Ministers must wait to see whether Gupta can refinance Liberty Steel before stepping in, says Kwarteng
Business secretary Kwasi Kwarteng has today told MPs that there is “always a danger” that some of Liberty Steel’s assets could go bust as a result of the collapse of Greensill Capital.
He added that ministers would wait to see if GFG Alliance boss Sanjeev Gupta could deliver his plans to refinance the firm before deciding whether to step in.
Since the collapse of supply chain financiers Greensill last month, concerns have been mounting over the future of Liberty’s UK steelworks, which employ around 5,000 people.
The government has already rejected a plea for a £170m bailout for GFG Alliance. Speaking to MPS on the Business Select Committee this morning, Kwarteng said it would have been “deeply irresponsible” to give Gupta’s conglomerate the money.
“We can’t separate Liberty Steel from the wider group under which it sits. As Mr Gupta says, [GFG Alliance] has billions of pounds of debt, so the idea that we would sign a cheque for £170m is deeply irresponsible.
“We can’t simply give taxpayer money to companies that are very opaque”, he added.
Despite concerns from politicians and unions, the steel tycoon has repeatedly said that the firm is working on securing new financing arrangements.
Kwarteng said that the government would see how these plans played out before taking action.
“You will know that in other instances we have kept similar companies going”, he said. “But we have to work through Mr Gupta’s plans ahead of any government intervention or otherwise. Let’s see if he can refinance his business in the way he’s said he can.”
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Although he admitted he had not spoken to Gupta himself, Kwarteng said he had been in frequent contact with Liberty Steel’s local management as well as trade unions.
There is recent precedent if ministers do eventually decide to prop up Liberty Steel. When British Steel went bust in 2019, £500m of taxpayer money was used to keep the firm running while a buyer was found.
MPs also asked Kwarteng about allegations that Gupta’s firms had received loans from Greensill on the basis of suspect invoices, as the FT reported this weekend.
The validity of a series of invoices provided by Liberty Commodities, GFG’s trading arm, to Greensill have been called into question by four firms named in them.
The chief executive of one of the the businesses, KME Germany, told the FT: “We have nothing to do with Liberty. We did not trade with them in the past, we are not trading with them now, and we will not trade with them.
“We are copper producers and don’t even know what we would have bought from them”, said Ulrich Becker.
Speaking today, Kwarteng said that the allegations were “very serious”. These are “essentially allegations of criminal behaviour”, he said.
But he said that it was not his place to comment on the allegations.