Transparency demand over steel tycoon's £586m Scottish loan deal

·2-min read
Transparency demand over steel tycoon's £586m Scottish  loan deal
Transparency demand over steel tycoon's £586m Scottish loan deal

Scottish ministers are facing calls for greater transparency after it was reported a metal tycoon under investigation for fraud paid just £5 towards the acquisition of a Highlands smelting plant – with taxpayers financing the rest of the £330million deal.

Entrepreneur Sanjeev Gupta, chief executive of Liberty Steel, acquired the Lochaber aluminium plant and its two hydro power plants in 2016.

The Scottish Government has guaranteed loans for the smelter and the hydro power plants worth £586 million.

The Sunday Times revealed Mr Gupta’s firms put £5 into the deal, according to company filings, not the £35m previously thought.

Mr Gupta’s family empire, GFG Alliance, is the subject of alleged fraud and money laundering investigations.

The company have denied any wrongdoing.

The UK Government recently ended guarantees on £400m of loans Greensill Capital made to Mr Gupta's firms.

The Scottish Government has been urged to follow suit to protect hundreds of million of taxpayers' cash.

Scottish Liberal Democrat MSP Willie Rennie said the Scottish Government must “end the secrecy” and reveal the details of the deal.

“We knew that the Scottish Government’s industrial intervention strategy was a disaster, but this takes it to a new level.

"We need a statement from ministers to finally properly explain this deal, the financial exposure for the Government and its detailed plan to recover the position and limit the exposure for taxpayer.”

Tory MSP Jamie Halcro Johnson said it was “staggering” the Government was prepared to risk more than half a billion pounds.

The Scottish Government said it was "committed to openness and transparency".

A spokesperson said: "Our intervention to support the Lochaber aluminium smelter and to secure the continued operation of the Dalzell and Clydebridge steel mills has preserved strategic industrial capacity and supported the livelihoods of hundreds of people since 2016.

“The Scottish Government receives a commercial fee in respect of the Lochaber Guarantee and Guarantee fee payments are up-to-date.

"There has been no call on the Guarantee and the Scottish Government holds a comprehensive suite of securities over the assets at Lochaber that have been valued at more than the outstanding amount guaranteed.

“GFG has created 40 new jobs in Lochaber since 2016 – increasing direct employment in the complex to 200 jobs. The business remains committed to investment in the long term future of the site. The Liberty steel sites continue to trade and directly support 140 households. Both businesses support a valuable supply chain with hundreds of associated jobs.”