SFO launches inquiry into Gupta firms, including Greensill finance links

Move to investigate suspected fraud and money laundering prompts collapse of Liberty Steel rescue deal putting 3,000 UK jobs at risk

The Serious Fraud Office has launched an investigation into the financing of Sanjeev Gupta’s metals empire, including its links to Greensill Capital, in a move that immediately caused the collapse of a rescue deal for Liberty Steel and raised fears over thousands of British jobs.

The UK’s anti-corruption agency said it suspected fraud, fraudulent trading and money laundering related to the financing of Gupta Family Group Alliance (GFG), the loose grouping of steel and metals trading companies controlled by Gupta.

The investigation prompted renewed fears for the struggling GFG company Liberty Steel, which employs about 3,000 people in the UK.

San Francisco-based investor White Oak Global Advisers on Friday pulled out of a deal to provide finance to GFG. It had last week agreed terms to lend to operations in both the UK and Australia, but both were subject to due diligence checks.

“As with any regulated financial institution, we are not in a position to continue discussions with any company that is under investigation by the Serious Fraud Office for money laundering,” White Oak said in a statement.

Globally there are as many as 35,000 people in related GFG companies, including large mining and steelmaking operations in Australia, the US, France, eastern Europe and India.

Gupta has been scrambling to secure financing for his companies since March, when his key lender, Greensill Capital, collapsed. The supply chain finance provider, set up by the banker Lex Greensill, had lent Gupta’s companies as much as $5bn (£3.6bn).

The SFO on Friday said that its investigation included GFG’s financing arrangements with Greensill’s UK arm.

The SFO inquiry has been running covertly for several months, said a person familiar with the investigation. Covert investigations are often used in cases where destruction of evidence may be a risk.

In a short statement, the SFO said: “The SFO is investigating suspected fraud, fraudulent trading and money laundering in relation to the financing and conduct of the business of companies within the Gupta Family Group Alliance (GFG), including its financing arrangements with Greensill Capital UK Ltd. As this is a live investigation, the SFO can provide no further comment.”

Gupta had previously approached the UK government for a £170m emergency loan. The request was rejected because of fears the money would be moved outside the UK via GFG’s opaque and complex corporate structure. A government source said the SFO inquiry vindicated a possible plan to step in to save Liberty Steel operations only if they fell into insolvency.

Steel mills in Rotherham and Stocksbridge, both in South Yorkshire, have been put under particular pressure by the collapse of GFG’s main lender, as well as the decline in demand from the aerospace industry during the coronavirus pandemic. Gupta’s companies employ a further 2,000 people elsewhere in the UK, including in an energy company and a Scottish aluminium smelter.

A steelworkers’ union, Community, said the SFO inquiry was a “concerning development” but added that “this must not detract from the complete focus of all parties on securing our members’ jobs and protecting these crucial strategic businesses”.

Gupta built the GFG empire rapidly with the help of Greensill’s loans. However, since Greensill collapsed GFG’s financing has come under heavy scrutiny, including in relation to the practice of borrowing against invoices for potential future clients. GFG has previously said that it borrowed from Greensill on the basis of “prospective receivables”.

David Cameron, the former prime minister who was paid by Greensill and lobbied on his behalf, on Thursday told MPs that reports about GFG’s financing were “clearly very disturbing if true”.

In March, Richard Fuller, a Conservative MP, in parliament asked the business secretary, Kwasi Kwarteng, whether the reports about GFG warranted the SFO’s involvement. On Friday Fuller said Gupta should now provide details on his companies’ corporate structure and financing, as well as clarity over his contingency plans for the steel plants.

Responding on Friday to news of the SFO investigation, a GFG spokesperson said: “GFG Alliance notes the UK Serious Fraud Office’s announcement that it has opened an investigation into GFG Alliance. GFG Alliance will cooperate fully with the investigation. As these matters are the subject of an SFO investigation we cannot make any further comment.

“GFG Alliance continues to serve its customers around the world and is making progress in the refinancing of its operations which are benefiting from the operational improvements it has made and the very strong steel, aluminium and iron ore markets.”

The administrators for Greensill’s UK arm, Grant Thornton, declined to comment.


Jasper Jolly

The GuardianTramp

Related Content

Article image
Greensill: watchdog opens investigation into auditors including PwC
Inquiry involves Saffery Champness and PwC’s audit of the Sanjeev Gupta-owned Wyelands Bank

Kalyeena Makortoff Banking correspondent

28, Jun, 2021 @10:58 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
MPs accuse Lex Greensill of ‘disrespect’ over refusal to attend steel inquiry
Labour MP leading business committee says financier must appear in front of parliamentarians

Kalyeena Makortoff Banking correspondent

16, Jun, 2021 @7:44 PM

Article image
British Business Bank launched probe into Greensill Capital before collapse
Exclusive: UK development bank was concerned over loans to Sanjeev Gupta’s steel empire

Kalyeena Makortoff Banking correspondent

26, Mar, 2021 @7:00 PM

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
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
Greensill given access to Covid loans without detailed checks, watchdog reveals
Taxpayer facing potential £335m loss after audit office says government bank carried out limited due diligence on business support loans

Rajeev Syal

06, Jul, 2021 @11:01 PM

Article image
Greensill crisis spreads as Bank of England and German regulator take action
Uncertainty over lender’s future poses threat to investors, business borrowers and nearly 50,000 jobs

Kalyeena Makortoff and Jasper Jolly

03, Mar, 2021 @7:46 PM

Article image
Tory MPs reject inquiry into David Cameron's lobbying for Greensill
Former PM will not face scrutiny by Treasury committee following reports he used private channels to lobby on firm’s behalf

Kalyeena Makortoff Banking correspondent

22, Mar, 2021 @8:33 PM