Liberty Steel: MPs call for investigation into financing
MPs have called for investigations into the owners of Liberty Steel and boss Sanjeev Gupta to prevent another crisis in the industry.
MPs on the business committee found there were ‘systemic risks’ that should have raised red flags with authorities.
The steel industry is too important to lurch from ‘crisis to crisis’, they argue.
Mr Gupta's GFG Alliance, which owns Liberty Steel UK in Rotherham and the Speciality Steels division in Stocksbridge, was plunged into chaos when lender Greensill Capital collapsed in spring.
It used supply chain finance to quickly pay companies waiting for invoices to be paid by customers and then pay investors back when they were paid.
But the report by the Business, Energy and Industrial Strategy Committee says the use of such finance and the way Mr Gupta structured his businesses was questionable.
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Darren Jones, chairman of the committee, said the steel industry was too important strategically to be left to the mercy of international competition, high risk finance, and volatile energy prices.
He added: "The evidence we heard during 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," Mr Jones said.
A spokesman for GFG said they noted the findings, but since the committee took evidence the company had restructured and refinanced and injected £50m to restart the Rotherham and Stockbridge operations.
In a statement, the firm added: "Since 2019 the group has been on a journey to improve governance and transparency."