Sanjeev Gupta could face MPs’ questions over Liberty Steel

Magnate may be compelled to give evidence as business committee launches inquiry in wake of Greensill Capital collapse

The steel magnate Sanjeev Gupta could be summoned in front of MPs after the parliamentary business committee launched a formal inquiry into Liberty Steel following the collapse of its largest lender, Greensill Capital.

The business, energy and industrial strategy (BEIS) committee is the fourth parliamentary committee to launch an inquiry linked to Greensill’s failure. It will consider the impact of the lender’s collapse on Liberty Steel, its customers and its roughly 3,000-strong UK workforce, who could be under threat if the company fails to find alternative financing.

Gupta’s sprawling holding company GFG Alliance, which owns Liberty Steel, was one of Greensill’s largest borrowers, owing the firm an estimated £3.6bn, according to reports. The lender’s collapse prompted the Liberty Steel owner to temporarily pause production at UK factories to preserve cash last month, and request a £170m government bailout that was ultimately rebuffed.

While MPs on the BEIS committee are still constructing the witness list, it is understood that the group could compel the billionaire GFG Alliance owner – who is currently in Dubai – as well as the Greensill Capital founder, Lex Greensill, to give evidence.

“The collapse of Greensill Capital and subsequent financing issues affecting the GFG Alliance has put thousands of jobs at Liberty Steel in jeopardy,” said the committee chairman, Darren Jones.

He added that the episode “also raised a catalogue of concerns relating to corporate governance, audit and supply-chain finance.

“As a committee, we will want to examine whether reform is needed in these areas and, additionally, access to and use of taxpayers’ money, including Covid-related support, and whether adequate checks and balances were put in place in return for support from government.”

The British Business Bank has launched its own inquiry into the loans that Greensill Capital extended to GFG Alliance through the government’s second-largest emergency Covid loan scheme, which were 80% backed by the taxpayer.

Reports have claimed that Greensill and GFG exploited a loophole that allowed the group to borrow £400m despite a £50m-per-company cap. GFG Alliance has said it followed the law and that while various entities in the group applied for government-backed loans, only one of its companies was granted £46m under the scheme.

Gupta’s relationship with Greensill has also come under scrutiny amid reports that Greensill was offering loans to GFG Alliance based on speculative invoices that named customers it had never done business with. GFG has said “Greensill selected and approved companies with whom its counter parties could do business in the future” as part of its “prospective receivables programme”.

Greensill is facing criminal complaints by prosecutors in Germany, who say its local bank could not provide evidence of receivables on its balance sheet.

A Liberty Steel spokesperson said: “Liberty Steel will fully support the committee’s inquiry and looks forward to contributing to the committee’s work to secure a sustainable future for the UK steel industry and the skilled jobs, local communities and critical supply chains which depend on it.”

Greensill Capital’s administrators at Grant Thornton declined to comment.


Kalyeena Makortoff

The GuardianTramp

Related Content

Article image
Sanjeev Gupta close to winning £200m loan to save Liberty Steel
Likely lifeline could save thousands of UK jobs and follows funding from same source for Australian unit

Kalyeena Makortoff Banking correspondent

06, May, 2021 @6:32 PM

Article image
MPs call for inquiry into Liberty Steel tycoon Sanjeev Gupta
Ministers’ claim his leadership threatened future viability of crisis-stricken metals company

Jasper Jolly

05, Nov, 2021 @12:01 AM

Article image
Liberty Steel plans to sell Yorkshire plant to stay afloat
Sale of aerospace supplier proposed as lenders try to claw back cash after Greensill collapse

Jasper Jolly and Kalyeena Makortoff

24, May, 2021 @3:03 PM

Article image
Liberty Steel wants to buy time, but who will want to snap up its assets?
As creditors circle, plan to sell off its key aerospace supply plant comes with one major hitch

Nils Pratley

24, May, 2021 @7:16 PM

Article image
HMRC withdraws winding-up petitions against four Liberty Steel firms
Threat to 3,000 jobs appears to have receded but GFG consulting on possible closure of Coventry factory

Jasper Jolly

07, Mar, 2022 @4:55 PM

Article image
Thousands of Liberty Steel jobs at risk in England as HMRC files winding-up order
Unions condemn move as ‘devastating blow’ saying plants must remain open

Jasper Jolly

10, Feb, 2022 @6:37 PM

Article image
Aerospace body urges government to secure Liberty Steel supply
ADS Group wants continuity of production as Sanjeev Gupta seeks finance after collapse of Greensill

Jasper Jolly

14, Apr, 2021 @5:14 PM

Article image
Steel tycoon Sanjeev Gupta says Port Talbot jobs can be saved
Managing director of Liberty House, a potential buyer for plant, says he believes he can revive Tata Steel’s UK business

Sean Farrell

05, Apr, 2016 @8:26 AM

Article image
Fears furlough ‘cliff edge’ at Liberty Steel could put jobs at risk
Owner Sanjeev Gupta urgently seeking new lenders before government pay support ends for thousands of workers

Jasper Jolly

26, Aug, 2021 @9:57 PM

Article image
Metals magnate Sanjeev Gupta seeks £170m government rescue
Liberty Steel founder requests bailout as company cashflow problems are compounded by Greensill collapse

Kalyeena Makortoff and Heather Stewart

26, Mar, 2021 @8:45 PM