How Sanjeev Gupta sold his green revolution to British politicians

Business


On a bright June 2015 afternoon, Sanjeev Gupta stared at the crowd gathered at the Celtic Manor Resort hotel near Newport. One of the industrial companies’ family businesses was the new sponsor of Polo al Manor, an event considered to be a highlight of the Welsh social season.

Gupta was on a roll. The day before, he and his father, PK Gupta, had celebrated the inauguration of the latest addition to the family empire, a coal-fired power plant in nearby Uskmouth.

Located in a group next to Alun Cairns, the Conservative MP for Vale of Glamorgan, Gupta set the stage for a seductive vision in which the place would become a center of renewable energy and feed the adjacent steel industry had acquired two years earlier.

The promise of rescuing struggling metal operations and transforming them into green companies fit for the 21st century has been Gupta’s business card for nearly a decade. It is something that proved irresistible to politicians of all party lines.

Their support and connections, as well as government guarantees and subsidies, helped roll the wheel for a series of acquisitions, earning the nickname “steel savior” and companies that would end up at 49 years old. for four continents and would generate $ 20 billion in revenue.

“In the early days he was seen as a positive force in nature,” said one person who knows Gupta. “Their ambitions were very much in line with what governments were trying to do: support struggling industries and try to revolutionize them with green energy.”

These ambitions have now been replaced by efforts to rescue his empire, which fell into crisis last month after the collapse of its main lender, Greensill Capital.

The Liberty House Group Rolled Steel Mill in Newport © Chris Ratcliffe / Bloomberg

Greensill’s implosion has also led to greater control over how Gupta built an extensive collection of companies that includes Liberty Steel, the third largest British producer. It employs 3,000 people and 2,000 others work at Gupta’s energy and engineering companies in the UK.

Suspicious bill revelations and circular trade suggestions now raise awkward questions for politicians and government officials who were eager to support him.

Although the UK government has left open the possibility of giving its steel mills a lifeline, it rejected its £ 170 million bailout request, noting the opaque structure of the pound. its GFG alliance.

Cardiff Invitations

Wales was a major focus in the early days of Gupta’s expansion, starting with the purchase of a struggling Newport steelmaker in 2013. For more than a year, its company retained about 130 employees in half pay and allowed them to find work before they did. restarted the drive. His vision of revitalizing industries, often in communities in severe economic decline, gained support.

This support was still in evidence the day after Greensill filed for insolvency on March 8. The previous week Gupta had written to Ken Skates, the Welsh economy minister, to outline GFG’s situation given the deepening problems at Greensill.

On March 9th Mark Drakeford, the Prime Minister of Wales told the country’s parliament that Gupta had not asked for additional funding from the government but had established the Liberty Steel group’s current strong commercial position and “strengthened GFG’s commitment to Wales”.

“What the letter demonstrates, I think, is the close relationship that has existed between the company and the Welsh government, and the confidence that the company wants to continue to build in its future,” Drakeford said.

Along with efforts to reach out to local communities, GFG invited stakeholders from Wales. Invitations to events at Cardiff Principality Stadium were frequent, including one at a Beyoncé concert in June 2018.

Gupta’s offices are adorned with images of himself with politicians and royals, including former British Prime Minister Theresa May and Prince Charles, according to people familiar with the matter.

“You can walk into any of Sanjeev’s offices and there will be a picture of him with a politician,” one said.

GFG declined to comment on the piece.

Two high-profile former Welsh ministers took on GFG-related roles. Carwyn Jones, the former Welsh Prime Minister who led the decentralized administration between 2009 and 2018, joined GFG’s advisory board last year.

The decision earned him a reprimand from the Advisory Committee on Business Appointments (Acoba), which advises the business roles of former members of the government. The committee said his position as an adviser to GFG was contrary to his previous advice. He had previously told Jones that he could take on a role with Simec, a GFG company, as long as he limited himself to advising on energy. Jones has done it previously rejected the allegation.

Jones ’former colleague Edwina Hart, who met with Gupta as Minister for the Economy, Science and Transport in the Welsh government, took on a role on the Greensteel Council that had created GFG. Acoba authorized the appointment in October 2016 with certain conditions. The council has since been dissolved.

Carwyn Jones, former Welsh Prime Minister, joins GFG advisory board © Dario Pignatelli / Bloomberg

Transparency records show that Gupta’s various companies in Wales received more than £ 200,000 government support during the pandemic. The group was also the beneficiary of a £ 40,000 infrastructure grant for its steel plant in Newport which had originally been delivered to its previous owner, Mir Steel, shortly before GFG bought it.

Another big supporter of Gupta’s Uskmouth plan was Nigel Adams, MP for Selby and Ainsty, who chaired the all-party parliamentary group on biomass.

The deputy has received more than £ 20,000 from Simec Uskmouth including £ 16,000 for an auction prize and about £ 3,000 for a trip to the UAE on energy and biomass, according to transparency records. Gupta donated £ 11,350 in September 2016, according to records. An Adams spokesman said “all notifiable donations” had been “declared correctly and transparently.” It is understood that none of the donations were personally intended for Adams.

Adams ’political assistant Malin Bogue went to work at GFG in 2018 as a public relations officer, although he has since left.

Other Westminster figures who worked for GFG include Katie Perrior, a former Downing Street communications consultant in May, who briefly advised the group in 2017.

Perrior, who now runs iNHouse Communications, said: “I briefly advised GFG Alliance in 2017 and then became an iNHouse customer shortly thereafter … A year later, we resigned from the account at at our request, as we decided that the customer was not suitable for our business “.

Another recent political contract was Mark Lancaster, Minister of the Armed Forces from 2017 to 2019, who took on a role on GFG’s advisory board in August 2020. Lancaster had no previous relationship with GFG before joining. be on the board according to authorization received from Acoba. He could not be reached for comment.

New chapter for Scotland

Gupta’s degree of sales also helped its expansion into Scotland, where the industrialist garnered widespread political support, including Prime Minister Nicola Sturgeon.

GFG’s purchases preserved jobs and bailed out important industrial assets, but its financing has proved controversial, particularly the Britain’s last aluminum smelter in Lochaber, along with two nearby hydroelectric plants acquired. in Rio Tinto in 2016. The deal was backed by a government guarantee worth £ 575m.

The government record of ministerial commitments shows SNP rural economy minister Fergus Ewing having dinner with GFG investment director Jay Hambro four times in six months from September 2017 to May 2018. Ewing faces questions of Labor politicians in Scotland over whether he breached the rules of ministerial conduct during a dinner in June 2017 with Gupta, Hambro and Lex Greensill.

Ewing was not available for comment. The SNP said Ewing’s meetings with Greensill and GFG were “properly” recorded according to ministerial engagement rules.

At the time of the Lochaber agreement, Sturgeon hailed it as a new chapter in Scottish manufacture. Whatever happens in the Gupta empire, the crisis may finally force politicians to pursue a sustainable strategy for the British steel industry.



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