The metals empire owned by Sanjeev Gupta has said it followed the law when it made a series of applications for emergency coronavirus loans backed by the government.
Various GFG Alliance companies applied to the coronavirus large business interruption loan scheme (CLBILS), a government programme that guarantees lending to companies struggling because of the pandemic.
Only one company was granted funding worth £45.6m under the scheme, GFG said.
It was responding to an report in the Financial Times that Gupta had restructured his businesses to become eligible for more loans. GFG’s lender was only allowed to give £50m to a single company, but Gupta’s empire is spread over as many as 200 corporate entities in the UK and other countries including Singapore, according to one source. He is a director of 79 UK companies, many of which have not filed annual reports for two years or more.
Loans to Gupta’s companies were extended by Greensill Capital, the lender whose collapse has prompted intense scrutiny of lobbying in Westminster after it emerged that the former prime minister David Cameron was a paid adviser to the company.
A GFG Alliance spokesperson said the loan applications were intended “to support business activities and to help preserve jobs in industrial communities following the significant impact of Covid-19 on some operations and markets”.
The company sought approval from authorities and worked with unnamed lawyers on the applications, and was also subject to checks by Greensill’s lawyers, the spokesperson said. “GFG Alliance is confident that it abided by all rules that applied to GFG Alliance entities in respect to those loan applications, including rules related to business structure.”
The CLBILS was run by the British Business Bank (BBB), which accredited private-sector lenders, including the UK’s largest banks and Greensill. The BBB, however, launched an investigation into Greensill and its loans to Gupta before its collapse.
It was up to the banks to make decisions about whether to lend to individual companies. The BBB has the power to audit the loans made by lenders to make sure they fit with the rules, and it can also withdraw the guarantee “if serious non-compliance is identified”.
A spokesperson for the BBB said it could not comment on Greensill because of an ongoing investigation.