Serious Fraud Office launches investigation into Gupta’s GFG

The UK’s Serious Fraud Office has opened an investigation into suspected fraud, fraudulent trading and money laundering at Sanjeev Gupta’s metals empire, including its relationship with the collapsed Greensill Capital.

The SFO said on Friday that it was scrutinising “the financing and conduct of the business of companies within the Gupta Family Group Alliance (GFG), including its financing arrangements with Greensill Capital UK”.

The anti-graft agency has come under intense pressure to investigate Gupta’s steel conglomerate following reporting in the Financial Times that revealed suspicious invoices 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 around a year.

The SFO’s statement comes as GFG has been left reeling by the collapse of its main financial backer Greensill, a finance group where former prime minister David Cameron was an adviser.

The loose GFG conglomerate of companies that include Liberty Steel employs 35,000 people at metalworks stretching from Wales to Australia.

It recently sought a £170m state bailout of Liberty, the UK’s third-largest producer of the alloy with 3,000 employees. The request was rejected by the UK government.

GFG said it would “co-operate fully” with the SFO investigation. It added that the group was “making progress in the refinancing of its operations which are benefiting from the operational improvements it has made and the very strong steel, aluminium and iron ore markets”.

The group has been in talks with White Oak Global Advisors, a US-based private finance firm, about a £200m loan to provide emergency working capital for its Yorkshire steelworks, but any agreement is still subject to due diligence.

In previous cases, the anti-graft agency has privately assessed matters covertly for several years before formally announcing them, such as in the case of British American Tobacco, which began in 2015 but was officially launched in 2017.

Overwhelming public interest or market requirements are key triggers for bringing a probe into the public domain.

The SFO will examine the links between GFG and Greensill, including the basis on which financing was extended. In April the Financial Times revealed a series of companies named on invoices handed over to Greensill in exchange for cash had denied ever doing business with GFG. Gupta later told the FT that one such company had been listed as a “prospective” customer, and financing was provided on that basis. 

Commodities trading houses have also launched investigations after web domains resembling their own were registered to a GFG employee’s email address.

The SFO takes on the GFG probe at a vulnerable time, having last month torpedoed a trial against two former Serco executives by failing to share certain evidence with the defence. Director Lisa Osofsky is under pressure to secure high-profile convictions, following a series of plea deals that have spared company top brass.

She had been called on by politicians including Tory MP Richard Fuller to initiate a probe, following a number of separate inquiries into the Gupta-Greensill network.

Greensill had $5bn of exposure to GFG when the finance company collapsed in March.

Credit Suisse is seeking to wind up several Liberty Steel companies in the UK and Australia in order to claw back money for customers who invested in Greensill loans through the bank’s funds.