Investigation launched into Lochaber smelter accountants linked with £586m government guarantee

A firm that signed off the accounts for the Lochaber smelter is under investigation after a probe was launched by the Financial Reporting Council (FRC).

The council, which regulates the accounting industry, said it would be investigating accounts signed off by King and King for four Liberty Steel businesses.

This includes Alvance British Aluminium Limited, previously called Liberty Aluminium Lochaber Ltd, which was the company formed when GFG Alliance bought the smelter in Lochaber.

Companies House states the smelter’s accounts for 2020 are now more than a year overdue.

Offices of Liberty Steel, including those in Scotland, faced visits from Serious Fraud Office (SFO) investigators last week as part of a probe into suspected fraud and money laundering by parent firm GFG Alliance.

Critics have said questions are “piling up” for the Scottish Government due to the smelter receiving a guarantee from ministers to purchase power from the nearby hydro-plant, owned by Mr Gupta’s father, worth £586 million over 25 years.

This deal has come under renewed scrutiny following the collapse of Greensill Capital, GFG Alliance’s main funder.

The Scottish Government has maintained there has never been a call on the guarantee, and claim the smelter and the wider securities are worth more than £430m.

Sanjeev Gupta, owner of GFG Alliance and Liberty Steel, with Nicola Sturgeon

This would be well over the remaining exposure to the guarantee of £284m, but documents obtained by The Scotsman put the value of the security at £162m.

The FRC said it would be combing through accounts relating to Liberty Speciality Steels Limited, Alvance British Aluminium Limited (formerly Liberty Aluminium Lochaber Ltd) and Liberty Steel Newport Limited for the year ending March 31, 2019.

It will also look at Liberty Performance Steels Limited statements for the year ended March 31, 2020.

Mr Gupta was once lauded as the “saviour of steel” for rescuing factories, but has come under heavy scrutiny amid accusations of potentially fraudulent trading after his main lender, Greensill Capital, collapsed a year ago.

Scottish Labour’s finance spokesperson