In a new report, British MPs reveal the future of tycoon Sanjeev Gupta’s family-owned conglomerate is under threat. Gupta’s GFG Alliance has been struggling to arrange refinancing of its global web of operations, including British steel sites, after the collapse of its main lender Greensill Capital.
Published last week, the report said, “A number of audit and corporate governance red flags became clear during this inquiry.” They said control was centralized with Gupta and “members of staff within his businesses are prevented from performing their roles and duties adequately.” GFG said in a statement that it has already implemented a range of measures to deal with matters raised in the report. It added, “Since 2019 the group has been on a journey to improve governance and transparency.”
The MPs meanwhile, said GFG and Liberty had failed to publish financial accounts despite repeated promises to do so. They said, “We are not satisfied that Sanjeev Gupta is adequately addressing the many fundamental issues and … this poses a threat to the long-term prospects of Liberty Steel UK.”
The report said the future of the British steel sector was uncertain because producers faced some of the highest energy prices in Europe even before the current power crisis. It said, “We recommend that the government take action to reduce this disparity.” The Boris Johnson-led government responded to the report by saying it would carefully consider the report’s recommendations.
French authorities are investigating GFG Alliance, as reported by The Financial Times. The Paris Prosecutor’s Office said it was probing Gupta’s French operations over allegations of “misuse of corporate assets” and “money laundering”. GFG holds multiple important assets in the company in France.
The French portfolio includes plants and smelters Gupta bought during a multibillion-dollar spending spree financed by the collapsed Greensill Capital. Public officials highlighted a deal Gupta made with commodities specialists Glencore as he tried to fight off a takeover attempt by US private equity firm American Industrial Partners.