By Derek Kotz
Industrial reporter

THE BUSINESS empire of Liberty Steel owner Sanjeev Gupta is under investigation by the Serious Fraud Office (SFO), it was announced today.

The probe will include its dealings with the failed “supply chain finance” debt-trading company Greensill Capital, which collapsed spectacularly in March and is already facing scrutiny by the Financial Conduct Authority (FCA).

The Gupta Family Group Alliance (GFG) relied heavily on loans from Greensill, which crashed into administration after its insurers refused to extend cover on the loans it had made.

A statement by the SFO said that it was “investigating suspected fraud, fraudulent trading and money laundering in relation to the financing and conduct of the business of companies within the Gupta Family Group Alliance, including its financing arrangements with Greensill Capital UK Ltd.”

The news prompted fears for the jobs of 35,000 people employed around the world by GFG-owned companies, including some 5,000 at Liberty Steel in Britain.

Unite said that “no option should be ruled out in protecting the long-term future of Liberty Steel – and that must include the option of nationalising the business.”

The union, which has already been in discussions with ministers over the company’s future, described the potential loss of the thousands of skilled, well-paid, unionised jobs it provides as “unthinkable.”

GFG, which has a turnover of about £20 billion from operations in dozens of countries, said that it would co-operate fully with the investigation and would make no further comment on it.

A statement by the group said that it “continues to serve its customers around the world and is 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.”

Mr Gupta was dubbed the “saviour of steel” after he brought up several British businesses threatened with collapse, including Tata Steel in 2016.

Since Greensill’s crash, GFG has been seeking alternative finance, but its request for a £170 million British government loan for Liberty Steel was turned down, although ministers have said that the company will not be allowed to collapse.

The news of the investigation will make it considerably harder for GFG to secure further loans.

Lawyers for Greensill have reportedly said that GFG has already begun to default on its debt, believed to be in the region of £3.6 billion.

Greensill’s business model worked by the firm placing itself between customers and their suppliers, paying invoices so that the latter would not have to wait for their money.

The Financial Times (FT) has reported that one of Mr Gupta’s companies had handed “suspicious” invoices to Greensill, which the finance company paid.

The newspaper said that the invoices were for business supposedly done with four European metal companies, but they told the FT that they had not dealt with GFG.

In response, GFG said that the invoices were for products that it expected perhaps to sell in the future, citing Greensill’s arcane financing arrangements for “future receivables.”

Former prime minister David Cameron was grilled by MPs on Thursday over his role in lobbying ministers, officials and the Bank of England on behalf of Greensill in a bid to gain access to government-backed Covid-support schemes.

Mr Cameron told MPs he had been paid “far more” by Greensill than he had been as PM, when he earned £150,000.

He admitted that he also had shares in the company but claimed that he had worked for Greensill because he believed it could help smaller businesses in difficult economic times.