The UK’s Serious Fraud Office has opened an investigation into suspicions of fraud, fraudulent transactions and money laundering in the Sanjeev Gupta metals empire, including its relationship to the collapse of Greensill Capital.
The SFO said on Friday it was reviewing “the financing and conduct of business of companies within the Gupta Family Group Alliance (GFG), including its funding arrangements with Greensill Capital UK”.
The anti-corruption agency came under intense pressure to investigate the Gupta steel conglomerate following a report in the Financial Times that suspicious invoices were provided by GFG to Greensill in exchange for cash. GFG denied the wrongdoing and Greensill was under no obligation to check the invoices.
According to people familiar with the investigation, the OFS has been talking to whistleblowers for about a year.
The OFS statement comes as GFG was left in shock by the collapse of its main funder Greensill, a financial group where former prime minister David Cameron was an adviser.
The conglomerate of companies GFG, which includes Liberty Steel, employs 35,000 people in metallurgical plants stretching from Wales to Australia.
He recently asked for a £ 170million state bailout from Liberty, Britain’s third-largest producer of the alloy with 3,000 employees. The request was rejected by the British government.
GFG has said it will “fully cooperate” with the OFS investigation. He added that the group “is progressing in the refinancing of its operations which benefit from the operational improvements it has made and the very solid markets for steel, aluminum and iron ore”.
The group is in talks with White Oak Global Advisors, a US-based private finance firm, over a £ 200million loan to provide emergency working capital to its Yorkshire steelworks, but any deal is on hold. always subject to due diligence.
In previous cases, the anti-graft agency has evaluated cases privately for several years before officially announcing them, such as in the case of British American Tobacco, which started in 2015 but was officially launched in 2017.
Overwhelming public interest or market demands are key triggers for bringing a probe into the public domain.
The SFO will examine the relationship between GFG and Greensill, including the basis on which the funding was extended. In April, the Financial Times revealed that a series of companies named on invoices given to Greensill in exchange for cash had denied ever doing business with GFG. Gupta later told the FT that such a company had been listed as a “potential” customer and that funding had been provided on that basis.
Commodity trading houses have also launched investigations after web domains resembling their own were registered with the email address of a GFG employee.
The OFS is attacking the GFG investigation at a vulnerable time, after torpedoing a lawsuit against two former Serco executives last month by failing to share some evidence with the defense. Director Lisa Osofsky is under pressure to secure high-profile convictions, following a spate of plea deals that have spared the company’s top executives.
She had been called upon by politicians, including Conservative MP Richard Fuller, to launch an investigation, following a number of separate inquiries into the Gupta-Greensill Network.
Greensill is surveyed by the UK’s Financial Conduct Authority and a Treasury Select Committee.
German financial regulator BaFin has filed a criminal complaint against the management of German bank Greensill for alleged balance sheet manipulation. The BaFin share follows an investigation by an independent auditor, which raised concerns about the bank’s level of exposure to companies linked to Gupta.
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 in order to recover money from clients who have invested in Greensill loans through the bank’s funds.
Additional reporting by Robert Smith, Cynthia O’Murchu and Michael Pooler