Liberty Steel, part of Sanjeev Gupta's GFG Alliance, is under criminal investigation in Romania for alleged embezzlement and tax evasion, marking another significant blow to the embattled metals tycoon.
The probe, announced by Romania's prosecutor's office last week, involved raids on seven private residences and the registered office of an unnamed company believed to be Liberty's operation in Galați. A video released by authorities showed officers in helmets and body armour conducting a night-time raid on a property.
The Allegations and Raids
Romanian prosecutors allege that persons in management positions within the company orchestrated a scheme to embezzle funds through affiliated entities registered in other jurisdictions. They point to fictitious contracts for goods and services, along with fake loan agreements, as part of the suspected financial misconduct.
A central transaction under scrutiny involves the €137 million sale of CO2 certificates to Russian state-owned gas giant Gazprom. These certificates are required by EU regulations for heavy polluters like steelworks. According to investigators, the proceeds from these sales were transferred to the accounts of the parent company via a Singapore-based entity.
The company was subsequently forced to replace the certificates at a cost of €154 million, resulting in a substantial financial loss. Prosecutors further claim that funds earmarked for industrial investments were diverted to make payments to affiliated legal entities without operational justification.
GFG Alliance's Vigorous Defence
Liberty Steel and its parent organisation, the GFG Alliance, have strongly denied all allegations. A spokesperson stated the company "will vigorously defend itself against the unfounded allegations directed at the company."
The GFG spokesperson contended that the Galați plant has been a "net beneficiary within the group", receiving substantial financial support from the alliance. They asserted that all transactions under review were conducted for the benefit of the Galați facility and were vetted and approved by independent external lawyers to ensure legal compliance.
GFG also noted that the plant's external auditors examined the transactions in question and issued clean audit reports for the relevant periods.
Mounting Troubles for Sanjeev Gupta
This investigation adds to the considerable difficulties facing Sanjeev Gupta, who was once hailed as the "saviour of steel" for his plans to revitalise struggling metalworks. His industrial empire, which previously spanned the UK, Eastern Europe, and Australia, has been unravelling since the collapse of its main lender, Greensill Capital, in 2021.
The UK's Serious Fraud Office has been conducting its own investigation into GFG and Greensill since 2021. GFG and Gupta have consistently denied any wrongdoing.
Gupta has recently lost control of several key assets, including the steelworks in Whyalla, Australia, and the South Yorkshire operations of Liberty Steel UK in August.
The Romanian investigation forms part of a broader series of raids by authorities in the country targeting business activities. The Liberty Steel operation in Galați is located near Romania's border with Ukraine.
