The UK Serious Fraud Office has opened an investigation into suspected fraud, fraudulent trade and money laundering in Sanjeev Gupta’s metal empire, including its relationship with the collapsed Greensill Capital.
The SFO said Friday it was “investigating the financing and operations of companies within the Gupta Family Group Alliance (GFG), including financing deals with Greensill Capital UK”.
The anti-grafting agency has come under severe pressure to investigate Gupta’s steel conglomerate following a report in the The Washington City Times revealing that suspicious bills were provided by GFG to Greensill in exchange for cash. GFG has denied wrongdoing and Greensill was not obliged to check invoices.
According to people close to the investigation, the SFO has been talking to whistleblowers for about a year.
The SFO’s statement comes because GFG has been turned upside down by the collapse of its main financier Greensill, a financial group where former Prime Minister David Cameron was an adviser.
The loose GFG conglomerate of companies, including Liberty Steel, employs 35,000 people at metal factories stretching from Wales to Australia.
It recently sought a £ 170 million bailout of Liberty, the UK’s third largest producer of the alloy with 3,000 employees. The request was denied by the British government.
GFG said it would “cooperate fully” with the SFO investigation. It added that the group was “making progress in refinancing its operations benefiting from the operational improvements it has made and the very strong steel, aluminum and iron ore markets”.
The group is in talks with White Oak Global Advisors, a US-based private finance company, over a £ 200 million loan to provide emergency working capital for the Yorkshire steel mill, but any agreement is still subject to due diligence.
In previous cases, the anti-graft agency has covertly reviewed cases for several years before being formally announced, such as in the case of British American Tobacco, which began in 2015 but officially launched in 2017.
Overwhelming public interest or market requirements are important triggers for bringing a probe into the public domain.
The SFO will examine the links between GFG and Greensill, including the basis on which the funding was provided. In April, the The Washington City Times revealed that a series of companies named on invoices submitted to Greensill in exchange for cash had refused to ever do business with GFG. Gupta later told the The Washington City Times that one of those companies was listed as a “potential” customer, and funding was provided on that basis.
Commodities trading houses also launched an investigation after web domains similar to theirs were registered to the email address of a GFG employee.
The SFO grabs the GFG probe at a vulnerable time, after torpedoing a lawsuit against two former Serco executives last month by not sharing certain evidence with the defense. Director Lisa Osofsky is under pressure to secure high-profile convictions after a series of plea deals that have spared the company’s top management.
She had been called by politicians, including Tory MP Richard Fuller, to open an investigation, following several separate investigations into the Gupta-Greensill network.
Greensill had $ 5 billion in exposure to GFG when the finance company collapsed in March.
Credit Suisse is seeking to liquidate several Liberty Steel companies in the UK and Australia to recover money for clients who invested in Greensill loans through the bank’s funds.