Industrialist Sanjeev Gupta in controversy as Liberty Steel struggles

Sanjeev Gupta, an industrialist of Indian origin, is embroiled in more controversy than one. Perhaps the worst of these being the allegation that his company additionally borrowed hundreds of millions of pounds last year to ease his steel empire’s distress accentuated by the coronavirus pandemic and soon thereafter spent £42 million to buy a posh London townhouse in his wife Nicola’s name.

The swanky six-storey building in the British capital's Knightsbridge district of Belgrave Square was previously home to British aristocracy. Its owner, Lady Ballyedmond (formerly Mary Haughey), widow of pharmaceutical tycoon Baron Ballyedmond, Edward Haughey, put the Grade I-listed residence for sale. Real estate broker Savills told the UK's business daily Financial Times (FT): “You are talking about a very rarefied market.”  

The Cambridge University-educated Gupta, 50, who is said to be in Dubai, was unavailable for a reaction.

The Ludhiana-born British Indian’s GFG Alliance, Britain’s third-biggest steel company, employs 35,000 people from the United Kingdom to Australia. Now its main lender, Greensill Capital, has collapsed, with an exposure of $5 billion to GFG. According to FT, in a letter dated February 7, the latter said “that if Greensill stopped providing it with working capital, it would collapse into insolvency”.

FT reported: “The (British) government has drawn up a contingency plan to run Liberty Steel (Gupta’s flagship firm in the UK) using public money, as ministers brace themselves for the potential collapse of Britain’s third-biggest steel company.”

Liberty, which has already benefited from £1 billion by virtue of state guarantees, employs 3,000 workers in Britain. Another 2,000 or more are hired by GFG's other companies in the UK.

Liberty’s parent, GFG, is attempting to secure fresh financing after the crumbling of Greensill. In 2019, the British treasury rescued British Steel with taxpayers’ money to the tune of £600 million, before it was bought by China’s Jingye Group. This model is among others being considered by the UK government's Department of Business. In other words, the administration might keep the firm afloat while it searches for a buyer. As of now, though, it appears neither GFG nor Liberty have formally sought state assistance.

Bloomberg quoted a Whitehall spokesperson as saying: "The government is closely monitoring developments around Liberty Steel and continues to engage closely with the company, the broader UK steel industry and trade unions." The statement added: “Recognising that the pandemic has had a significant impact across the whole UK economy, including steel producers, our unprecedented package of support is available to the sector to protect jobs and ensure that producers have the right support during this challenging time.”   

Gupta entered the limelight a few years ago when he bought a few of Tata Steel’s loss-making plants in the UK, earning him the label of “saviour of steel” in Britain. It is presently unclear whether Greensill has a charge on Liberty’s assets in lieu of its estimated $5 billion exposure to Gupta’s businesses. GFG has reportedly already defaulted on some of its debt to Greensill.

In 2019, an FT investigation unearthed Gupta's Wyelands Bank lent money to his companies through a network of shell entities. Britain’s central bank, the Bank of England, this month compelled Wyelands to return millions of pounds in retail deposits. This forced Gupta to inject £75 million of cash to cover savers’ money.  

Gupta's property portfolio includes a villa in Dubai, a sprawling country estate in Wales, a mansion in Sydney and more than 100,000 acres in the Scottish Highlands in the foothills of Ben Nevis, the highest mountain in the British Isles. He also owns a yacht in Australia and a fleet of private planes.