‘Saviour of steel’ Gupta criticised over ‘high risk’ funding practices in MPs’ report
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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Asian stock markets tumble – with Hong Kong’s Hang Seng index suffering worst fall for 28 years
Asian stock markets have fallen dramatically amid escalating fears of a global trade war – as Donald Trump called his tariffs “medicine” and showed no sign of backing down.
Hong Kong’s Hang Seng index of shares closed down 13.2% – its biggest drop since 1997, while the Shanghai composite index lost 7.3% – the worst fall there since 2020.
Taiwan’s stock market was also hammered, losing nearly 10% on Monday, its biggest one-day drop on record.
Elsewhere, Japan’s Nikkei 225 lost 7.8%, while London’s FTSE 100 was down 4.85% by 9am.
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US stock market futures signalled further losses were ahead when trading begins in America later.
At 4am EST, the S&P 500 futures was down 4.93%, the Dow Jones 4.32% and the Nasdaq 5.33%.
Markets are reacting to ongoing uncertainty over the impact of President Trump’s tariffs on goods imported to the US, which he announced last week.
A screen showing the Hang Seng index in central Hong Kong. Pic: Reuters
Speaking on Air Force One on Sunday, Mr Trump said foreign governments would have to pay “a lot of money” to lift his tariffs.
“I don’t want anything to go down. But sometimes you have to take medicine to fix something,” he said.
The US president said world leaders were trying to convince him to lower further tariffs, which are due to take effect this week.
“I spoke to a lot of leaders, European, Asian, from all over the world,” Mr Trump told reporters.
“They’re dying to make a deal. And I said, we’re not going to have deficits with your country.
“We’re not going to do that because to me, a deficit is a loss. We’re going to have surpluses or, at worst, going to be breaking even.”
Mr Trump, who spent much of the weekend playing golf in Florida, posted on his Truth Social platform: “WE WILL WIN. HANG TOUGH, it won’t be easy.”
President Trump believes his policy will make the US richer, forcing companies to relocate more manufacturing to America and creating jobs.
However, his announcement has shocked stock markets, triggered retaliatory levies from China and sparked fears of a global trade war.
US customs agents began collecting Mr Trump’s baseline 10% tariff on Saturday.
Higher “reciprocal” tariffs of between 11% and 50% – depending on the country – are due to kick in on Wednesday.
Investors and world leaders are unsure whether the US tariffs are here to stay or a negotiating tactic to win concessions from other countries.
Richard Flax, chief investment officer at wealth manager Moneyfarm, said: “I guess there was some hope over the weekend that maybe we would see this as part of the start of a negotiation.
“But the messages that we’ve so far seen suggest that the President Trump is comfortable with the market reaction and that he’s going to continue on this course.
Goldman Sachs has raised the odds of a US recession to 45%, joining other investment banks that have also revised their forecasts.
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In the UK, Sir Keir Starmer has promised “bold changes” and said he would relax rules around electric vehicles as British carmakers deal with a new 25% US tariff on vehicles.
The prime minister said “global trade is being transformed” by President Trump’s actions.
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KPMG has warned tariffs on UK exports could see GDP growth fall to 0.8% in 2025 and 2026.
The accountancy firm said higher tariffs on specific categories, such as cars, aluminium and steel, would more than offset the exemption on pharmaceutical exports, leaving the effective tariff rate around 12%.
Yael Selfin, chief economist at KPMG UK, said: “Given the economic impact that tariffs would cause, there is a strong incentive to seek a negotiated settlement that diminishes the need for tariffs.
“The UK automotive manufacturing sector is particularly exposed given the complex supply chains of some producers.”
Traders called this morning a complete bloodbath as the UK’s FTSE 100 joined world indexes in turning red as uncertainty over Donald Trump’s tariffs continued to batter stock markets.
Across Asia and Europe, hundreds of billions have been wiped off companies’ values, particularly in banking and manufacturing.
The cause is not just the imposition of those tariffs (the largest the US has inflicted since the 1930s) and the very obvious drag this will have on global trade and growth, but also the uncertainty of ‘what next?’.
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Investors cannot work out if the Trump administration is genuinely wedded to tariffs on this scale, on the proviso that they will help re-shore companies and millions of jobs to the United States.
They don’t know if they are permanent or merely part of a negotiating tactic to address trade imbalances, and for America to use its economic heft to strike better deals.
If Mr Trump is open to deals (the first test comes later in a meeting with the Israeli prime minister), markets will calm, even if the midst of uncertainty hasn’t fully cleared.
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However, if this is a genuine rewiring of global trade and the end of globalisation as we know it, markets and economies will continue to get battered.
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As one Trump supporter, billionaire Bill Ackman – who opposes the tariffs – put it, President Trump has launched a “global economic war against the whole world” that will usher in an “economic nuclear winter.”
It’s time for all of us to buckle up.
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