Here is my Insight longread for @scotonsunday on the implications of Greensill capital’s collapse for Sanjeev Gupta’s Scottish steel firms and, by extension, Scottish taxpayers. Thread👇scotsman.com/news/politics/…
The potential exposure to the public purse could be circa £575m, due to the SG’s 25 year guarantee to Gupta’s Lochaber subsidiary, which will see the govt buy power its hydro plant generates in the event its smelter shuts down.
The guarantee was approved after the govt enlisted EY to carry out due diligence But seven months *after* the deal was done, the govt hired Deloitte to give advice and flag up “key risks.". Deloitte is still retained on the SG payroll, at a cost to taxpayers of around £200k.
The risk to public money that has gone to Gupta’s firms is not theoretical. In March ‘17, Scottish Enterprise approved a three year loan to his Dalzell steel plant worth £7m. That cash has yet to be repaid. Scot Ent says it is in discussions with Gupta’s firm about the loan.
The focus so far on the Scottish Government’s dealings with Gupta’s GFG conglomerate has been on Fergus Ewing’s 2017 dinner with Gupta and Lex Greensill, but over the next two years, GFG executives had dinner with Ewing again, and met with at least six other ministers.
All this raises Qs about what the SG knew about GFG’s reliance on Greensill for funding, and what happens if GFG can’t refinance. GFG said that its Lochaber biz is “profitable,” and its Dalzell plant is “operationally strong,” but there are well-placed fears for their future.
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