SNP-GUPTA FILES: SCOTGOV DEALS EXPOSING TAXPAYERS AMID INVESTIGATIONS
Resigning auditors, a Serious Fraud Office investigation & un-minuted dinner dates: just who has the SNP Government jumped into bed with? How much exposure are taxpayers liable for?
If you have not heard the name Sanjeev Gupta, you likely will in coming months and years. He is the CEO and chairman of GFG Alliance, an international conglomerate operating primarily in the steel and mining industries. Once hailed as the savour of the British steel industry, but recent events have cast a deepening shadow. And unfortunately for the Scottish taxpayers, the SNP led government has signed deals which could potentially spiral into costs into the hundreds of millions.
Gupta industrial expansion
Sanjeev Gupta with financing from Greensill Capital exploded into the UK steel market back in 2014. His group Liberty bought the Steel mill Mir Steel in Newport, South Wales, saving it from closure. From there the Gupta empires industrial expansion into the UK grew rapidly extending into the Midlands of England with the purchase of assets from administration from what had formerly been Caparo Industries Plc. By 2016 the Gupta spending spree reached into Scotland, with Liberty House obtaining two formerly mothballed steel manufacturing sites from Tata Steel UK.
That 2016 deal was brokered by Nicola Sturgeon’s SNP government, and by April 28th 2016 witnessed Gupta acquire Clydebridge and Dalzell steel mills. The First Minister herself personally re-launched the Dalzell steel manufacturing site by September 28th of the same year, to much fanfare among sections of the press1.
Yet the growth of Gupta acquisitions in Scotland would continue by the December of 2016. Gupta-led GFG Alliance would finalise the takeover of Britain’s last aluminium smelter at Fort William in Lochaber, as well as the hydro-power plants in Kinlochleven and Fort William. Again, the SNP government in Edinburgh, led by Nicola Sturgeon had played a role in aiding the Gupta acquisitions.
The official justification from the Scottish Government has always been these purchases by Gupta saved jobs and feature as part of an industrial strategy. But as is rapidly becoming apparent, the deals done by the Scottish Government have potentially opened Scottish taxpayers up to liabilities running into the hundreds of millions. And the Scottish Government deals generating the exposure is not just restricted to facilitating Gupta’s Dalzell acquisition or the Lochaber purchase; unpaid loans lurk in the mud too.
With all of this backstory in mind, questions are now raised as to just how close Gupta and the SNP have been.
Gupta-SNP ties
What is already known is that Gupta has “sponsored” at least one SNP conference dinner in Glasgow’s Village Hotel in October 7th 20182. Now that date is, obviously, after the 2016 purchases but it is nevertheless fascinating.
For one thing, it demonstrates a continuing association between Gupta and the SNP well after the 2016 purchases had been facilitated. A relationship not restricted to official deals facilitated relating to Dalzell or Lochaber. Furthermore, it ropes in First Minister Nicola Sturgeon personally. The evening event of October 2018
“started with a drinks reception after which the agenda stated there were welcomes from the then finance secretary Derek Mackay and Nicola Sturgeon, followed by starters and a main course”3
One takeaway is that Ms Sturgeon was content to let her then-minister Derek Mackay drink at an official conference event. I point this out merely due to the fact that the now-disgraced former SNP minister had such a penchant for boozing at SNP conferences that Ms Sturgeon would later feel compelled to ban him from imbibing4
But the more important thing to note is that as at the close of 2018 we can prove there was a continuing relationship between the governing SNP and Sanjeev Gupta long after the 2016 acquisitions had been facilitated. As 2018 drew to a close, Mr Gupta was generously “sponsoring” SNP conference events, with food and drink provided.
But other events are also known which link this SNP government to Gupta and lobbying-scandal businessman Lex Greensill. It is a matter of record that former SNP Government Minister Fergus Ewing had not one but four slap-up meals which were arguably in total contravention of the ministerial code.
In 2017 Fergus Ewing - at the time a Minister in Nicola Sturgeon’s government - enjoyed a posh dinner date with Sanjeev Gupta, Lex Greensill, Jay Hambro and Tim Haywood5. This took place in the up-market Cail Bruich restaurant located here in Glasgow. This meeting too place without any civil servants being present and without any minutes having been taken.
This actually matters since we now know there are potential liabilities for Scottish taxpayers running into the hundreds of millions as a result of deals done between Greensill, Gupta and the Scottish Government. But Fergus Ewing nor anyone else inside the SNP government have ever felt bothered that meetings such as this one in 2017 took place between these men un-minuted without civil servants present.
But also worth noting is the name Tim Haywood. He was at the slap-up meal in June 2017 too. His name should be noted as he was later suspended from his job as a city fund manager at GAM Holdings and fined by the Financial Conduct Authority for failing to manage conflicts of interest. Conflicts of interest involving...you guessed it...Lex Greensill (later caught up in the Westminster lobbying scandal alongside David Cameron). Haywood was caught accepting “gifts and entertainment, including travelling on a Greensill private aircraft, but failed to record them in a timely manner”6
These are the people that SNP government minister Fergus Ewing was having dinner dates with having failed to follow the ministerial code at the time. And did you notice I wrote ‘dates’? That is because it is also now known that Ewing would enjoy a total of four meals within just six months with this sidekick of the tax row boss Lex Greensill7.
Taxpayer exposure
Ultimately all of this brings us to the issue of financial risk for taxpayers as a result of the deals “facilitated” by Nicola Sturgeon’s government and also the cosy dinners between SNP ministers and the businessmen in question.
Take the Dalzell sale to Gupta as a case in point. That one has created potential taxpayer exposure running into the millions. It turns out, when the Scottish Government was acting as an “intermediary” in the sale of Clydebridge and Dalzell steel mills, they may have been breaking the law.
This is something I have written about before, a sorry story where the SNP are confessing they may have broken the law. The then-SNP trade minister Ivan McKee admitted sheepishly to Holyrood that in the process of that facilitation being done, Scottish taxpayers were potentially landed with future environmental remediation costs if Liberty collapsed. As a way of contextualising the potential liabilities of an environmental clean-up of an industrial site, the Ravenscraig clean-up cost £70m8.
At this point I should also point out that Greensill Capital has collapsed, and it was a key financial backer of the Gupta business empire’s explosive purchasing spree here in the UK. Suddenly a Liberty collapse is not merely an academic question given a key financial backer is now absent. Even more alarmingly is the revelations that the auditors King and King - responsible for auditing four Gupta businesses - has suddenly resigned from the responsibility. The auditors are now mired deep under investigation by the Financial Reporting Council amid a flurry of allegations that its auditing work has not been up to scratch9. As of September 15th 2022 King and King resigned from auditing responsibilities for ... *drumroll* ... Liberty Speciality Steels and Liberty Steel Dalzell10.
Neither of these Gupta businesses - as of writing this - have yet registered their accounts for March 2020 or March 2021 (both deadlines currently missed) and now the auditors for both businesses have resigned amid investigation by the accounting regulator.
But looking beyond the Dalzell deal and accidental environmental liabilities, this SNP government has landed us with much larger potential exposures as a result of its Gupta deals.
Part of the deal done to aid Gupta acquire the Lochaber smelter deal was the Scottish Government issuing a taxpayer backed “guarantee”. This guarantee involved a 25 year power purchase deal to help Gupta finance the takeovers of the aluminium smelter in Fort William, Lochaber, as well as the hydro-power plants in Kinlochleven and Fort William. The SNP initially fought to prevent the full financial liability this guarantee represented from ever becoming public, but were eventually forced to release the information after a Freedom of Information Request was made.
Turns out Ms Sturgeon’s power purchase guarantee created exposure of approximately £586m for taxpayers. All so that Gupta (currently under investigation by the Serious Fraud Office for fraud and money laundering) could expand his industrial portfolio in the UK. And all further backed by Greensill Capital which had been caught up in a serious lobbying row and is now defunct.
Between the Lochaber and Dalzell exposures we are already talking hundreds of millions of pounds, but the last kicker is the Scottish Enterprise loan. This cherry on the top of relentless scandal and incompetence reveals that the public body (so, ScotGov auspices) Scottish Enterprise actually provided a loan to Gupta to help him along in his acquisitions in Scotland. This £7m loan is - as of writing this - still unrepaid, so that represents a further liability for taxpayers.
In the meantime as of May 2021, the Serious Fraud Office announced an
“investigation into suspected fraud, fraudulent trading and money laundering in relation to the financing and conduct of the business of companies within the Gupta Family Group Alliance (GFG), including its financing arrangements with Greensill Capital UK Ltd”11
The SFO investigating suspected fraud, frudulent trading and money laundering, by the people the SNP have done deals with at taxpayer risk. These are the people - now under investigation - that Nicola Sturgeon would also have “sponsor” an SNP conference drink event.
Looking forward
There comes a point where mere political incompetence is no longer a sufficient excuse for relentless failure on this scale. Given the known links between this SNP government and Gupta, of ministerial codes going un-regarded and huge financial liabilities for taxpayers questions need to be asked; and by people with the power to compel witnesses.
Amid resigning auditors under investigation, Gupta business accounts missing deadlines for submission and a Serious Fraud Office investigation into Gupta12 - we need to know the extent of the relationship between Nicola Sturgeon, the SNP and the businessmen they chose to jump into the proverbial bed with. After all, the one ultimately footing the bill could well be you and me dear reader.
Mitchell, Robert (2016, 28 September), ‘Scottish steel boost as Nicola Sturgeon re-opens iconic Dalzell works’, Daily Record, https://www.dailyrecord.co.uk/news/local-news/scottish-steel-boost-nicola-sturgeon-8934768
Hutcheon, Paul (2021, 23 May), ‘Business giant probed by fraud squad sponsored swanky SNP conference dinner’, https://www.dailyrecord.co.uk/news/scottish-news/business-giant-probed-fraud-squad-24165207
Hutcheon, Pail (2021, 23 May), ‘Business giant probed by fraud squad sponsored swanky SNP conference dinner’, Daily Record, https://www.dailyrecord.co.uk/news/scottish-news/business-giant-probed-fraud-squad-24165207
Rodger, Hannah (2020, 7 Feb) ‘Nicola Sturgeon 'banned shamed Derek Mackay from drinking at SNP conferences', The Herald, https://www.heraldscotland.com/news/18217581.nicola-sturgeon-banned-shamed-derek-mackay-drinking-snp-conferences/
Ferguson, John (2021, 11 April), ‘SNP minister accused of breaking rules over dinner with man at centre of £360m taxpayers’ cash scandal’, Daily Record, https://www.dailyrecord.co.uk/news/politics/snp-chief-hot-water-over-23891736
Financial Conduct Authority (2022, 30 March), Press Release ‘FCA fines GAM International Management and former Investment Director Timothy Haywood’, FCA, https://www.fca.org.uk/news/press-releases/fca-fines-gam-international-management-former-investment-director-timothy-haywood
Ferguson, John, (2021, 18 April), ‘ SNP minister Fergus Ewing had four dinners with sidekick of tax row boss’, Daily Record, https://www.dailyrecord.co.uk/news/scottish-news/snp-minister-fergus-ewing-four-23933652
Gordon, Tom (2021, 15 December), ‘Taxpayers could face huge clean up cost for SNP steel deal lasting moments’, The Herald, https://www.heraldscotland.com/politics/19786812.taxpayers-face-huge-clean-cost-snp-steel-deal-lasting-moments/
Jasper, Jolly (2022 15 September), ‘Auditor resigns from Sanjeev Gupta’s UK steel companies’, The Guardian, https://www.theguardian.com/business/2022/sep/15/sanjeev-gupta-uk-steel-companies-auditor-king-and-king-resigns#:~:text=The%20auditor%20of%20many%20of,of%20firms%20under%20his%20control.
Times Business Reporter (2022, 16 Sept), ‘King & King resigns as Gupta steel auditor’, The Times of London, https://www.thetimes.co.uk/article/king-amp-king-resigns-as-gupta-steel-auditor-vp3vzmrsg
SFO (2022, 27 April) , ‘SFO Steps Up Investigation into Gupta Businesses’, Serious Fraud Office, https://www.sfo.gov.uk/2022/04/27/sfo-steps-up-investigation-into-gupta-businesses/
SFO (2022, 27 April) , ‘SFO Steps Up Investigation into Gupta Businesses’, Serious Fraud Office, https://www.sfo.gov.uk/2022/04/27/sfo-steps-up-investigation-into-gupta-businesses/
Utterly damning and for once I am almost speechless. Many thanks for all of your hard work.
Do these guarantees ,if called in,exceed Scot Gov’s ability to borrow ...which ability they have been at such pains to deny they have?If not,would Scot Gov pay the debt by cutting budgets and ask the taxpayers to cough up?Or are they able to issue Scot Gov bonds on the debt? In a perverse way it seems almost like an argument in support of independence...that Scot Gov should have the power to pay the price of their incompetence?