Metals tycoon Sanjeev Gupta insists doubts over the authenticity of invoices issued by companies under his control can be explained by the future receivables financing provided to Gupta by collapsed lender Greensill.
Accounting firm Grant Thornton – appointed to recover funds owed to Greensill after its collapse into insolvency last month – has reportedly been unable to verify invoices used by Gupta-owned companies to raise financing from the London-headquartered lender.
According to the FT, citing correspondence and sources familiar with the matter, Grant Thornton has approached several companies with outstanding invoices from Gupta’s trading firm Liberty Commodities – only to be told by those companies that no trading relationship existed between those parties.
In one example, German scrap metals trader RPS Siegen told reporters last week that “a trading relationship between us does not exist”, when presented with a Liberty Commodities invoice.
However, Gupta has since told the newspaper that RPS Siegen was never accounted for as a current client, but as a “potential customer” at a later date.
Anticipated future business between the two companies was used to underpin loans from Greensill, part of a controversial funding model whereby current and future receivables would be packaged up, insured and sold to investors.
Gupta’s company network GFG Alliance declined to comment further when contacted by GTR, but in a letter responding to the FT published on April 6, the steel magnate urges the industry to “put a focus on Greensill’s ‘prospective receivables’”.
“As part of those programmes, Greensill selected and approved companies with whom its counterparties could potentially do business in the future,” Gupta writes in the letter.
“Greensill then determined, at its discretion, the amount of each prospective receivables purchase and its maturity. Therefore, although RPS Siegen GmbH was a company identified as a potential customer of Liberty Commodities, it is not one currently.”
That funding model has already been described in detail in a lawsuit against Greensill filed by US mining firm Bluestone Resources.
He adds that the company has not seen the invoice in question and so has not been able to investigate it further.
The FT, however, says the invoice ostensibly appears to refer to current business between Liberty Commodities and RPS Siegen, rather than to hypothetical future trading activity between them.
Reached by phone, a representative from the German company declined to answer when asked by GTR about the nature of any invoice presented by Grant Thornton. There is no suggestion of wrongdoing by RPS Siegen.
At the same time, GFG Alliance says it is launching an independent investigation into FT claims that a Gupta employee set up web domains that closely resemble real-world commodity trading firms, including Gunvor, Concord Resources and Salzgitter Mannesmann.
It is not clear why the three domains, which were registered between March 2016 and April 2017 were set up, nor whether they have ever been used. A GFG Alliance spokesperson tells GTR the company “take[s] these allegations very seriously and [has] initiated a third-party investigation into the matter”, declining to answer further questions.
The claims come as Gupta-owned companies face legal challenges from financial institutions looking to recoup losses.
In the UK, Citigroup instructed administrators last week to file wind-up orders against Liberty Commodities – an action reportedly carried out under instruction by Credit Suisse, whose investment funds face heavy losses following Greensill’s collapse.
And in Australia, applications to wind up two other companies – OneSteel Manufacturing, which trades as Liberty Primary Steel, and Tahmoor Coal – were filed in the New South Wales Supreme Court yesterday.
At the same time, Grant Thornton has written to customers of UK group Liberty Steel requesting customers pay invoices directly to Greensill, rather than to Gupta-owned companies.
“You are instructed to disregard any instructions from Liberty that may be inconsistent or in conflict with our instructions,” the administrators said, according to a note seen by Argus Media.
Liberty says Gupta’s GFG Alliance “continues to work constructively with Grant Thornton while we try to negotiate a formal standstill”.
In a company podcast in late March, Gupta said: “This is something which has definitely been a great challenge for us, and we are managing the situation as best we can. Luckily we have a very good dialogue with Greensill’s administrators Grant Thornton.”
Grant Thornton declined to comment when contacted by GTR.