Sanjeev Gupta's GFG Alliance metals empire has filed a last-ditch bid in London's high court to recapture a coveted aluminium smelter in northern France from a US private equity firm. Two GFG Alliance firms have launched a lawsuit against a fund owned by American Industrial Partners (AIP), which has been operating the smelter in Dunkerque since October after receiving government licence.
The allegation is based on a complicated set of loan arrangements, but GFG's court documents imply that the action might lead to more examination of Gupta's business. According to court records, AIP claimed in September that it was unable to receive payments from GFG relating to the loans because of an accusation that GFG entities had infringed Romanian law.
The complicated dispute over the smelter's ownership has contributed to Gupta's financial woes, which began with the bankruptcy of its principal lender, Greensill Capital, in March of last year. Greensill had recruited former Prime Minister David Cameron, who lobbied government officials on its behalf several times before it collapsed.
Gupta's businesses are also the subject of criminal investigations in several nations. In the case of GFG and Greensill, the UK's Serious Fraud Office (SFO) is looking into "suspected fraud, fraudulent trading, and money laundering," while Paris prosecutors are looking into various charges of corporate asset mismanagement and money laundering. German officials are also looking into the matter.
The Dunkerque smelter, regarded as Europe's largest, was a valuable asset for Gupta since it was still profitable, and rising aluminium prices in recent months made it even more appealing. AIP officials appeared at the facility in October, only days after declaring that they had acquired control, and notified shocked managers that they were the new owners. Since then, they've been in charge of the website.
The GFG firms claimed that AIP was operating "in bad faith, oppressively, and/or otherwise unconscionably" to "take" the smelter, according to the details of a lawsuit signed by Gupta.
GFG's accusations have yet to get a response from AIP. However, according to GFG's declaration, AIP stated it was unwilling to accept a loan return due to "an unspecific accusation that Romanian law had been violated." Between July and September, AIP made four different requests for "KYC" (know-your-customer) information from GFG, according to the document. Companies are compelled by anti-money laundering (AML) rules to conduct KYC checks.
The court lawsuit comes as GFG's operations in Romania, where it has huge steelworks in Galati, a Danube port city, are being scrutinised. Last year, a Czech government minister asked for an investigation into the sale of carbon credits worth £40 million to GFG's firm, Liberty Galati, from a Czech steelworks. The Financial Times reported on Thursday that GFG firms had channelled transactions through Banca Romana de Credite si Investitii, a Bucharest-based Romanian bank owned by Gupta (BRCI).
“None of the funds tendered to repay the [loan] facility with AIP had any connection with BRCI,” stated a spokesperson from GFG Alliance.
According to the spokeswoman, GFG believes AIP "illegally expropriated the lucrative aluminium smelter," and that GFG was able to "pay all liabilities owing to AIP under a finance arrangement." As per BRCI, it was a “completely independent banking institution with a fully independent board of directors”. Adding further it said that it has “a strong AML and compliance function that has served it well over many years”.
GFG claims to employ 35,000 people worldwide in steel, aluminium, and energy, with 5,000 in the United Kingdom. On top of the criminal investigations, however, some significant assets are in jeopardy. HM Revenue and Customs filed a court petition this month to close down four Liberty Steel enterprises in the United Kingdom due to unpaid taxes.
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