Pic: BBC
The slow motion collapse of Sanjeev Gupta's Liberty Steel shows how it is always best to do business by the book
With the latest revelations about the likely collapse of Liberty Steel owner Sanjeev Gupta's bank Wyelands Bank, David Cameron's less than convincing defence of his lobbying for Greensill Finance (the insolvent firm that funded Liberty Steel) and a Serious Fraud Office investigation into Gupta's business dealings it seems only a matter of time that Liberty Steel is goes into administration at which point it is likely to be briefly owned by the tax payer.
Ian Carrotte
Ian Carrotte of ICSM said it was a classic case of 'opaque' business practices which have been found out with suppliers and staff paying the ultimate price with the house of cards come tumbling down. He said: "Everyone knows that Sanjeev Gupta's business empire is complex to say the least. Even Government ministers have said the whole set up doesn't look good. For the SFO to be investingating it something is seriously wrong. There is only one way to do business and that's to do by the book. Any business studies student will tell you that using a company to essentially factor your invoices when your business is struggling is madness. Greensill was not only factoring for Liberty Steel's operation but according to the SFO some of those invoices were shall we say 'ghost invoices.' You cannot run a business by in effect cooking the books which is what is suspected here."
Greensill and Cameron. Pic: FT
Liberty Steel employ 2,000 workers in Wales, the north and midlands while their parent company GFG Alliance includes another 3,000 employees in the uK and 32,000 workers across the globe. The firm is less than 10% of the one mighty British Steel set up but those jobs and the suppliers to the business are now at risk with millions of pounds likely to be wiped if adminstration takes place. Greensill Finance has already gone to the wall with its biggest casualty being the reputation of former PM David Cameron whose amateur lobbying on Cabinet ministers exposed him to ridicule from his former colleagues.
Wyelands Bank was acquired by Gupta to fund Liberty Steel in 2016 but the business is insolvent after a rescue package could not be agreed. The UK Government turned down a request from Gupta for £170m to save Liberty Steel from collapse with the recieved wisdom being they don't trust him. With the Serious Fraud Office now going through his books one can only wonder how long can Liberty Steel stave off the inevitable.
Ian Carrotte commented on the whole fiasco: "There's an old fashioned saying in business and that is if you look after the pennies the pounds will look after themselves."
About ICSM Credit
ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel - while at the moment there's a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach - ask for details from Paul.
For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.
To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com
For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk