First Minister was warned about “very significant” risks before Gupta steel deal 

First Minister Nicola Sturgeon (top of page) her deputy, John Swinney, Fergus Ewing and Dorothy Bain, the Lord Advocate.

By Islay McColl

Scottish Liberal Democrat economy spokesperson Willie Rennie MSP ​has spoken in parliament,  labelling the SNP Government as “reckless” after a freedom of information (FOI) request showed ministers were warned by a top official that their 2016 steel deal with businessman Sanjeev Gupta risked “very significant political, financial, state aid and legal issues”.

Mr Rennie. right, raised the issues in the chamber of the Scottish Parliament in a debate on inward investment and trade.

The Gupta Family Group Alliance (GFG) is currently under investigation by the UK’s Serious Fraud Office, with its auditors quitting last week claiming they were unable to complete long overdue accounts.

The new documents, published on the Scottish Government website, show the advice given by Director of Economic Development to ministers including Nicola Sturgeon and John Swinney before the back-to-back deal.

They reveal:

  • The official told the First Minister that the specific deal carried “very significant political, financial, state aid and legal issues.”
  • SNP ministers were warned about due diligence amid “less and poorer quality information than would have wished to see” about Liberty, that their state aid position was “untested” and that they did not have a business case “that sets out a rationale for our intervention”.
  • The First Minister was told before signing in 2016 that the terms of the “untested”, “novel” deal “carries significant state aid and financial risk”, yet Ivan McKee told Parliament in 2021 that “it was not our intention to sign up to a contract clause which may not comply with state aid requirements”.
  • Ministers were warned that the government could become liable for the environmental clean-up costs at the steelworks in the “small theoretical risk” of Liberty ever being liquidated, but the First Minister was told it could just “sit there unrestored for years” if necessary.
  • TATA were reticent to sell the steelworks to Liberty directly because they did not know enough about Liberty or its business plan, and were already in discussions with another potential buyer.
  • The price of TATA changing its mind about doing that deal with Greybull, who were said to be “now more positive” about reopening the sites, was for the Scottish Government to agree to the indemnity that meant taking on TATA’s “past and future” liabilities.
  • The First Minister, John Swinney, Fergus Ewing and the Lord Advocate were all personally asked to make a decision on the deal.   

Mr Rennie said:  “The Scottish Government have been reckless, leaving the taxpayer on the hook for millions and throwing the interests of workers to the wind.

“When I raised this with Ivan McKee today, he laughed and tried to silence my concerns. He dismissed those workers, he ignored those taxpayers and ran with an SNP spin machine that refuses to take responsibility for its carelessness.

“We now know that the government was warned about the major ramifications of the deal, from environmental clean-up costs to the uncertainty around state aid compliance. We now know that the government was warned that they did not have a clear rationale for intervening. Despite all of this the First Minister decided to go ahead.

“It smacks of a government which is willing to throw taxpayers and workers under the bus in negotiations with big business.

“Between the resignations, the Serious Fraud Office investigation and the unaudited accounts, you would expect the Scottish Government to be taking a close interest in what is going on.

“That is why I am calling for an urgent parliamentary statement ​on this specific issue so that the SNP Government can give clear answers about what they signed up to and the consequences. Millions of pounds, skilled jobs and the credibility of the Scottish Government’s industrial strategy are at stake.”

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