According to a report in UK Newspaper The Guardian, the French government has grounds to believe that Sanjeev’s Gupta’s GFG Alliance has ‘misappropriated’ funds from a steel plant in Romania, as stated in court documents from a case involving one of the metal magnate’s companies.
Gupta has launched legal action in London in an attempt to reclaim an aluminium smelter in Dunkirk, northern France, after its takeover by a US private equity firm, American Industrial Partners (AIP). GFG has been under intense financial pressure since the collapse of its main lender, Greensill Capital, which filed for insolvency in 2021.
However, filings in the case suggest that legal authorities in France believe laws may have been broken by Gupta’s companies in separate dealings in Romania. GFG is under investigation by the UK’s Serious Fraud Office (SFO) over ‘suspected fraud, fraudulent trading and money laundering’, and French prosecutors are also investigating, but GFG has not so far faced charges.
The smelter is the largest in Europe, and is a highly sought-after asset in an important industry for the French government, thought to consume as much as 1% of France’s electricity.
The alleged suggestion by the French government that GFG may have ‘misappropriated’ money from Romania could have serious implications for Gupta’s attempts to refinance his other businesses, including those in the UK. As stated by The Guardian, under UK law, companies may not receive money if they believe it may have come from unlawful conduct, and they must carry out strict checks on customers.
The filing alleged that AIP asked GFG several times for information on the source of the funds to repay its loan, but that GFG was only able to provide ‘certain limited documents filed at Companies House and a copy of Mr Gupta’s passport’. They ‘omitted to say anything about the actual source of the funds’, the filing said.
GFG claimed that AIP had bought the loans in order to ‘appropriate’ the smelter, and a source briefed on the negotiations claimed that GFG received offers of more than $1 billion, five times more than the roughly $200m offered by AIP.
AIP in its filing claimed that GFG had in fact asked it to buy the debt to protect GFG from insolvency after it missed scheduled repayments.
“Many of the claims in AIP’s filing rest on undisclosed documents and alleged conversations with third parties. There was no misappropriation of group money from any company. We took legal advice and thorough steps to ensure compliance with all relevant laws and regulations, and are confident that the transfer of funds to repay AIP did not breach any of them.”
GFG Spokesperson
A GFG Alliance spokesperson stated: “Many of the claims in AIP’s filing rest on undisclosed documents and alleged conversations with third parties. There was no misappropriation of group money from any company. We took legal advice and thorough steps to ensure compliance with all relevant laws and regulations, and are confident that the transfer of funds to repay AIP did not breach any of them.”
The spokesperson said that ‘AIP never had any intention of accepting funds, from GFG or anyone else’ to repay the loans. AIP used a ‘premeditated, predatory manoeuvre to seize a valuable asset on the cheap’, the spokesperson said.
“AIP’s defence is as cynical as its original expropriation of our asset. We reject AIP’s specious interpretation of events.”
GFG Spokesperson
They continued: “AIP’s defence is as cynical as its original expropriation of our asset. We reject AIP’s specious interpretation of events.”
Source: The Guardian