Taxpayers face £586m exposure
The SNP finally admit the amount following a two year freedom of information battle
The Scottish Government’s two year long attempt to hide their taxpayer guarantee to Sanjeev Gupta ended with full disclosure. According to the Freedom of Information (FOI) secured by the Financial Times (FT) the SNP run government provided a taxpayer guarantee to the value of £568m to the troubled Gupta steel magnate.
Back in 2019 Reuters reported the levels of taxpayer exposure was £575m, but the SNP government refused to disclose the precise amounts at the time.
The origins of this staggering level of taxpayer exposure goes back to when Gupta’s GFG Alliance purchased the Lochaber aluminium smelter located near Fort William; and the two nearby hydro plants in 2016. The agreement also involved the SNP government guaranteeing 25 years of power purchases from another business - which just so happens to have been owned by Gupta’s father.
What followed next was the entrance of the controversial banker Greensill. His Greensill Capital outfit then transformed the contract into debt worth £295m. But that debt now carried the same credit rating as UK bonds, and was used to fuel Gupta’s acquisition of the remaining British aluminium smelter.
However there were signs that not all was well. Back in March Greensill Capital went bankrupt - despite desperate last minute lobbying by David Cameron for a Westminster bailout with public money. Furthermore, the FT revealed that French authorities have launched an investigation into Gupta’s business empire, following serious allegations of “money laundering” and “misuse of corporate assets”.
Over the last two years of legal battles however, the SNP government has been more concerned about any potential damage to Gupta. ScotGov has been arguing that disclosing taxpayers exposure to Gupta’s GFG Alliance would risk hurting his business…
“The ministers, who had argued that revealing the size of the guarantee could disadvantage GFG and be used to help calculate commercially sensitive information, were eventually overruled by the Scottish Information Commissioner in September 2021.”
But perhaps the reluctance to disclose the exact figure was less to do with concern over Gupta’s commercial health and more to do with political considerations?
After all the SNP guarantee to Gupta was the first major deal Greensill had carried out for Gupta. And it was the launching pad for a series of debt-fuelled acquisitions that helped turn Gupta’s GFG Alliance into the huge behemoth it is today. Yet the exposure levels Greensill built up led to the Gupta metal conglomerate defaulting on a staggering debt of at least £5bn. All debts it had borrowed from the now-disintegrated Greensill supply-chain finance company.
This whole story gets more interesting still when we note the extent of Gupta and Greensill’s wining & dining of Scottish Government ministers over the last few years.
Cail Bruich
The then Scottish Government minister for rural affairs Fergus Ewing has admitted to enjoying un-minuted meeting with controversial banker Lex Greensill and Sanjeev Gupta. The meeting took place in the swanky Glasgow west-end restaurant Cail Bruich, but alas no civil servants were present apparently. No minutes taken. No official record of what was said or discussed at a meeting involving a Scottish Government minister, a businessman it has offered hundreds of millions of guarantees to, and the controversial banker in the middle of it all.
Amazingly the SNP at the time claimed that no emails, texts or phone records exist concerning the dinner date at Cail Bruich. Back in 2017 the SNP government was asked for emails and text messages concerning Ewings little dinner date in an FOI. But the official response was that no correspondence could be found one month on either side of the appointment.
How very convenient for the SNP.
Scottish Labour’s Monica Lennon sums the whole sorry story rather well
“Scottish taxpayers could end up paying out hundreds of millions of pounds over the next 25 years as a result of a deal involving these businessmen – and it’s increasingly unclear how safe that investment is or whether it ever represented good value for money.
“What on earth was a Cabinet minister doing having a cosy dinner at a posh west end restaurant without any officials present when government business was clearly on the agenda.
“Why can no record of any communications concerning the dinner be found? Are we to believe it was arranged telepathically?
“It’s beyond belief that there are no official records of the meeting at all beyond the notes taken by the businessman in attendance.
“And it’s crucial that this is not brushed under the carpet and that we get a full explanation because the fallout for the people of Scotland is potentially catastrophic. Over £350million which could have been spent on hospitals, schools and public services could simply disappear”
Of course back then nobody realised that the actual scale of taxpayer exposure was not limited to £350m, but was £586m (total gross figure).
Naturally Nicola Sturgeon has since shuffled Fergus Ewing out of her cabinet and onto the back benches of Holyrood. The first minister said as she sacked Ewing
“I want to pay tribute to the work of both Fiona Hyslop and Fergus Ewing and to thank them for their unstinting public service over many years.”
I don’t know about you, but shadowy associations with Gupta, Greensill amid hundreds of millions of pounds exposure does not sound like ‘unstinting public service’ to me. If anything, it sounds like hideous incompetence married to an allergy to accountability. Twin traits many have come to associate with the SNP government.
That this SNP government provided Greensill with taxpayer backed stream of cash demands a public inquiry. Especially when we consider the agreement also involved a 25 year guarantee that taxpayers would purchase energy from Gupta’s daddie.
Un-minuted meetings, evidence of questionable lobbying of the SNP government by Greensill & Gupta, murky dealings at taxpayers expense. And zero transparency and accountability. Just another day in Nicola Sturgeon’s Scotland.
Sources material
Scotsman ‘SNP minister accused of breaking conduct rules as Greensill lobbying scandal grows’
Insider ‘Scottish taxpayers face £586 million exposure following GFG guarantee’
Financial Times ‘Scottish government guarantee to Sanjeev Gupta was £586m’
Daily Record ‘SNP minister accused of breaking rules over dinner with man at centre of £360m taxpayers’ cash scandal’
The National (aka nationalist pravda) ‘Scottish Cabinet reshuffe: Fiona Hyslop and Fergus Ewing leave government’