Hungary Accused of Cut-Price Steel Plant Sale to Sanjeev Gupta

Ukraine’s Metinvest BV has accused the Hungarian government of selling a steel plant to Sanjeev Gupta for less than a third of its true value.

(Bloomberg) — Ukraine’s Metinvest BV has accused the Hungarian government of selling a steel plant to Sanjeev Gupta for less than a third of its true value.

Metinvest, which was excluded from the bidding process for the bankrupt firm ISD Dunaferr Zrt., alleged in a statement on Thursday that the auction had not been transparent, and called on the European Union to investigate it.

“It looks like the Hungarian government originally designed the tender as a mechanism to legitimise the transfer of the plant at a non-market value to a specific buyer, Liberty Steel,” Metinvest said.

Hungary announced last week that Liberty Steel had won the auction for Dunaferr, where the government has been covering wages for the past six months after a court ordered its liquidation late last year. Liberty Steel is part of Gupta’s GFG Alliance, which is under investigation for suspected fraud and money laundering in the UK and France.

Hungary’s economic development ministry didn’t immediately respond to an e-mailed request for comment on Metinvest’s accusations.

When it announced the sale to Liberty Steel, the ministry portrayed both the government and the selected buyer as saviors for Dunaferr, which it said would otherwise have remained mired in insolvency.

“The government has saved Dunaferr,” it said in a statement on July 11. “Liberty Steel’s winning bid is a key milestone but the bulk of the work is still ahead,” it said, citing the further reorganization and investment needed.

Liberty Bid

Liberty Steel was the bidder that submitted a valid and successful offer and it had already “rushed to help” the factory in December when the steel industry was going through a rough period, the ministry said.

Metinvest said that the price for Dunaferr could have been 200 million euros ($224 million) in “a transparent auction,” but that instead Liberty was one of only two investors allowed to compete and won the bidding by offering just 55 million euros. That was just above the minimum price set by the liquidator. 

The Ukrainian company said it had been excluded from the tender process because of a delay in national security vetting, but hadn’t been told whether it had failed to pass the vetting or why. 

Metinvest, which is controlled by billionaire Rinat Akhmetov, is seeking new outlets for its Ukrainian iron ore mines after losing control of its Azovstal steel mill in Mariupol as a result of the Russian invasion. 

“We were particularly interested in Dunaferr because it would have meant jobs for thousands of Ukrainians, taxes for the budget and foreign-exchange earnings for Ukraine,” Metinvest said.

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