King & King Chartered Accountants, which themselves are under investigation by the Financial Reporting Council, resigned as auditors of Liberty Steel Dalzell on Thursday, Companies House records state.
Liberty Steel Dalzell’s accounts are several years overdue, with the last set of accounts published prior to the pandemic in 2019.
Advertisement
Hide AdAdvertisement
Hide AdThere also remains outstanding issues relating to a £7 million loan from Scottish Enterprise, which remains unpaid.
GFG Alliance said the company had “parted company” with the auditors due to “overall issues resulting from the collapse of Greensill Capital”.
King & King is under investigation for audits relating to the Lochaber smelter and three other Liberty Steel companies.
The smelter’s accounts were published unaudited earlier this year, showing a £4m loss, something GFG Alliance said was an “interim step”.
The Dalzell steelworks were purchased by Sanjeev Gupta’s conglomerate following a back-to-back sale from Tata Steel, during which the Scottish Government purchased the plant for a nominal £1 to facilitate the immediate sale to Liberty Steel.
Scottish Enterprise, a public body that encourages economic development through investment in business, is owed £7m by Liberty Steel Dalzell in relation to a loan issued in 2017.
The loan continues to appear in Scottish Enterprise’s most recent accounts.
Ivan McKee, the business minister, also told MSPs the back-to-back deal to sell Dalzell to Sanjeev Gupta may also have breached state aid rules, potentially leaving the taxpayer on the hook for millions of pounds of environmental clean-up.
Advertisement
Hide AdAdvertisement
Hide AdThe Scottish Government’s deals with GFG Alliance at Dalzell and the separate power purchase guarantee at Lochaber came under scrutiny following the collapse of the company’s main funder, Greensill Capital, last year.
At Lochaber, the Government agreed to guarantee 25-year power purchase agreement worth £586m, which helped Mr Gupta finance the purchase of the smelter and the associated hydroplant.
A GFG Alliance spokesperson said: “We have parted company with King & King due to overall issues resulting from the collapse of Greensill Capital.
"We are in the process of appointing new auditors. There is no impact on the operations of any of our businesses."
A spokesperson for Scottish Enterprise said: “We continue to work with Liberty Steel to explore avenues of support and remain in discussion regarding repayment of the loan funding.
"In the interim, the company is meeting the current interest payments due on the loan.”
A Scottish Government spokesperson said: “The appointment of auditors is a matter for Liberty Steel. Repayment of the £7m loan is a matter for Scottish Enterprise.”
King & King has been contacted for comment.