Willie Rennie: Scottish Government was ‘reckless’ over smelting plant deal

The Scottish Liberal Democrats have accused the Scottish Government of being “reckless” after it emerged ministers received warnings from a senior official over the 2016 acquisition of a Highlands smelting plant by a metal tycoon.

Businessman Sanjeev Gupta, chief executive of Liberty Steel, acquired the Lochaber aluminium smelter and two adjacent hydro power plants in 2016.

Mr Gupta is currently under investigation for fraud after documents filed at Companies House revealed he paid just £5 towards the £330 million deal, leaving taxpayers to finance the rest.

The Gupta Family Group (GFG) Alliance is also under investigation by the UK’s Serious Fraud Office.

The group’s auditors quit last week, claiming they were unable to complete long-overdue accounts.

A Freedom of Information (FOI) request has revealed the Scottish Government was warned its deal with Mr Gupta risked “very significant political, financial, state aid and legal issues”.

Scottish Lib Dem MSP Willie Rennie raised the issue in a debate on inward investment and trade on Wednesday afternoon.

Documents published on the Scottish Government website show advice had been issued to ministers, including Nicola Sturgeon and John Swinney, by the director of economic development ahead of the deal taking place.

Ministers were told there was “less and poorer quality information than they would have wished to see” about Liberty, and that there was not a business case “that sets out a rationale for our intervention”.

It also showed the First Minister was warned the terms of the deal “carries significant state aid and financial risk”.

Last year, however, business minister Ivan McKee told the Scottish Parliament that “it was not our intention to sign up to a contract clause which may not comply with state aid requirements”.

Mr Rennie said: “The Scottish Government have been reckless, leaving the taxpayer on the hook for millions and throwing the interests of workers to the wind.

“When I raised this with Ivan McKee today, he laughed and tried to silence my concerns. He dismissed those workers, he ignored those taxpayers and ran with an SNP spin machine that refuses to take responsibility for its carelessness.

“We now know that the Government was warned about the major ramifications of the deal, from environmental clean-up costs to the uncertainty around state aid compliance.

“We now know that the Government was warned that they did not have a clear rationale for intervening. Despite all of this, the First Minister decided to go ahead.

“It smacks of a Government which is willing to throw taxpayers and workers under the bus in negotiations with big business.”

A Scottish Government spokesperson said: “The Scottish Government acted at pace in 2016 to support a transaction involving Tata Steel and Liberty House to ensure steel communities in Scotland had a future.

“This saved the Dalzell and Clydebridge steel works, rescued more than 100 jobs and retained steel plate production in Scotland.

“The Scottish Government’s indemnity to Tata Steel, arising from its ownership of Longs Steel UK, covered certain future liabilities arising from the sites that might pass to the company.

“These included any share of environmental remediation costs, although many factors would need to happen before such a scenario came to fruition.

“If the wider group fails to exist and the site is going to be repurposed to a different use then some of those liabilities, for environmental remediation, may then crystallise to the operators of the site currently and to any previous operator of the site.”