Liberty Steel boss Sanjeev Gupta has been criticised in a report by MPs looking into the crisis that engulfed the company, as well as the future of the wider steel sector.
It claimed that the use by Mr Gupta – once known as the “saviour of steel” – of “high risk financial funding practices” was undermining the long-term viability of the steel industry in the UK.
The report by the Commons business, energy and industrial strategy select committee also called into question the “unusual and… unacceptable” way in which he structured his business empire.
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March: British steel feeling the pressure
It found that, in companies belonging to Mr Gupta’s GFG Alliance business empire, there was “no formal oversight or accountability” of the decisions taken by the businessman.
The MPs recommended that the government should reflect on the risks posed to UK industries “by such unusual corporate structures” and consider reforming company laws.
They also said they would “welcome the Insolvency Service considering whether… Sanjeev Gupta may have acted in breach of his fiduciary duties as a company director”.
Labour MP Darren Jones, chairman of the select committee, said that “systemic issues” at the heart of Mr Gupta’s business empire “highlighted the vulnerabilities of Liberty Steel and its place in the wider steel sector in the UK”.
“We met with hard-working and dedicated workers at Liberty Steel and want to ensure that the UK steel sector is able to continue to support their jobs,” he said.
“However, 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.
“Sanjeev Gupta must urgently fix these problems if he is to be seen as a fit and proper owner of steel companies in the UK.”
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Gupta tells workers: ‘I will not give up on you – you are my family’
The report also looked more widely at the UK steel sector, which it said “cannot continue to lurch from crisis to crisis”.
It called for action from the government to help the industry to address challenges such as high energy prices and barriers to supplying steel for major public projects.
Liberty bought and reopened a number of steel sites between 2015 and 2017 when the wider industry was in crisis.
But the company, which employs 3,000 people in the UK, fell into financial difficulties when its main source of funding, Greensill Capital, collapsed earlier this year.
In May, parent company GFG announced plans to sell seven UK plants employing 1,500 people as part of a subsequent restructuring plan.
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‘I bear complete responsibility for the collapse of Greensill Capital’
But last month, a £50m cash injection was announced, enabling Liberty to restart production at its plant in Rotherham, which had been closed since the spring.
The Serious Fraud Office has launched an investigation into suspected fraud, fraudulent trading and money laundering in relation to the financing and conduct of GFG Alliance businesses, including its financing arrangements with Greensill.
A GFG Alliance spokesperson said: “GFG Alliance takes note of the findings of the select committee. We will review and reflect upon its conclusions.
“We are disappointed that the report fails to recognise the significant role Sanjeev Gupta and Liberty Steel has played in saving and safeguarding thousands of UK jobs which otherwise would have been lost.”
GFG said it had implemented a range of measures to deal with matters raised in the report.
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