Giving a £170m taxpayer bailout to steel tycoon Sanjeev Gupta would have been “completely irresponsible”, the business secretary has told MPs.
Kwasi Kwarteng was answering questions from members of the business, energy and industrial strategy committee about Liberty Steel, which is owned by GFG Alliance, the conglomerate headed by Mr Gupta.
Sky News revealed in March that GFG had written to the government to request an emergency bailout of as much as £170m, as thousands of jobs were hanging in the balance.
Mr Kwarteng told the committee that there were fears the money could be moved out of the UK to the group’s assets overseas.
He said: “If you look into the Gupta Family Group, they’re not the most transparent organisation and it also has assets all over the world and they employ something like 35,000 people all over the world.
“So if the Gupta family asked the British government to give £170m of taxpayers’ money, it is incumbent on ministers to be sure, to have some degree of surety, that the money will stay in the UK and won’t simply be dispersed across the Gupta Family Group’s other steel manufacturing assets across the world.”
He added: “As far as I could understand, we did not have these guarantees, it was a very opaque structure, and there was a reluctance to give the group the money.”
Mr Kwarteng said ministers had “no idea where this money would end up”, adding: “I think we came to the right decision in that particular instance”.
In March it was reported that Mr Kwarteng had met Liberty executives several times to discuss the crisis at the group, amid concerns that it could collapse into administration without taxpayer help.
Its reliance on financing from Greensill, the supply chain finance provider which collapsed earlier that month, had left it in a parlous state.
In April, Mr Gupta told Sky News that he would not close any of the group’s plants.
In comments directed at Liberty Steel’s 3,000 UK workers, Mr Gupta said: “I will not give up on you. You are my family.
“Under my watch, none of my steel plants will close, I promise.”
He had added: “We are handling the situation as it has arisen, but we need to keep in mind that our business actually is enjoying one of the best times it’s ever had.”
When Mr Kwarteng was asked by the committee on Tuesday if there was a danger of job losses or of losing the plants if action was not taken, he said: “I’m very keen to see that these assets, which are good assets, continue to operate, and the company continues to operate.
“But we can’t strip Liberty Steel from the wider group under which it sits and, as Mr Gupta says, they’re billions and billions of pounds in debt.
“The idea that the British government or any British minister would give this group, which is completely opaque…we don’t know the full extent of their liabilities… the idea we would sign a cheque would be completely irresponsible and if I had done so, you would rightly be grilling me about this now.”
Mr Kwarteng was asked what the government’s contingency plans were for Liberty Steel.
He replied: “We have to work through (Mr Gupta’s) plans. He keeps reassuring his workforce that he has refinancing plans in place and the local management also have their own plans.
“Ahead of any government intervention or otherwise, I’m very keen that the plans of local management and Mr Gupta are indeed worked through. Let’s see if Mr Gupta can refinance his businesses in the way he said he would.”
Liberty controls 11 sites, including ones at Rotherham and Stocksbridge in South Yorkshire, Newport in South Wales and Hartlepool.