Jeremy Heywood was a leading figure at investment bank Morgan Stanley, which advised on the sale of the troubled firm in 2006. He is now David Cameron’s Permanent Secretary at Downing Street and is tipped to be the next Cabinet Secretary.
His No 10 role puts him at the nerve-centre of a Government that may end up using taxpayers’ money to bail out the residential care group.
It is not clear how much of a personal bonus Mr Heywood was paid for overseeing the Southern Cross float in 2006.
However banking sources said it is certain that he will have been handsomely rewarded for running the team which won it.
The floatation has been heavily criticised because it left the company financially vulnerable and unable to withstand the property crash of 2008.
Some 31,000 frail elderly people in 750 care homes face an uncertain future now Southern Cross is hovering on the brink of bankruptcy.
U.S. private equity firm Blackstone bought the firm in 2004, floated it on the stock market two years later and sold all its shares in 2007 – taking a huge profit.
A report by the GMB union reveals the controversial stock market floatation was guided by Morgan Stanley, where Mr Heywood was co-head of UK investment banking between 2004 and 2007 during a break from the civil service.
It advised Blackstone on the float, informing it of Stock Exchange rules, helping draw up a prospectus, setting the share sale price and attracting investors.
The 2006 float valued Southern Cross at £425million and released huge profits for directors and for Blackstone.
Morgan Stanley is believed to have shared in a £10million fee with other advisers, including Swiss bank UBS.
They all seem to be in it together.
