UK fraud probe puts cloud over Gupta business financing
Sanjeev Gupta’s plans to save his sprawling metals empire were mired in confusion on Saturday as a financial backer sent mixed messages about its support in the wake of a UK fraud probe.
On Friday the Serious Fraud Office (SFO) launched an investigation into possible fraud and money laundering at Gupta’s GFG Alliance. That initially prompted White Oak Global Advisors — which had offered loans to his UK steel businesses and one of his Australian units — to say it was not in a position to continue discussions with a company facing a probe.
Hours later a spokesperson for the San Francisco-based lender said it was continuing efforts to refinance Liberty Primary Metals of Australia, “subject to financial due diligence and acceptable governance”. Last week it had agreed terms with Gupta to refinance the unit.
The apparent reversal throws the fate of Gupta’s businesses into further confusion.
It is unclear whether the loan to the Australian unit, which includes the Whyalla steelworks, will go ahead or depends on the SFO investigation.
White Oak declined to comment on Saturday on the status of a reported £200m of lending to Gupta’s UK businesses. The company also would not comment on a report in the Financial Times saying White Oak may be reluctant to walk away because it has a financial exposure to Gupta’s businesses after buying up debt from the steel tycoon.
GFG said on Friday it will co-operate fully with the SFO investigation. It declined to comment on White Oak’s decision.
SCRAMBLING
Gupta has been scrambling to find new financing after Greensill, his biggest lender, fell into insolvency. His group employs 35,000 people across 30 countries, all of whom may be in danger of losing their jobs if the tycoon cannot secure replacement loans.
He faces an uphill battle, with the SFO probe likely to deter many potential financiers.
The scope of the SFO investigation is not yet clear. Four banks stopped working with Gupta’s Liberty House Group trading business, starting in 2016, amid concerns about what they perceived to be problems in paperwork provided by Liberty, Bloomberg has reported.
In one example, the company had presented a bank with what seemed to be duplicate shipping receipts. A Gupta spokesperson has denied any wrongdoing.
The two-month period from when it started looking into GFG and its financing by Greensill to announcing the formal probe is a quick turnaround for the SFO, which often takes years to publicly confirm it is taking action against a company.
It will now start to gather evidence, including securing devices and documents. However, it is likely to take years for the office to make any tangible updates to the investigation, including whether it decides to charge individuals as part of the probe.