Sanjeev Gupta, the industrialist battling to save his metals empire, held talks with offshore law firm Mossack Fonseca about setting up a bank in Panama two years before regulators allowed him to buy one in the UK.
The metals magnate approached Eduardo Fonseca, the son of one of the co-founders of the now-defunct law firm at the centre of the Panama Papers scandal, in September 2014 for assistance in establishing a bank in the central American country.
“I would very much like to make some headway on the discussions we have had about opening a bank in Panama prior to your move to Dubai,” Gupta wrote in an email to Fonseca, who had just been appointed Panamanian general consul in Dubai, where the UK industrialist has a home.
The efforts by Gupta, dubbed the “saviour of steel” for stitching together a business empire from struggling metals mills and smelters, are outlined in documents obtained by Süddeutsche Zeitung and provided by the International Consortium of Investigative Journalists — commonly referred to as the Panama Papers.
Though the existence of Panamanian companies established by Gupta was revealed as part of the leak of 11.5m files from Mossack Fonseca in April 2016, his attempt to set up a bank has not previously been reported.
In an unprecedented move following Greensill’s implosion, the Bank of England forced Gupta’s main UK lender, Wyelands Bank, to return millions of pounds in retail deposits.
The Panama Papers leak occurred while the Prudential Regulation Authority (PRA), part of the BoE, was in the middle of assessing whether Gupta was a fit and proper person to own a UK bank.
The PRA granted this approval in November 2016 and later allowed Gupta to buy a second bank. A Financial Times investigation last year revealed that Wyelands had helped fund Gupta’s wider business empire through a network of shell companies. UK authorities have not publicly confirmed why they stepped in this month to protect depositors.
The Bank of England declined to comment. It has also invoked government secrecy laws to block two freedom of information requests from the FT on the matter.
The email trail disclosed in the Panama Papers leak also offers a rare glimpse into the close-knit business relationship between Gupta’s GFG Alliance and a group of associates, which the FT has previously reported were referred to as the “Friends of Sanjeev”.
In the email in September 2014, Gupta wrote that he would send two colleagues on a “fact-finding mission” to Panama.
“We discussed on the phone that you would send us some advance information about the procedures and regulations surrounding the formation of a new bank in Panama so that we . . . can extract full value from the visit,” the businessman wrote.
Alongside his ambition to set up a bank, Gupta sought to ensure that a series of commodities trading entities and a cargo shipping company would be rapidly established in Panama.
“Select one of the cos and form a shipping co immediately with nominee director & shareholders & BO [beneficial owner] as Delic,” Gupta wrote to a colleague at Liberty House, his commodities trading and industrial group. “Also get a couple of filter trading cos and bank accounts opened in Panama, one in RT group and one in Delic group plus Liberty Commodities Panama Ltd.”
“Urgent please esp the shipping co,” he added.
Delic refers to Vladimir Delic, the Cyprus-based founder of steel trading business Unibros. Contacted by the FT on Thursday, the 74-year-old businessman said he had done business with Gupta for several decades.
RT, meanwhile, refers to Gupta’s associate Ravi Trehan. The FT reported last year that Trehan’s company Aar Tee Commodities was one of several Gupta-linked entities that borrowed from now-collapsed lender Greensill through a government-backed Covid loans scheme.
“We have a business relationship with companies within the GFG Alliance, both as suppliers and customers of goods and services,” the AARTEE Group told the FT. “However, AARTEE is a separate independent business guided by its own strategy and pursuing its own success.”
Liberty employees remained involved in the administration of the Panamanian companies. In an email in March 2016, one requested “any other auditor who is more flexible in audit” for one of the companies whose beneficial owner was one of the so-called “Friends of Sanjeev”.
According to the emails, Liberty employees pushed Mossack Fonseca to hastily dissolve the companies following the publication of the Panama Papers.
The government loans to the Gupta-backed companies, some with only a handful of employees, are now subject to growing scrutiny. The UK’s opposition Labour party this week called on the government to publish details of the loans.
GFG Alliance has always asserted that businesses with ties to Gupta’s associates operate independently.
“We have always been clear that different parts of the GFG Alliance trade with each other on commercial terms,” GFG Alliance told the FT.
“While GFG companies have done business with people known to the founder, the company has long-term customer relationships with major infrastructure, industrial, aerospace and automotive customers — as you would expect from one of the world’s largest steel producers and the operator of Europe’s largest aluminium smelter.”
Eduardo Fonseca could not be reached for comment.
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