The steel magnate Sanjeev Gupta could be summoned in front of MPs after the parliamentary business committee launched a formal inquiry into Liberty Steel following the collapse of its largest lender, Greensill Capital.

The collapse of Lex Greensill’s business empire has left a messy international trail across several countries, including the UK, Germany, Switzerland and Australia. Former UK prime minister David Cameron, the German federal government and Mr Gupta are just a few of the stakeholders who have found themselves embroiled in the international finance collapse prompting several government level enquiries.

Some of the biggest stakeholders include Credit Suisse, Japanese investment group SoftBank, the German government and Liberty Steel.

Credit Suisse is one of the most heavily affected stakeholders due to the large exposure it had to four of Greensill’s supply-chain funds, worth $10bn before the bank chose to freeze them on 1 March. The bank had also given an additional $140m loan to Greensill in 2020.

Credit Suisse has so far recovered $5.4bn but stressed that three borrowers are “driving valuation uncertainty” in investments made across four funds. These are Sanjeev Gupta’s GFG Alliance which owns Liberty Steel, Bluestone Resources and Katerra, a construction start-up backed by Softbank. Gupta’s GFG Alliance owes Credit Suisse $1.2bn, Katerra owes it $440m, meanwhile $690m is due from Bluestone Resources.

The business, energy and industrial strategy (BEIS) committee will be the fourth parliamentary committee to launch an inquiry linked to Greensill’s failure. It will consider the impact of the lender’s collapse on Liberty Steel, its customers, and its UK workforce, who could be under threat if the company fails to find alternative financing.

Liberty Steel is at the heart of the scandal and faces the spectre of thousands of job cuts. UK business secretary, Kwasi Kwarteng has urged Mr Gupta – who was once touted as the saviour of British steel firms – to find new funds to support its 5,000 workers, spread across 12 British plants.

The BBC reported in March, that Mr Gupta had written to the Department of Business asking the government for a £170m that he said was required to “pay day-to-day operating expenses and absorb recent losses”.

Mr Gupta said he envisaged the support “could be structured in a way that works to ensure value for money and appropriate protections for the taxpayer”. The government rejected the request.

A GFG Alliance spokesperson told Asian Standard: “While most of our major businesses are performing well, some of our businesses in the UK have suffered as a result of Covid-19 and the collapse of Greensill Capital has meant there is less working capital support for our UK businesses while we seek new financing to replace Greensill”. He added: “.  While that takes place, we are undertaking significant self-help measures with the support of our customers and suppliers to ensure we manage cash carefully and continue to operate”.

While MPs on the BEIS committee are still constructing the witness list, it is understood that the group could compel the billionaire GFG Alliance owner – who is currently in Dubai – as well as the Greensill Capital founder, Lex Greensill, to give evidence.

Committee chairman, Darren Jones said: “The collapse of Greensill Capital and subsequent financing issues affecting the GFG Alliance has put thousands of jobs at Liberty Steel in jeopardy.” In explaining the remit of the committee Mr Jones said: “As a committee, we will want to examine whether reform is needed in these areas and, additionally, access to and use of taxpayers’ money, including Covid-related support, and whether adequate checks and balances were put in place in return for support from government”.

Since the collapse of Greensill ministers have been urged to step in to save jobs at Liberty’s steelworks, which employ about 5,000 people around the country.

However, Mr Kwarteng has said the government will not act until tycoon Sanjeev Gupta, who owns the plants through his family business GFG Alliance, has exhausted his own efforts to refinance them.

GFG’s work practices have come under question in recent weeks, with Mr Kwarteng himself describing the organisation as “opaque”.

In response to Asian Standard’s questions the GFG spokesperson said: “We continue constructive discussions with a range of stakeholders on mechanisms that would provide the short-term working capital support our UK businesses need in order to protect jobs and the supply chain while refinancing takes place”.

Tata Steel allege Liberty have missed repayments

In a further twist, Tata Steel is suing Liberty Steel over alleged missed payments in a 2017 deal involving its Rotherham speciality steel plants which it sold to GFG Alliance for £100m in 20017.

Mr Gupta said he was working on securing working capital facilities to support Liberty and “bridge the funding gap” while refinancing took place. He also outlined longer-term measures to address the loss-making parts of the business, including possible partnership opportunities.

The Community union has said the future of Liberty’s strategic steel assets “must be secured” and that it is ready to work with “all stakeholders to find a solution”.

Sites that are facing an uncertain future include plants in Rotherham, Motherwell, Stocksbridge, Newport and Hartlepool.