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Sanjeev Gupta at the official opening of the Dudelange steel plant under its new ownership in 2019. Library photo: Nader Ghavami 

Gupta’s business has been in trouble financially since the bankruptcy of Greensill Capital, its main financial backer, and the investigation could spell more problems in attracting potential new financiers.

GFG Alliance owns Liberty Steel, which among other sites includes the Dudelange steel plant, which Gupta bought from ArcelorMittal in 2018. The Dudelange site employs around 300 people, out of 35,000 employees group-wide.

The Serious Fraud Office is probing suspected fraud, fraudulent trading and money laundering within the GFG group. This includes the financing arrangements with Greensill Capital, the collapse of which has also embroiled former prime minister David Cameron in a lobbying scandal.

GFG Alliance owed Greensill Capital $5bn when the lender went bankrupt in March, leaving Greensill’s backers in turn facing huge losses.

French newspaper Le Monde reports that potential sourcing of financing, US-based outfit White Oak Global Advisors, stepped away from plans to provide €500m in the framework of an emergency loan in Australia and the UK in the wake of the SFO investigation.

Australia’s government is under pressure to draw up contingency plans for the steel mills owned by GFG should the company collapse. Paris and London are unlikely to let the steelworks fail--Liberty Steel employs 2,000 people in France and 3,000 in the UK--but have yet to step in.

GFG also faces a preliminary investigation by the Poitiers public prosecutor’s office in France over an €18m loan paid to the Poitou aluminium foundry by Greensill, backed with a French state guarantee as part of covid-19 rescue measures. The money was transferred to GFG but then forwarded to an account hosted by Greensill.

Economy minister Franz Fayot (LSAP) in the wake of the Greensill collapse told members of parliament that the government was closely monitoring the situation. For the time being, there are no details on what the government plans to do should Liberty Steel fail to maintain the Dudelange steelworks.

This story was first published in French on Paperjam. It has been translated and edited for Delano.