Sanjeev Gupta has saved thousands of manufacturing jobs in the UK. His company, Liberty, has kept steel and other metal working factories open across the North of England, in South Wales and in Scotland. He has brought hope to families and kept communities alive. The Liberty Group has invested heavily in steel plants across Europe and in Australia. The expansion has been rapid and successful in a way that unsettles some people from the home counties stockbroker belt. What would have made Mr Gupta superstar in the US and across much of Asia, makes him suspect to some in the establishment here in the UK. Is it the success or is it his ethnicity or his power to disrupt that upsets people most? Is it that this is all about manufacturing, steel, car parts, it is neither services nor high tech?

The financial establishment in the city of London has been particularly unsettled by Gupta’s personal journey. It combines so many things they find unnerving. Gupta began his trading company from his halls at Cambridge University. He was asked to move out to other digs. The ivory tower could not be mixed with something so unsavory as trade. He learned business selling bikes for his Dad in Turkey rather than from an MBA from the London Business School. He then set about trying to save the British Steel industry. The more success he had the more eyebrows were raised. The city’s in-house newspaper, the Financial Times, turned its attention to him and there followed a series of blistering attacks from the pink thunderer, that taken together amount to a witchhunt.

The relationship between Gupta and the FT had started normally enough. When he reopened the Newport Steel works in 2015, the FT ran a conventionally balanced piece. The paper dutifully reported his repeated purchases of the heartland of UK manufacturing. Saving the last alumni works in Scotland from closure. (400 jobs at the plant and in the supply chain). Buying a steel works in Kent. (100 jobs at the mill) Buying and investing in specialty steel. (1700 jobs across north of England). West Midlands car parts manufacturer saved from closure (700 jobs). But by the following year the FT was reporting Liberty Steel’s plan to save the Port Talbot steel works as: “The buccaneering commodities entrepreneur Sanjeev Gupta is not the most obvious white knight for Tata’s unwanted UK steel operations” and “The worst outcome would be for the state not to rescue Port Talbot, but simply to allow Mr Gupta to gobble up the juicier parts of Tata’s UK operations without competition.” At some point over that year Mr Gupta became a buccaneer in the eyes of the FT. He is also always the “Indian-Born” and usually “Indian-born former commodities trader turned Steel tycoon”. Or some variation of that theme. The earlier, generally, fair pieces were usually written by or with Michael Pooler a genuine steel industry enthusiast and industrial/manufacturing correspondent.

The change in attitude at the FT seemed to come when the story passed from the manufacturing desk to the city desk. Liberty had acquired a bank which specialized in business investment and there was a note of caution in the coverage of that from the beginning. Steel mills are one thing, but owning a bank?

Michael Pooler was joined by Anthony Smith from the city desk and the attacks really got going. In September the pair did a stunning ill-informed deep dive into the financial instruments being used to fund Liberty’s rapid expansion. The article uses a number of

familiar tropes. For example, Gupta has apparently “long faced questions” about how he finances deals. But the citation for these “questions” is to an another article by Michael Pooler from November 2018. In other words, the same journalist has been asking the same questions. At the heart of this is the use of supply chain financing as one of a number of devices that create capital for investment. Anthony Smith and Michael Pooler characterize the form of funding being used as “opaque and unconventional financing linked to working capital and supply chains that can be expensive.” The article contributed to problems with a bond issue and Gupta had to put in his own money to complete the bond issue process. The timing of the article and the investigation on which it was based and the recurrent focus on Liberty should raise questions for the editors of the FT. GFG’s bank, Wyelands, was also the subject of an intensive investigation by the FT. And again the journalists used the same trick: saying that questions had been raised about the bank but only citing an article co-written by Anthony Smith on the relationship between Gupta’s wider GFG and Wyelands Bank . The bank plays a role in the supply chain financing that is questioned in the other attack pieces. As reported in the FT, it is currently reviewing its lending practices after a report from a banking watchdog.

If Smith and Pooler are to be believed there is something wrong with the supply chain financing processes and the relationship between GFG and the Wyelands bank. There are three responses that can be made to this witchhunt: technical, political and ethical.

The technical response is that supple chain financing is not a fringe or opaque activity at all and it is disingenuous or profoundly ignorant to describe it as such. SCF has been around since the early 1970s but really took off in western economics after the financial crash of 2008. It is widely used in China and increasing used across the world. There is a helpful annual review of SCF published by BCR. The global value of SCF is probably around $2 trillion and growing very rapidly, see the detailed review by PWC here. In an academic review of the extensive literature on SCF, Marak and Pillai, found that trust, collaboration, reputation and communication were key elements that underpin the use of SCF. They describe it as a win -win form of financing. The balance of the entire body of academic literature on the subject in this review was positive about its operation, impact and viability to encourage investment and ensure liquidity in a difficult economic environment. In other words, the industry body, the BRC, the independent auditors PWC and the entire academic community who study the subject take exactly the opposite view of the techniques used by Sanjeev Gupta to raise funds to save jobs, businesses and communities to the view taken by Pooler and Smith.

In the second main torch carried in the FT witch hunt, there is the accusation that Wyelands bank has not been independent and has been investigated by the regulator. This is a highly technical area and we may have to wait for the report by the independent forensic accountants to see what has happened here. In the year ending April 2019 Wyelands had £726m in customer deposits with new business reaching £1b for the first time with 44% growth. In the original business plan Gupta was open about the way in which he would be introducing business to the bank. Under UK regulations 25% of the banks lending can be to “connected entities”. There is a possibility that the bank went over this percentage in lending to help purchase factories and save jobs and communities. If it did, it will need to review its processes and ensure that this percentage is not exceeded again. And that is it.

The extent of this great scandal the FT is flogging will come down to a per centage point or two in an overall set of transactions of a £1b.

As there is little or no fire amid all the smoke, what has motivated the attack after attack on Sanjeev Gupta. It could be political. Gupta is a non-campaigning support of Brexit, the FT is a Labour supporting remain paper. But there is very little politics in these pieces. It is rather very personal, very directed and very carefully timed. That leaves the ethical question. Is someone feeding the city desk at the FT these stories for a purpose? Are business rivals plotting against Liberty Group because of its rapid growth and success. These articles are spun very specifically to inflict the most short-term damage possible. Which in the cut and thrust of M and A, is normal. But these journalists, and these editors, need to remember that Liberty Steel is not a business that just moves money around or simply makes money out of money. It is a business that makes things, something that used to happen a great deal in the UK. It is a business that employs people in communities that have been in long term decline. It is a business that is connected to industrial heritage of the UK but more importantly to the future prosperity of communities across the country. So, the question is: is it in the public interest to spread disinformation and sustain a witch hunt against a company that is rebuilding the industrial heartland of the United Kingdom because of prejudice against the man who runs that company? Because the other way of reading all of this is that if Sanjeev Gupta has been white, posh and one of the city establishment he would have been supported as a national hero rather than potentially hounded out of the UK by campaign of smears and innuendo.

Tony Alyson