Sanjeev Gupta faces enforcement action from business regulator: report

Gupta is also embroiled in a £117 million lawsuit with rival tycoon Lakshmi Mitta

• Pramod Thomas
• 11 October, 2024

By: Pramod Thomas

STEEL tycoon Sanjeev Gupta is facing prosecution from Companies House for failing to submit financial accounts for over 70 companies linked to him in the UK.

Gupta, once hailed as the “saviour of steel” for rescuing struggling British steelworks in 2017, now faces serious legal repercussions, including the possibility of fines or being barred from holding director positions, reported the Guardian.

This latest legal action comes amid ongoing scrutiny of Gupta’s business operations, particularly concerning the Gupta Family Group Alliance (GFG).

The group is currently under investigation by the Serious Fraud Office for suspected fraud connected to the downfall of its primary lender, Greensill Capital, which collapsed in 2021.

In a separate legal matter, Gupta is embroiled in a £117 million lawsuit with rival tycoon Lakshmi Mittal. His company, ArcelorMittal, is suing Gupta’s GFG Alliance as part of a long-standing dispute. This legal battle stems from a problematic deal involving the sale of various European factories to Gupta’s company five years ago, the Telegraph reported this week.

ArcelorMittal has already secured a freezing injunction against Gupta’s companies in Singapore and is intensifying its legal efforts in the UK. Mittal is pursuing Gupta in an attempt to enforce a multi-jurisdictional legal process, the report revealed.

The Companies House enforcement involves 76 companies associated with Gupta, including Liberty Commodities, the trading entity he founded, and several businesses tied to his Liberty Steel operations.

While Companies House has confirmed the enforcement action, it has not provided further details. Gupta has maintained his innocence, pleading not guilty to the charges.

At 53, Gupta has had a remarkable career, initially making his wealth in commodity trading before expanding into the steel sector. His GFG empire employs over 30,000 people across 30 countries and includes the Liberty Steel Group, which operates numerous manufacturing facilities in the UK, including locations in Rotherham, Newport, and Scunthorpe.

In 2021, Gupta’s companies faced a financial crisis when Greensill Capital went bankrupt. Investigations revealed that Greensill had lent approximately £400m to Gupta’s firms, using the government-backed coronavirus large business interruption loan scheme.

This revelation prompted the SFO to initiate a criminal investigation into Gupta’s operations, looking into potential fraud, fraudulent trading, and money laundering within GFG.

The ongoing SFO investigation has reportedly hindered GFG’s ability to secure new auditors, complicating the company’s financial troubles further.

According to the report, not only Gupta, but several directors, including Iain Hunter, Deepak Sogani, Jeffrey Kabel, and Jeffrey Stein, are also facing scrutiny. All four directors have pleaded not guilty and were appointed in May 2021 to help navigate the fallout from the Greensill crisis.

A spokesperson for GFG said that there are no significant issues with their accounts, asserting that the directors have taken all necessary steps to rectify the situation.

They also mentioned that unaudited accounts for their UK businesses have been prepared and that GFG has been in regular contact with Companies House. The spokesperson stressed that the legal proceedings would not impact their operations.

The next hearing related to the Companies House case is scheduled for January 2025, although no trial date has been set.

In connection with Mittal’s case, a GFG spokesperson said that the current dispute revolves around contested deferred compensation from 2019, with legal proceedings ongoing in confidential arbitration.

The spokesperson insisted that these matters are at a holding company level and do not affect GFG’s operational capabilities.

GFG has also claimed that it has been unable to maintain the steel plants acquired from ArcelorMittal in 2019 due to Mittal’s alleged dominance in the European market.

James Keates, a restructuring expert, said that the High Court case could be a strategy aimed at compelling Gupta’s companies to settle alleged debts.