The distressed metal tycoon, Sanjeev Gupta's GFG Alliance owned UK's last aluminium smelter has stated that investment plans for the Lochaber-based factory are on track, despite concerns that they have failed to publish accounts for their Highlands firms. As it concludes accounting for Alvance British Aluminium and its power plant, Simec Lochaber Hydropower, GFG Alliance, which bought the 90-year-old smelter and its hydropower facility from mining and metal giant Rio Tinto in a whopping £330 million transaction in 2016, risks fines.
Alvance is about 11 months late reporting its accounts for the year ending March 2020, according to Companies House data, while the group is more than six months late filing for different corporate entities linked with the hydropower sector. Companies are required by law to keep their documentation in a timely way, despite the fact that fines are merely £1,500 per firm.
Willie Rennie, a spokesperson for the Liberal Democrats on the economy, said the inability to finish the accounts might be a "warning flag."
“We must all hope that this failure is not a sign that the smelter and the jobs are at risk but the warning signs have been clear for some time,” said Willie Rennie.
Since the bankruptcy last year of its lender Greensill Capital, which had financed Gupta Family Group firms as much as £3.5 billion, the worldwide conglomerate run by entrepreneur Sanjeev Gupta has faced crisis after crisis. The failure caused the Serious Fraud Office (SFO) to open an investigation into "suspected fraud, fraudulent trading, and money laundering" at GFG, raising fears about the future of the company's 35,000-strong global workforce, including 3,000 in the United Kingdom.
As it battles fires fighting off creditors in its companies throughout the world, the corporation has insisted on working on negotiations to acquire additional financing. HMRC recently issued a winding-up order against four of GFG's steel operations in England due to a £26.3 million debt. Mr. Gupta and his company group have previously been chastised for having "opaque" and inadequately audited corporate structures.
Last year, the Business, Energy and Industrial Strategy (Beis) committee issued a damning report into the group's governance, casting doubt on whether the Anglo-Indian businessman was a "fit and proper person" to receive government support unless he restructured the company "into a more acceptable corporate structure and publishes adequately audited consolidated accounts."
This came when business secretary Kwasi Kwarteng refused to give Liberty Steel, the owner of steelworks in Dalzell and Clydebridge, a £170 million bailout because he couldn't guarantee the money would stay in the UK. GFG confirmed that the filing of its accounts was "delayed due to the disruption created by Greensill Capital's failure." GFG also holds an interest in a significant tidal array in the Pentland Firth.
“We are in contact with Companies House and are now finalising these accounts which will be filed in due course,” said the firm.
After it was revealed that the 2016 sale was financed by a £586 million Scottish government promise to buy electricity from the hydro plants, the company's acquisition of the aluminium smelting firm, which comprised a 14,000-acre estate that included part of Ben Nevis, has come under examination.
The agreement gives the Scottish Government "substantial influence" over the Alvance company, which has been based in Fort William since 1929. Despite criticism about the deal's secrecy and delays in planned plant and employment investments, the Scottish Government maintains that supporting it was "undoubtedly the correct option."
Following the establishment of a "restructuring and transformation committee" in the wake of the SFO probe, a Scottish Government spokeswoman claimed GFG was cleaning up its corporate governance act.
“The Lochaber businesses are aware of their obligations in respect to account filing. GFG has been undertaking activity to enhance corporate governance, including the creation of the restructuring and transformation committee in the UK. Providing the financial guarantee to protect jobs in the region, underpin additional investment at the site, and promote industry in Scotland, was undoubtedly the correct decision,” added the Scottish Government spokesman.
Although GFG could not disclose specifics on recent trade, a representative for the business stated the smelter had a " strong earnings performance last year " due to a strong global aluminium pricing, which "provides a good platform" for GFG's ambitions to build a recycling and billet casting operation in Fort William.
The Unite union has also verified that workers at the facility have agreed to a three-year salary agreement, indicating that there is still a demand for the company's goods. According to the Scottish Government, the smelter employs roughly 200 people, up 40 since 2016, but still well short of the 2,000 jobs Mr Gupta promised when he purchased the business.
GFG's Alvance, along with fellow local employers fish farmer Mowi and timber producer BSW, were "working closely" with the chamber, the Highland Council, and the Scottish Government to find "innovative ways of providing housing solutions to support the staff required," according to Lochaber Chamber of Commerce chief executive Frazer Coupland.
“As Lochaber businesses move towards the Government’s net zero targets it is essential that our businesses are afforded the opportunities and support they need to invest,” added Frazer Coupland.
Both the GFG and the Scottish Government must be more transparent, according to Mr Rennie.
“We need openness from the company about the future of the jobs and the plant and we also need honesty from the Scottish Government on the exposure to taxpayers following the multi-million pound government financial guarantee. We have had next to nothing in return for that guarantee and the promised 2,000 jobs have not materialised. We need the SNP government to be straightforward now," said Mr Rennie.
This news is also available on our App 'AlCircle News' Android | iOS