British MPs have called for investigations into the owners of Liberty Steel and boss Mr Sanjeev Gupta in a bid to avert another crisis in the industry. Business, Energy and Industrial Strategy Committee Chair Mr Darren Jones said “The systemic issues at the heart of GFG Alliance have highlighted the vulnerabilities of Liberty Steel and its place in the wider steel sector in the UK. We met with hard working and dedicated workers at Liberty Steel and want to ensure that the UK steel sector is able to continue to support their jobs. However, the evidence we heard during our inquiry has highlighted serious problems with high-risk financial practices, weaknesses in audit, and about inadequate accountability and corporate governance arrangements within GFG Alliance. Sanjeev Gupta must urgently fix these problems if he is to be seen as a fit and proper owner of steel companies in the UK.”The report describes the use of high-risk financial practices as being at odds with the requirements of any future steel sector deal and recommends the Financial Conduct Authority and HM Treasury investigate the use of, and accounting rules for, future or prospective receivables.The report highlights the audit of Liberty Steel UK businesses by audit firm King & King and questions their capacity to complete audits effectively. The report finds it utterly unconvincing” that King & King had the capacity, expertise, or resources to audit the accounts of multiple large GFG Alliance and Liberty Steel UK companies representing over GBP 2.5 billion of revenue”.Ministers should reflect on the systemic risks to the UK steel industry posed by such unusual corporate structures as those used by GFG Alliance1. Liberty Steel owner, Sanjeev Gupta, put senior members of his staff in an unacceptable position by employing them with job titles associated with traditional executive functions in well run companies, without giving them the required access to information or decision-making powers necessary for them to perform their duties.2. The regulatory authorities should undertake an investigation into King & King, the auditors of a number of GFG Alliance businesses3. The Insolvency Service may wish to consider whether Mr Gupta has breached his fiduciary duties as a company director.The Committee’s report urges the Government to consider formalising a fit and proper person test for private company directors within any future steel sector deal and that a review be undertaken to consider the systemic risks associated with high-risk financial practices in the steel sector.
British MPs have called for investigations into the owners of Liberty Steel and boss Mr Sanjeev Gupta in a bid to avert another crisis in the industry. Business, Energy and Industrial Strategy Committee Chair Mr Darren Jones said “The systemic issues at the heart of GFG Alliance have highlighted the vulnerabilities of Liberty Steel and its place in the wider steel sector in the UK. We met with hard working and dedicated workers at Liberty Steel and want to ensure that the UK steel sector is able to continue to support their jobs. However, the evidence we heard during our inquiry has highlighted serious problems with high-risk financial practices, weaknesses in audit, and about inadequate accountability and corporate governance arrangements within GFG Alliance. Sanjeev Gupta must urgently fix these problems if he is to be seen as a fit and proper owner of steel companies in the UK.”The report describes the use of high-risk financial practices as being at odds with the requirements of any future steel sector deal and recommends the Financial Conduct Authority and HM Treasury investigate the use of, and accounting rules for, future or prospective receivables.The report highlights the audit of Liberty Steel UK businesses by audit firm King & King and questions their capacity to complete audits effectively. The report finds it utterly unconvincing” that King & King had the capacity, expertise, or resources to audit the accounts of multiple large GFG Alliance and Liberty Steel UK companies representing over GBP 2.5 billion of revenue”.Ministers should reflect on the systemic risks to the UK steel industry posed by such unusual corporate structures as those used by GFG Alliance1. Liberty Steel owner, Sanjeev Gupta, put senior members of his staff in an unacceptable position by employing them with job titles associated with traditional executive functions in well run companies, without giving them the required access to information or decision-making powers necessary for them to perform their duties.2. The regulatory authorities should undertake an investigation into King & King, the auditors of a number of GFG Alliance businesses3. The Insolvency Service may wish to consider whether Mr Gupta has breached his fiduciary duties as a company director.The Committee’s report urges the Government to consider formalising a fit and proper person test for private company directors within any future steel sector deal and that a review be undertaken to consider the systemic risks associated with high-risk financial practices in the steel sector.