Sanjeev Gupta’s Liberty Steel is under investigation in Romania for embezzlement and tax evasion, adding to the metals tycoon’s difficulties after the loss of his key British operation.
Romania’s prosecutor’s office said in a statement last week that they raided seven homes and the registered office of an unnamed company.
Liberty Steel and its parent organisation, the Gupta Family Group (GFG) Alliance, said the company would “vigorously defend itself against the unfounded allegations directed at the company”.
Gupta, who is Indian-born and UK-educated, was once known as the “saviour of steel” for his plans to turn around struggling metalworks. However, his empire, previously stretching through the UK, eastern Europe and Australia, has unravelled in the years since the collapse of the lender Greensill Capital in 2021.
The UK’s Serious Fraud Office has been investigating GFG and Greensill since 2021. GFG and Gupta have strenuously denied any wrongdoing, while administrators of Greensill Capital have previously declined to comment.
Gupta has lost control of key assets including the steelworks in Whyalla, Australia, as well as the South Yorkshire operations of Liberty Steel UK in August.
Liberty Steel’s Romanian operation is based in Galați, near the Ukrainian border. The prosecutor’s office said it carried out the searches in Galați, as well as in and near Bucharest, the Romanian capital.
Referring to an unnamed company, the Romanian prosecutors said: “Persons with management positions within the company acted to embezzle it through affiliated entities registered in other jurisdictions”, as well as “a series of contracts for the purchase of goods or the provision of services that were not based on real operations, as well as fictitious loan contracts”.
Transactions under investigation included a €137m (£121m) sale of CO2 certificates – required by EU regulations for heavy polluters such as steelworks – to the Russian state-owned gas company Gazprom. The money from those sales was transferred “to the accounts of the ‘parent company’” via a company in Singapore, the prosecutors said. Gazprom was placed under UK and US sanctions related to Russia’s invasion of Ukraine this year, well after the alleged transactions.
The company was forced to later replace the certificates for €154m, leaving it with a heavy loss, the prosecutors said. Funds intended for industrial investments were diverted to cover payments to affiliated legal entities, “without an operational justification”, they added.
A GFG spokesperson said: “Liberty Steel and its management will vigorously defend itself against the unfounded allegations directed at the company.
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“Galați has been the recipient of substantial financial support from the GFG Alliance and is therefore a net beneficiary within the group. All transactions under review were conducted for the benefit of Galați and were vetted and approved by independent external lawyers to ensure full compliance with applicable laws.”
GFG also said Galați’s external auditors checked the transactions and issued clean audit reports for the periods containing the transactions.
The investigation was part of a series of raids by Romanian authorities targeting businesses.
