Liberty Steel being investigated in Romania for embezzlement | Sanjeev Gupta

Sanjeev Gupta’s Liberty Steel is under investigation in Romania for embezzlement and tax evasion, further compounding the metals tycoon’s difficulties following the loss of its key operation in the UK.

The Romanian prosecutor’s office said in a statement last week that they raided seven houses and the registered office of an unnamed company. The office released video, blurred to make identification more difficult, showing officers wearing helmets and body armor entering a property at night.

Liberty Steel and its parent company, the Gupta Family Group (GFG) Alliance, said the company “will vigorously defend itself against false allegations made against the company.”

India-born and British-educated Gupta was once known as the “savior of steel” with his plans to turn around the struggling metals business. But his empire, which previously spanned the UK, Eastern Europe and Australia, has unraveled in the years since the collapse of lender Greensill Capital in 2021.

The UK’s Serious Fraud Office has been investigating GFG and Greensill since 2021. GFG and Gupta have strongly denied any wrongdoing, while Greensill Capital’s executives had previously refused to comment.

Gupta lost control of key assets in August, including steel mills in Whyalla, Australia, as well as Liberty Steel UK’s South Yorkshire operations.

Liberty Steel’s Romanian operation is located in Galaţi, close to the Ukrainian border. The prosecutor’s office said that the searches were carried out in and around Romania’s capital Bucharest, as well as in Galaţi.

Regarding an unnamed company, Romanian prosecutors said that “individuals holding management positions in the company acted to embezzle the company through subsidiaries registered in other jurisdictions” and also entered into “a series of contracts for the purchase of goods or the provision of services that are not based on real operations, as well as fictitious loan agreements.”

Transactions under investigation include the sale of CO worth 137 million Euros₂ Certifications for Russian state-owned gas company Gazprom required by EU regulations for heavy pollutants such as steel mills. Money from those sales was transferred to “parent company accounts” through a company in Singapore, prosecutors said. Gazprom was subject to sanctions this year over Russia’s invasion of Ukraine by Britain and the United States, long after the alleged transactions.

Prosecutors said the company was later forced to exchange the certificates for 154 million euros, leaving the company facing a heavy loss. Officials added that funds intended for industrial investments were diverted to cover payments to affiliated entities “without operational justification.”

A GFG spokesman said: “Liberty Steel and its management will defend itself vigorously against false allegations made against the company.

“Galati has received significant financial support from GFG Alliance and is therefore the net beneficiary within the group. All transactions under review have been undertaken for the benefit of Galati and have been reviewed and approved by independent external lawyers to ensure full compliance with applicable law.”

GFG also said Galati’s external auditors checked the transactions and issued clean audit reports for the periods involving the transactions.

The investigation was part of a series of raids by Romanian authorities targeting businesses.