics regulations.
Government ethics chief Sir Eric Pickles said he had been “warning of the possibility of a scandal... for some time”.
He admitted he did not “anticipate anything like Greensill” but stressed there are “anomalies in the system” which mean informal advisers are not covered by restrictions placed on them as a consequence of public sector work.
It came as a third parliamentary committee confirmed it will investigate the Greensill lobbying scandal and would summon former prime minister David Cameron to give evidence.
The row has engulfed Westminster following revelations that Cameron lobbied serving cabinet ministers to try and secure Covid rescue funding for financial services firm Greensill Capital, where he worked as an adviser and where he held shares reportedly worth millions.
The firm’s founder, Australian banker Lex Greensill, had previously worked as an informal adviser to Cameron in Downing Street when he was PM.
Pickles said the Advisory Committee on Business Appointments (Acoba) that he chairs would not have been able to look into Greensill’s role in No.10 because he was neither a civil servant or a special adviser.
The Tory peer told MPs on the Commons public administration committee (PACAC): “Contractors, consultants, people who arrive and offer assistance, maybe during the pandemic or maybe as Greensill did, they are not covered at all.
“I think that needs addressing and I think it needs addressing urgently.”
Pickles went on: “I’ve been really unhappy about this, and I’ve been unhappy about this for some time and I have been making various recommendations for some time.
“And of course, because of Covid and because of all kinds of things, I understand people have more important [things].
“But I have been warning of the possibility of a scandal with regard to this for some time.”
The Tory peer said he raised his concerns using the “proper channels”, including junior ministers, and said he felt the “machine was responding towards his requests”.
The Acoba chairman added: “If I had found the machine wasn’t responsive, then I would have wandered down and spoken to a secretary of state or the prime minister.”
Pickles said there were steps that “could be taken now” to have in place “well before the summer” to address concerns around informal advisers.
“Someone in Greensill’s place or someone offering advice on health equipment, they should at least sign a memorandum of understanding which would outline their responsibilities, outline the restrictions that would be placed on them once they left working with the government,” said the former communities secretary.
“And I believe that memorandum of understanding should be a transparent one and should be published so everyone understands where they are.”
Pickles meanwhile said the public was “entitled” to know how Bill Crothers was able to join Greensill Capital’s company board in 2015 while still working as the impartial civil service’s chief procurement officer until 2016.
He revealed Crothers was not required to seek Acoba’s advice when moving to take up a position with Greensill Capital.
Pickles said: “It appears he was not isolated in that position.
“I think it also highlights a number of anomalies within the system that require I think immediate address.”
He added: “I mean, if Crothers had decided he wanted to have a milk round or something, I don’t think we would be terribly worried.
“But his particular position, in terms of running procurement and working for a commercial organisation, is something that does require a full and frank and transparent explanation.”
While Pickles argued that officials or ministers found to breach rules around business appointments should face “consequences”, he argued against a system of fines or criminal responsibility, insisting it would be too expensive to administer.
Those found in breach could be denied honours or appointments to government roles, for example as special envoys or on quangos, in the future, he suggested.
Pickles spoke as the Commons public accounts committee has said it intends to launch an inquiry into supply chain financing, which Greensill Capital was involved in.
In a statement the committee said that it intended to call Cameron to give evidence.
Two other Commons committees – the Treasury committee and PACAC – have also said they are to examine issues arising from the collapse of Greensill Capital.
Boris Johnson has ordered an internal review led by City lawyer Nigel Boardman.