Unions fear huge job losses as ‘saviour of steel’ hits crisis

Posted on 04 March 2021

Union sources have told the BBC that they are very concerned about the potential risk to thousands of UK steel and engineering jobs.

Their fears follow the emergence of financial problems for the owner of plants at Rotherham, Stocksbridge, Newport and Hartlepool.

Called the “saviour of steel”, Sanjeev Gupta’s Liberty Group bought up the struggling UK steel businesses.

His GFG Alliance company said it had “adequate funding”.

There are 3,000 direct steel employees and a further 2,000 in engineering businesses within the group.

Serious trouble

One of Mr Gupta’s primary sources of finance is a group called Greensill Capital, run by former investment banker Les Greensill who counts former Prime Minister David Cameron among his paid advisers.

Greensill’s exposure to Mr Gupta’s business prompted the Swiss investment bank Credit Suisse to freeze withdrawals from up to £10bn worth of funds held as security.

Sources close to the situation told the BBC that Greensill was in serious financial trouble and that it would “not be wrong to surmise that it was likely to go into administration”.

The sources added that there was a direct link between Mr Gupta’s financing difficulties and risks to thousands of industrial jobs in the UK.

A spokesperson for steel union, Community, said: “There’s no doubt these reports are concerning and, on behalf of our members, we are pressing the company for answers. Liberty Steel UK is a crucial strategic business and we are ready to work with the company and the government to secure the business and protect jobs.”

Billions in loans

Mr Gupta was hailed as saving thousands of UK jobs when he stepped in to buy up plants and processing facilities that seemed on the brink of going bust.

But his financial arrangements have always been shrouded in secrecy and controversy.

Connections between Greensill Capital and international money manager GAM saw a senior manager at GAM forced to resign over allegations of poor risk management and due diligence over billions in loans to Mr Gupta’s empire.

GFG Alliance is a collection of global businesses and investments owned by Sanjeev Gupta and his family. A spokesman said: “GFG Alliance has adequate funding for its current needs and its refinancing plans to broaden its capital base and obtain longer term funding are progressing well.

“Our global efficiency drive means that our core businesses are operationally strong. We are benefiting from a recovery in steel and aluminium markets which means that most of our businesses are running at near full capacity to meet high demand and are generating positive cash flows.”

Harish Patel from Unite told the BBC what many in the industry have feared for some time: “Unite has always been concerned about the financial basis that Liberty Steel is based on.

“The latest concerns about the future of Greensill and Sunjav Gupta’s refinancing difficulties are deeply alarming and Unite will be seeking urgent reassurances about the health of the business units in the UK.”

Source : BBC