The noose is tightening a little more around Gupta Family Group Alliance (GFG Alliance), the steel and aluminum group owned by Indo-British businessman Sanjeev Gupta. Friday May 14, the Serious Fraud Office, the British equivalent of the financial prosecutor’s office, opened an investigation for “fraud, fraudulent trade and money laundering”. He specifies that he is particularly interested in his “Financial arrangements with Greensill Capital”, the financial institution, which was its first lender and whose resounding bankruptcy in March sparked the scandal.
Since then, GFG Alliance, which employs 35,000 people from the United Kingdom to Australia, and announces a turnover of 20 billion dollars (16.5 billion euros), is in great financial distress, its usual source. of liquidity being cut off. The announcement of the investigation now risks being fatal. White Oak Global Advisors – who had agreed to provide him with an emergency loan in Australia and was in talks for another in the UK, totaling around € 500m – having announced on Friday that he was withdrawing his offer. On Saturday, the California financial institution appeared to backpedal, finally explaining that discussions were continuing, but that any loan would be subject “The necessary checks and acceptable governance”. Confusion reigns.
In France, the public prosecutor of Poitiers opened a preliminary investigation, in March, after the mysterious disappearance of a loan guaranteed by the State of 18 million euros granted by Greensill to the aluminum foundry of Poitou, in Ingrandes (Vienna), which is part of the GFG Alliance. The money was paid in December 2020 to the company’s account in France, but forty-eight hours later it was returned to Greensill Capital. The foundry has never seen the color again.
Hazardous loans
The meteoric rise of Sanjeev Gupta, a former commodity broker, is intriguing. Since 2013, it has increased its purchases of steel and aluminum factories. Its arrival in this market took everyone by surprise and the origin of its funding was puzzling. In France, it employs 2,000 people at around ten sites, including the Ascoval steelworks in Saint-Saulve (North), the Liberty Rail factory in Hayange (Moselle), and the Alvance foundry in Dunkirk, the leading aluminum producer. primary in Europe.
Part of the veil has been lifted with the bankruptcy of Greensill Capital. This small British financial institution had also grown in just a few years, touting its use of new technologies to explain its exponential growth. The company even offered the luxury of recruiting former Prime Minister David Cameron as an advisor.
In fact, the company had multiplied risky loans. She also had strangely close ties to the empire of Mr. Gupta, who was by far her main client, in a deeply interdependent relationship. GFG Alliance owed Greensill $ 5 billion at the time of the bankruptcy. Has this very close relationship masked fraud? According to Financial Times, Greensill had loaned money on the basis of orders that GFG Alliance had obtained from customers… who were completely unaware of these contracts. Have false invoices been issued? Is there another explanation? By the time justice untangles this tangle, the steel company may no longer exist.
