Sanjeev Gupta was born in Punjab, the son of an industrialist. He was sent to boarding school in England and went on to study economics at Trinity College, Cambridge. There, he set up a commodities trading business from his student halls of residence. He called the business Liberty House Group, and traded steel and rice and chemicals. Trinity booted him out of halls because he’d registered his business there. But he continued trading. Even then, he claims, he was making £1 million a day.
After Cambridge, Gupta continued to grow Liberty, setting up offices in Dubai, Singapore and Hong Kong. He got married – to his former company treasurer – and they started a family. As his personal wealth grew, he spent lavishly, collecting trophy properties in London, Sydney and Dubai, and vast estates in Scotland and Wales. He bought a private jet and a bank that he renamed Wyelands, also the name of the vast nineteenth-century country house and estate he owns in Monmouthshire. The BBC nicknamed Gupta the ‘Man of Steel’ and talked about him as the saviour of the country’s metals industry.
By the early 2010s, he was well known and mostly well liked by banking and insurance executives. They wouldn’t necessarily want to lend him money, but he was fun and charming, and always good for an expensive lunch in the City. He talked in grand terms about building a global metals conglomerate. He wanted to start producing steel in the UK and the US, and to do it in an environmentally friendly and sustainable way. And he planned to make this vision a reality with a series of bold acquisitions.
This kind of talk was interesting over dinner in Mayfair, but it was at odds with reality. The steel industry was struggling. Most Western facilities were too costly to run. Customers often paid late. Competition was too intense. Steel companies were in constant need of cash to keep the mills running. Nevertheless, the steel sector rolls in long cycles, and Gupta’s supporters would say this was always a multi-year project.
Gupta made his move into the UK steel industry in 2013, when Liberty bought a mill in Newport, South Wales, from Mir Steel, a Russian-owned company. Funding for the deal came from a consortium of Dubai-based Indian investors.
What followed was a rapid series of acquisitions, processed through a spider’s web of Liberty House companies. At every step, there was a big hurdle. The traditional banks were not keen to lend to steel businesses at all, let alone fund a whirlwind spree of acquisitions carried out by an unproven industrialist with few assets to his name.
That’s where Greensill came in. When Gupta started, there were few other options in terms of traditional finance. So Greensill came as a breath of fresh air, Gupta told associates.
Lex and Sanjeev had for several years mixed in similar circles. Greensill had funded several commodities businesses, such as BSi Steel in South Africa or Griffin Coal in Australia. Both Greensill and Gupta were well known to the trade credit insurance industry too. They were both fiercely ambitious and talked frequently about disrupting established industries. Gupta realized that Lex’s supply chain finance business could play a crucial role in building up his metals empire. If the big banks wouldn’t lend to him, then maybe Lex could. He was so convinced that Gupta even took a stake in Greensill, acquiring a few thousand shares in the company in 2016 (though he sold the stake later the same year).
The two became close. Lex was enamoured of Gupta’s ambition.
‘I’m a big fan of what Sanjeev Gupta has been doing,’ he told me once. ‘I think exporting industrial jobs out of countries to Eastern Europe and China is not an awesome thing. If we can create jobs here, that’s a cool thing. We are broadly always supportive of what Mr Gupta was trying to do, and we remain supportive of him as a matter of principle.’
Lex would often visit Gupta’s office overlooking Sydney Harbour to discuss potential deals. Greensill executives attended lavish parties that Gupta threw at his mansions in Sydney and London. Sometimes Lex and Gupta would share a flight – both men owned private aircraft decked out in the same purple livery. The two were insatiable workaholics – often the best place to catch them was on board one of the planes, where they were invariably working free from the distractions you might get on the ground.
Gupta mirrored Lex’s ongoing efforts to embed into the political and financial establishment. He hired as his right-hand man and chief dealmaker Jay Hambro, a former investment banker. Hambro, who had been educated at the elite Harrow School, was the scion of one of Europe’s most elite banking dynasties. Gupta also lavished gifts and hospitality on Conservative politicians. His flat in Mayfair was next to 5 Hertford Street, a darkly lit, labyrinthine members’ club favoured by Britain’s political elite. He sponsored a squad of UK parliamentarians on a cricket-playing tour to Australia in 2017, where former Australian prime ministers watched their countrymen battle it out with their British political counterparts. The self-styled champion of ‘green’ steel even befriended Prince Charles, the ageing royal environmentalist, who appointed Gupta as an official ambassador for the UK Industrial Cadets programme, which aims to promote skills and training for the country’s manufacturing industries.
Lex frequently told a story about how he brought Sanjeev to the Greensill family farm in Bundaberg early on in their relationship. The two men drove around the extensive agricultural property for hours. At one point, they sat at the top of a large hill overlooking the estate. As the sun came down across the Australian outback, Lex and Sanjeev outlined their plans for Greensill and Liberty House to carve out twin empires that would dominate the world’s finance and steel industries.
For a while, there was a third member of their troupe. Lex and Sanjeev worked closely with Global Asset Management (GAM) fund manager Tim Haywood, in an interlocking triumvirate that appeared to benefit all three. Sanjeev had projects that needed financing. Lex had a start-up finance firm that needed deals to sell. Haywood had funds that needed higher-yielding assets.
OVER SEVERAL YEARS, Greensill and Gupta leaned on each other as they grew until, eventually, it was clear that if one stumbled, or withdrew his support for the other, the empires that both men were building would come tumbling down together.
Gupta began to call his business the GFG (short for the Gupta Family Group) Alliance. He acquired steel, aluminium and other assets across the UK, Europe, the US and Australia. In many cases, Greensill provided most or all of the funding. Gupta said the traditional banks were cheaper, but Greensill made lending decisions faster, and was much more flexible. He disliked the covenants that are usually attached to bank loans or bonds. Covenants often restrict a business owner’s ability to buy assets or take on more debt. GFG paid high fees to Greensill, and though some of Gupta’s executives questioned whether they were paying too much, it didn’t really matter. The two companies were intertwined, mutually dependent.
By 2017, GFG accounted for more than two-thirds of all Greensill revenue. Greensill needed GFG for revenue – the interest and fees on the loans Greensill made to GFG. GFG needed Greensill for cash in the form of the loans Greensill extended. Still, some GFG executives and advisers were concerned. They pushed Gupta to diversify the group’s source of funding beyond Greensill.
That wouldn’t be easy. Gupta had a blemished reputation in the traditional banking sector. Some banks did work with GFG, but their relationships were fleeting and access to bank funding was a constant problem. At least four banks had already stopped working with Gupta since 2016, according to a Bloomberg News story, because of concerns about improprieties in the documentation provided by his company. The banks were SberBank from Russia, Australia’s Macquarie and CWB, and ICBC Standard Bank, an Africa-focused Chinese bank. GFG told Bloomberg that its own internal investigation of the allegations of impropriety found no wrongdoing and none of the banks lost any money. But it was the kind of incident that left a stain that couldn’t easily be washed away.
Other banks worried about GFG’s over-reliance on short-term borrowings to fund his business. Short-term debt could be withdrawn quickly, which would leave GFG in distress and the banks potentially facing a default. Some financiers were concerned as to the viability of many of the group’s assets and the convoluted network of related companies within the overall GFG structure. How could they be sure these businesses would generate enough cash to pay their loans off? What sort of collateral could be recovered in the event Gupta defaulted? Which creditor would be first in line if the business went into an insolvency process? The Gupta business network was just too murky for most bankers trying to answer questions like these.
By 2018, some of Gupta’s top lieutenants persuaded him to try a new strategy. He should consolidate the various Liberty businesses into a single GFG conglomerate. GFG would have one set of financial accounts, which would give a clear picture of the entire business. With more transparency around the overall business, GFG could take out long-term debt with the banks and target an initial public offering of the company’s shares. That would lead to more transparent reporting of GFG’s financial position. And, finally, the company might untie itself from Greensill.
Gupta took some persuading. Listing the company’s shares meant adhering to miles of red tape and costly reporting requirements. And reducing the group’s reliance on short-term financing was all very well as a goal, but it was not going to be possible to reduce reliance on short-term debt until the company had something else to replace it with. Nevertheless, Gupta publicly said that he planned to list all, or part, of the business, in the UK, or Australia or the US – it depended on which day he said it and to whom.
In summer of 2019, he hired from accountants Grant Thornton a partner named Neil Barrell. At that point, GFG reportedly had annual revenue of more than $15 billion and 15,000 staff worldwide. Barrell had extensive experience dishing out strategic and operational advice to the steel, aluminium and automotive industries. He had previously advised GFG on its dealmaking spree. Barrell was hired to bring some order to the disparate businesses in the GFG group. He was also seen as someone who could take difficult decisions, even acknowledging problems with the business – a rare virtue in the GFG empire. Within a few months, he was promoted to chief operating officer, with a short-term focus of consolidating the GFG steel assets. At a conference in Italy, Gupta promised, ‘Our integrated group will stretch around the world with a financial and governance structure suitable for an intercontinental business of our size.’
But in March, the project ground to a halt. Barrell died unexpectedly on a work trip. Gupta called it a ‘devastating blow’. Without Barrell behind the plan, the whole idea of consolidating GFG went on hold. The Covid-19 pandemic had struck in earnest too. The future of the steel industry was unclear, and that suddenly became a much more pressing concern than promises of greater transparency: Gupta was more worried about keeping the business afloat than producing a set of consolidated accounts. The focus shifted. Inside GFG, senior management were only concerned with survival, including trying to get access to government funding for the under-pressure steel mills.
By then, Gupta had also come into the crosshairs of UK financial regulators. Wyelands, the bank Gupta owned, had been under investigation by the Prudential Regulation Authority in 2019. The PRA had become concerned that Wyelands had breached rules that limit the amount a bank can loan to related entities. In particular, the regulator found that Wyelands may have made loans to a series of entities that were apparently independent of Gupta, but which – on closer inspection – were connected to the steel magnate. When reporters at the Financial Times broke news of the PRA investigation, in early 2020, Gupta and Wyelands denied any wrongdoing and pledged their own, independent investigation. But much damage was already done. Heading into the Covid-19 pandemic, Gupta was under significant pressure. For Greensill, whose business leaned on Gupta so heavily, that was a major problem too.