- Thursday, April 25, 2024
By: Chandrashekar Bhat
A PARLIAMENTARY committee has called for an investigation into Liberty Steel chief Sanjeev Gupta over corporate governance issues.
“The Insolvency Service may wish to consider whether Mr Gupta has breached his fiduciary duties as a company director”, the Business, Energy and Industrial Strategy Committee, headed by Darren Jones, said in a report.
However, GFG (Gupta Family Group) Alliance, the parent of the steel company, said it was “disappointed” by the report, which it claimed, overlooked Gupta’s efforts to safeguard jobs in the UK.
Highlighting a series of “audit and corporate governance red flags” in the steel company, the committee said the government should reflect on “the systemic risks” to the UK steel industry posed by “unusual corporate structures as those used by GFG Alliance”.
Gupta put senior members of his staff “in an unacceptable position by employing them with job titles associated with traditional executive functions in well-run companies, without giving them the required access to information or decision-making powers necessary for them to perform their duties”, the report said.
It added that the regulatory authorities should investigate King & King, the auditors of several GFG Alliance businesses.
The report also urged the government to consider formalising a fit and proper person test for private company directors within any future steel sector deal and that a review should be undertaken to consider the systemic risks associated with high-risk financial practices in the steel sector.
According to Jones, the “systemic issues” at the heart of GFG Alliance has highlighted the “vulnerabilities” of Liberty Steel and its place in the wider steel sector in the UK.
“We met with hardworking and dedicated workers at Liberty Steel… 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”.
He called upon Gupta to “urgently fix” these problems “if he is to be seen as a fit and proper owner of steel companies in the UK.”
Reacting to the committee report, GFG Alliance told Eastern Eye that it “failed to recognise the significant role” Gupta has played in “saving and safeguarding thousands of UK jobs which otherwise would have been lost”.
GFG said it has implemented a range of measures under a broad-based restructuring and transformation committee of senior executives to deal with matters raised in the report.
“We have moved to establish a secure pathway to recovery following the collapse of Greensill Capital,” it said, referring to the fall of the financial services company which was the main backer of Liberty Steel.
A newly appointed management team at Liberty Steel UK has developed business plans engaging “in full transparency” with unions, creditors and the government, GFG said.
Last week, Liberty Steel restarted operations at its Rotherham facility, running the plant between 11 pm and 6 am when energy costs are comparatively lower.
