MPs launched a scathing attack on Sanjeev Gupta and claimed there was no evidence he had cleaned up his struggling metals empire.
The Liberty Steel owner agreed a vital restructuring package last month that will see £50million injected into his UK plants.
But in a damning report the Commons business committee said there were still serious question marks over whether the tycoon was fit to run a steel business. The report deals another hammer blow to Gupta’s already shredded reputation.
Crisis: Liberty Steel’s turmoil put 3,000 UK jobs at the country’s third-largest steelmaker on the brink
The 50-year-old tycoon had been hailed as the ‘saviour of UK steel’ after he snapped up a plant in Newport, South Wales in 2013 and later went on a spending spree that saw him take over factories in Rotherham, Scunthorpe and Stocksbridge, among others.
But his group of companies – the GFG Alliance, which includes Liberty Steel – was thrown into turmoil after its main lender Greensill Capital went bust in March.
Liberty Steel’s troubles put 3,000 UK jobs at the country’s third-largest steelmaker on the brink.
The report into the near-collapse of Liberty by MPs said:
- That the Insolvency Service should investigate whether Gupta breached his responsibility as a company director.
- That Liberty Steel is still at risk because Gupta is not doing enough to address fundamental problems with the business.
- That the committee was ‘utterly unconvinced’ one of GFG’s main auditors had the skills, expertise and resources to sign off on its accounts and should be investigated immediately.
- That the Treasury and Financial Conduct Authority should look into the complex and fragile financing provided by Greensill Capital that powered GFG.
In the report, MPs called on Gupta to take immediate action to restructure the business to make it more transparent.
Bailout: Sanjeev Gupta agreed a vital restructuring package last month that will see £50m injected into his UK plants
Darren Jones, chairman of the committee, said: ‘The evidence we heard in our inquiry has highlighted serious problems with high-risk financial practices, weaknesses in audit, and about inadequate accountability and corporate governance arrangements within GFG Alliance.
‘Sanjeev Gupta must urgently fix these problems if he is to be seen as a fit and proper owner of steel companies in the UK.’
MPs commended Business Secretary Kwasi Kwarteng for turning down Gupta’s request for a £170million bailout earlier this year.
And the Committee said it believed that until the GFG was simplified and published more accessible accounts, Gupta does not meet the requirements to be someone leading a company that might receive Government support.
MPs were also searing about King & King, the tiny two-partner firm that audited the accounts of around 60 GFG firms with combined revenues of £2.5billion.
MPs urged the Institute of Chartered Accountants for England and Wales to investigate King & King as ‘a matter of urgent public interest’.
A GFG Alliance spokesman said the firm would ‘review and reflect’ on the MPs’ conclusions.
The spokesman added: ‘We are disappointed that the report fails to recognise the significant role Sanjeev Gupta and Liberty Steel has played in saving and safeguarding thousands of UK jobs which otherwise would have been lost.
‘Mr Gupta has consistently met his obligations as a director of a private company, and with the restructuring and transformation committee has led GFG’s global restructuring since Greensill’s collapse which has enabled the refinancing of our Australian operations and laid the foundations to achieve secure financing across the group.’
