French police raid Sanjeev Gupta-linked businesses in money laundering probe

French police have raided the Paris offices of Sanjeev Gupta’s GFG Alliance and a metalworks it formerly owned in an escalation of a criminal probe into the metals magnate’s empire.

The Paris Prosecutor’s Office last year launched an investigation into Gupta’s French operations over allegations of “misuse of corporate assets” and “money laundering”, mirroring a separate probe by the UK’s Serious Fraud Office.

Once feted by politicians around the world as the “saviour of steel” for his rescue of unloved factories and foundries, Gupta’s group has faced suspicions of fraudulent trading after his main lender Greensill Capital collapsed a year ago.

Last week’s raids included an aluminium smelter in Dunkirk, which Gupta’s family-owned conglomerate lost control of last year when private equity group American Industrial Partners seized the plant.

People familiar with the raid at Dunkirk said that about 10 armed police arrived early in the morning and stayed all day to question executives and make copies of email servers.

They added that the police officers’ questions focused on several transactions carried out while the plant was under GFG’s control, such as a transaction whereby funds from Dunkirk were allegedly used to pay a $25mn legal settlement with Rio Tinto, due to a long-running dispute over the purchase of the smelter from the mining group in 2018.

A spokesman for Aluminium Dunkerque confirmed that on Wednesday “officers of the Direction régionale de la police judiciaire de la prefecture de police de Paris (the DRPJ), the criminal investigative division of the French National Police, inspected the offices of Aluminium Dunkerque”, adding that the company was “fully co-operating with any investigation by the French authorities”.

GFG said that the $25mn payment to Rio Tinto settled an outstanding claim for the supply of energy at “a discount” along with an agreement to “waive all other pre-existing claims between the two groups”.

“The transaction was managed by former executives of GFG that have since left the business and was funded by AIP to clear the way for its disputed acquisition of Aluminium Dunkirk,” GFG added.

“GFG has investigated the query from the French authorities and determined that there was no wrongdoing in its French businesses relating to this or any other transaction, and it is co-operating fully with the French authorities.”

The Paris Prosecutor’s Office did not respond to requests for comment.

Greensill Capital, a once high-flying lending start-up that counted David Cameron as an adviser, collapsed in March 2021 after GFG defaulted on $5bn of debt. Greensill’s unravelling drew scrutiny of the validity of invoices related to GFG that backed the loans.

Germany’s financial watchdog last year filed a criminal complaint against the management of Greensill Bank, which made billions of euros in loans to Gupta’s companies. Regulator BaFin said the Bremen-based lender “was unable to provide evidence of the existence of receivables in its balance sheet that it had purchased from the GFG Alliance Group”.

British financial regulators are also investigating Wyelands Bank, a British lender owned by Gupta, which has now all but collapsed after making a series of bad loans to companies linked to the metals magnate’s business. Andrew Bailey, governor of the Bank of England, revealed last year that regulators had also referred the bank to the National Crime Agency and SFO.

Gupta shifted his top management team to Dubai in the wake of the collapse of Greensill, where the Indian-born businessman has long had a home. He has visited Romania and Australia in the past year, however, countries where GFG owns large steelworks.

Additional reporting by Michael Pooler and Sylvia Pfeifer