The metal magnate Sanjeev Gupta might be summoned in entrance of MPs after the parliamentary enterprise committee launched a proper inquiry into Liberty Metal following the collapse of its largest lender, Greensill Capital.
The enterprise, power and industrial technique (BEIS) committee is the fourth parliamentary committee to launch an inquiry linked to Greensill’s failure. It should contemplate the impression of the lender’s collapse on Liberty Metal, its prospects and its roughly 3,000-strong UK workforce, who might be underneath risk if the corporate fails to search out various financing.
Gupta’s sprawling holding firm GFG Alliance, which owns Liberty Metal, was certainly one of Greensill’s largest debtors, owing the agency an estimated £3.6bn, in accordance with experiences. The lender’s collapse prompted the Liberty Metal proprietor to quickly pause manufacturing at UK factories to protect money final month, and request a £170m government bailout that was finally rebuffed.
Whereas MPs on the BEIS committee are nonetheless establishing the witness checklist, it’s understood that the group may compel the billionaire GFG Alliance proprietor – who’s at the moment in Dubai – in addition to the Greensill Capital founder, Lex Greensill, to offer proof.
“The collapse of Greensill Capital and subsequent financing points affecting the GFG Alliance has put hundreds of jobs at Liberty Metal in jeopardy,” mentioned the committee chairman, Darren Jones.
He added that the episode “additionally raised a listing of issues referring to company governance, audit and supply-chain finance.
“As a committee, we’ll need to look at whether or not reform is required in these areas and, moreover, entry to and use of taxpayers’ cash, together with Covid-related assist, and whether or not sufficient checks and balances have been put in place in return for assist from authorities.”
The British Business Bank has launched its own inquiry into the loans that Greensill Capital prolonged to GFG Alliance by way of the federal government’s second-largest emergency Covid mortgage scheme, which have been 80% backed by the taxpayer.
Reviews have claimed that Greensill and GFG exploited a loophole that allowed the group to borrow £400m regardless of a £50m-per-company cap. GFG Alliance has mentioned it adopted the regulation and that whereas varied entities within the group utilized for government-backed loans, solely certainly one of its corporations was granted £46m underneath the scheme.
Gupta’s relationship with Greensill has additionally come underneath scrutiny amid experiences that Greensill was providing loans to GFG Alliance primarily based on speculative invoices that named prospects it had by no means accomplished enterprise with. GFG has mentioned “Greensill chosen and authorised corporations with whom its counter events may do enterprise sooner or later” as a part of its “potential receivables programme”.
Greensill is dealing with prison complaints by prosecutors in Germany, who say its native financial institution couldn’t present proof of receivables on its stability sheet.
A Liberty Metal spokesperson mentioned: “Liberty Metal will totally assist the committee’s inquiry and appears ahead to contributing to the committee’s work to safe a sustainable future for the UK metal business and the expert jobs, native communities and significant provide chains which rely upon it.”
Greensill Capital’s directors at Grant Thornton declined to remark.