Sanjeev Gupta's UK steel business has transferred part of a £ 7 million taxpayer loan to the struggling Scottish Liberty Steel mill to its operations in other countries, told to the Financial Times, citing knowledgeable sources.
This is a 2017 loan from the Scottish administration to the Dalzell plate mill in Motherwell, which Liberty Steel, the UK's third largest steelmaker, had acquired for a nominal amount the year before.
“Liberty Steel Dalzell sent funds elsewhere to the GFG Alliance, a broad conglomerate of companies owned by Gupta and his family,” the newspaper writes.
Gupta's pledge to revive dying metal factories has received widespread support from Scottish politicians. The Holyrood government provided a £ 575 million guarantee when the industrialist acquired the last UK aluminum smelter at Lochaber, along with two hydroelectric plants, from Rio Tinto in 2016.
Iron and steel tycoon Sanjeev Gupta is battling new funding for his empire today after the administration of Greensill Capital, its main lender, filed for bankruptcy in March.
UK business secretary Kwasi Quarteng said last month that the government will wait and see if Gupta can refinance his UK operations before deciding to intervene. Liberty Steel employs around 3,000 people in the UK.
The government has previously rejected Gupta's request for £ 170 million in financial assistance, citing concerns that the money could be sent overseas.
Efforts to secure new funding were complicated earlier this month after the UK Serious Fraud Authority said it had launched an investigation into alleged fraud and money laundering at GFG. GFG denies wrongdoing and said it will cooperate with the investigation.
Liberty Steel Director Dalzell said last week that British Steel, the main supplier of slabs to the plant, “unilaterally imposed an unprecedented price increase on our contractually agreed supply of raw materials.
Liberty Steel decided to pass the cost on to customers, adding that British Steel canceled a three-week contract for slabs, which had "huge costs and operational implications" for the plant.
