Whitehall’s ethics chief has agreed that financier Lex Greensill’s appointment to a role inside government was “a screaming, glaring conflict of interest”.

The head of the civil service, Simon Case told MPs on a parliamentary watchdog committee that he found the nature of Mr Greensill’s position in government “unacceptable”

And he said it was “extraordinary” that Bill Crothers was allowed to work as the government’s chief procurement officer at the same time as he was employed by the financier’s company Greensill Capital, which went on to bid for lucrative public sector work.

Mr Case told the House of Commons Public Administration and Constitutional Affairs Committee (PACAC) that an unknown number of other individuals have been given roles as unpaid advisers to government, but said he was not aware of others in the same position as Greensill.

Admitting he was “alarmed” by the situation, Mr Case told the committee: “For me, I can’t explain the Greensill case

“I don’t think it’s acceptable, I don’t believe it is a common practice, I certainly don’t think there’s anything happening at the moment that is the equivalent.”

Boris Johnson has ordered an inquiry by lawyer Nigel Boardman into the Greensill affair after former prime minister David Cameron lobbied Rishi Sunak for government support for the company, where he worked as a senior adviser after leaving office.

Cabinet Office director general of propriety and ethics Darren Tierney told a PACAC inquiry that it was “unclear” how Mr Greensill had been appointed to an adviser’s role during Mr Cameron’s time in office, apparently on the recommendation of then cabinet secretary Sir Jeremy Heywood.

He confirmed that the financier was given a pass to enter Downing Street and was given security clearance some months after beginning his work, but said it had not been possible to find a contract setting out his position.

PACAC member David Jones said that while Greensill Capital had no public contracts at the time, its founder’s position within government “put him in a position to acquire information that would have been of assistance to him in deciding the basis upon which he could offer commercial services to the government”.

And he asked Mr Tierney: “Doesn’t it look like a screaming, glaring conflict of interest?”

The Whitehall ethics chief replied: “Yes, it does.”

Challenged that this appeared to be “appalling incompetence” by senior officials, Mr Tierney said: “What we haven’t seen is the evidence of how the conflict was to be managed, and that is what we have asked Nigel Boardman to look into.”

Asked about the nature of Mr Greensill’s role, Mr Tierney told MPs: “He wasn’t a special adviser – his exact status is unclear. That’s one of the things that we have asked Nigel Boardman to look into.

“He was appointed as an unpaid adviser on supply chain finance in January 2012, he did that until 2015. In 2013, he also became a crown representative, which lasted until 2016, when he left the Cabinet Office.”

Mr Greensill’s initial three-month appointment was approved by then minister Francis Maude – currently conducting a review of the Cabinet Office for Mr Johnson – and his senior civil servant Ian Watmore, but it was unclear who had signed off later extensions, said Mr Tierney.

He added: “We have been unable to find a contract. What we have found so far are an appointment letter, and then subsequent reappointment letters.”

Mr Case told the committee that it was “a pretty extraordinary set of circumstances” that Mr Crothers was permitted to remain as the government’s chief procurememt officer after his appoinment at Greensill, a company whose business was selling services to government.

His continuation in the post was approved by Sir Jeremy Heywood and the then head of the civil service Sir John Manzoni, without being signed off by ministers.

Describing the situation as being “of acute concern”, Mr Case said: “I personally have never heard of anything like it before and, having talked to current and former colleagues, no-one else seems to have seen anything quite like it.”

Mr Jones told him: “It looks very much as if senior officials were putting in place an arrangement that would make it easier for Greensill Capital to obtain public sector work.”