Doubt clouds Gupta’s rescue deal amid fraud probe
Fresh doubts surround Whyalla and Tahmoor coal mine, amid UK probe into industrialist’s GFG Alliance Group.
Fresh doubts surround the Whyalla steelworks and a Tahmoor coal mine, following the UK’s Serious Fraud Office investigation into Sanjeev Gupta’s GFG Alliance Group and confusion over the provision of emergency funds.
After claiming overnight it would walk away from a hefty rescue deal for Mr Gupta’s businesses, including A$430m package for Australian assets and £200m for the UK Liberty Steel — announced just a week ago — Californian company White Oak Global Advisors later on Saturday said it would continue its efforts to refinance Liberty Primary Metals of Australia’s debt subject to financial due diligence and acceptable governance.
“Our consideration continues to be providing capital to good companies in critical industries while preserving jobs,” a White Oak spokesman said.
Without the financing, Mr Gupta is left scrambling for half a billion cash flow to keep the businesses going, raising fears for thousands of jobs in the South Australian steel plant and NSW coal mine.
White Oak said in a statement early Saturday that it was unable to continue its arrangement with GFG Alliance.
“As with any regulated financial institution, we are not in a position to continue discussions with any company that is under investigation by the Serious Fraud Office for money laundering”, White Oak said.
Just hours earlier the Serious Fraud Office announced a probe into the steel tycoon’s business arrangements, including GFG’s US$5bn financing with Greensill Capital, owned by the failed Bundaberg financier Lex Greensill.
The SFO said it had a live investigation looking at “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 (GFG), including its financing arrangements with Greensill Capital UK Ltd’’.
A spokesman for GFG Alliance said the company will co-operate fully with the investigation.
It is believed that the investigation has been ongoing for several months and includes looking at Greensill’s debt packaging of future invoicing of Gupta’s companies in a practice known as “prospective receivables’’. Investigators are looking into any imaginary companies as well as companies which were invoiced but have denied doing business with companies associated with Gupta or Greensill.
David Cameron, the ex-British prime minister who was on the Greensill payroll and was accused of “stalking’’ ministers to lobby for Greensill to access UK government’s coronavirus funding told a Treasury committee on Thursday that reports that some GFG invoices appeared fraudulent were “clearly very disturbing if true”. He rejected accusations that the Greensill business was “a giant fraud’’ and a Ponzi scheme.
“Just because the business goes into administration, it doesn’t mean that everything about it was wrong, it doesn’t mean the whole thing was some giant fraud,’’ Mr Cameron said.
A GFG spokesperson insisted that GFG Alliance continues to serve its customers around the world and is making progress in the refinancing of its operations. However it is unclear how Mr Gupta will be able to raise fresh funds given the fraud investigation.
Earlier this week the UK Financial Conduct Authority announced it was investigating Greensill Capital and its packaging of loans, sold to investors through Credit Suisse.
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