French prosecutors investigate Sanjeev Gupta’s business empire


French authorities have opened an investigation into Sanjeev Gupta’s business empire, compounding the challenge facing the British metal tycoon once hailed as the “savior of steel.”

The Paris prosecutor’s office told the Financial Times that it was investigating Gupta’s French operations over allegations of “misuse of company assets” and “money laundering”.

France is home to several important assets of the GFG Alliance, the collection of factories and foundries that Gupta amassed in a multibillion-dollar wave of acquisitions funded by Greensill Capital. The collapse of Greensill in March plunged GFG into crisis and triggered investigations in Germany and by the UK’s Serious Fraud Office.

Paris prosecutors said they launched their investigation in July after suspicious activity was reported by public officials. They declined to provide details of the investigation.

GFG said it was “unaware of any such investigation and refutes any suggestion of wrongdoing in its French operations.”

The investigation by French prosecutors comes after a report by an influential group of British MPs questioned Gupta’s management of Liberty Steel, the UK’s third-largest steelmaker, after identifying “a series of signals alarm in matters of audit and corporate governance “at GFG.

The investigation marks a stark contrast to the warm reception previously given to Gupta by the French government. Bruno Le Maire, French Minister of the Economy, described GFG’s agreements in the country as “exemplary” for the relocation and decarbonization of industry.

Some of the allegations relate to Gupta’s attempts earlier this year to retain control of an aluminum smelter in Dunkirk, the largest in Europe and one of GFG’s most valuable assets, people briefed at this said. topic.

Government officials have reported on a deal Gupta struck with commodities trader Glencore as it sought to push back an attempted takeover by U.S. private equity firm American Industrial Partners, the people said.

In addition to assuming 40% of the foundry’s senior debt, Glencore would derive a financial benefit from every tonne of aluminum sold, which could represent a windfall of $ 10 million for the commodities trader over the course of a year. year, people added.

Officials who reported the deal were concerned whether it was designed to benefit Gupta at the expense of the factory and thwart AIP’s takeover bid, one of the people briefed at said. this subject. AIP announced last month that it had taken control of the foundry. GFG responded with legal action.

According to French law, the abuse of corporate assets is the fact that one or more directors use the assets or credit of a company in “bad faith”, either for personal purposes or in the interest of a company. other business they own.

GFG said: “There was a trade agreement with Glencore at market rates to ensure stable funding for the company.” Glencore said it has “entered into arm’s length trade agreements with Dunkirk which have been actively negotiated and have been subject to due diligence and review.”

Officials also reported that GFG used 25 million euros from the Dunkirk smelter to pay legal costs resulting from a dispute with Rio Tinto over the original purchase, people briefed on the matter said.

The use of the funds of the French company to settle the legal costs was regarded as an “abuse of social goods” which purely “benefited the shareholder”, it was added.

Another case reported by officials concerns whether the entire 18 million euro loan backed by the French government to Liberty Aluminum Poitou, part of the German banking subsidiary GFG empire Greensill’s now insolvent, has been deployed to the plant, the people said.

French media reported earlier this year that the Poitou loan was under investigation by local prosecutors, but that case has now been incorporated into the larger investigation by Paris prosecutors.

GFG said in a statement that it had “followed all the rules and invested 45 million euros of shareholders’ funds in downstream French assets, including Poitou, while under our ownership”.

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