FRC launches inquiry into audits of four Liberty Steel companies

theguardian.com:

Britain’s accounting watchdog has opened four investigations into the audits of four companies owned by the metals tycoon Sanjeev Gupta under the Liberty Steel banner.

The Financial Reporting Council said it had started investigating the statutory audits of the businesses by the firm King & King. The move follows a call from MPs for the FRC to refer the auditors for investigation.

Liberty Steel has been facing growing troubles since its key financial backer, Greensill Capital, collapsed in March 2021, sparking an ongoing attempt for it to find new lenders.

Gupta controls Liberty Steel through GFG Alliance, an informal group of metals and energy companies that employs as many as 35,000 people worldwide, including about 3,000 in UK steel.

His main British assets are a series of steel plants under the Liberty Steel name, including large operations at Rotherham and Stocksbridge in South Yorkshire and smaller facilities in Wales and the Midlands, as well as an aluminium smelter in Scotland.

A scathing report by a group of MPs into Gupta and his metals empire released last November last year flagged several areas of concern, including Liberty Steel’s audits. They also called on Gupta to be investigated for potential breaches of his duties as a company director.

The MPs on the business select committee said they had found “weaknesses in audit”, adding that frequent changes of auditors and accounting deadlines represented “red flags”.

The committee’s report found that the small audit firm King & King had “a lack of capacity to complete audits effectively”.

Milan Patel, a partner at King & King, previously told the committee his organisation was capable of auditing an organisation of GFG’s size and said the firm had “many clients who