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Legislative Council - Fifty-Fourth Parliament, Second Session (54-2)
2021-03-02 Daily Xml
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GFG Alliance

The Hon. F. PANGALLO (15:19): I seek leave to make a brief explanation before asking a question of the Treasurer about GFG Alliance and its billionaire boss, Mr Sanjeev Gupta.

Leave granted.

The Hon. F. PANGALLO: Last night in the UK, it was reported that Britain's state-owned Business Bank has stripped Greensill Capital of a government guarantee on huge loans it has made to the metals tycoon, whose company operates the Whyalla Steelworks. According to media reports, following an investigation by independent auditors brought in by BBB, Greensill may have breached terms relating to the adequacy of the security taken over GFG Alliance's assets under rules of the Coronavirus Large Business Interruption Loan Scheme. If the removal of the guarantee is enforced, Greensill, which is run by Australian billionaire Lex Greensill, could be on the hook for hundreds of millions of pounds if GFG defaults on its loans.

We trust it won't. However, the latest development follows a recommendation by BaFin, Germany's financial regulator, to Greensill to reduce its exposure to Mr Gupta's companies and Credit Suisse Group AG announcing it was suspending $10 billion of investment funds to the financier. Media is now reporting that Greensill is restructuring its business and may file for insolvency—bankruptcy—in days. As you can imagine, Mr President, this news has many businesses in Whyalla feeling uneasy today. My question to the Treasurer is:

1. Is he aware of the concerns being shown in international financial circles of the level of financial risks posed by exposure to Mr Gupta's extensive borrowings?

2. Is he alarmed by them such that he will immediately contact GFG and Mr Gupta to get assurances about the viability of the steelworks and its commitments to the many businesses in Whyalla that depend on it?

3. Has the South Australian government provided any financial guarantees to GFG and Mr Gupta?

4. In light of today's developments, will the government also freeze access to a $50 million loan that is available to GFG?

The Hon. R.I. LUCAS (Treasurer) (15:22): I always follow with interest informed and sometimes uninformed commentary in the financial pages. It is sometimes hard to tell the difference, but that is the challenge of financial commentary.

In relation to the specific nature of the recent article the Hon. Mr Pangallo refers to, I have been following for many months in international financial circles stories of a similar nature, not quite as trenchant as the particular article that has been referred to by the honourable member, but certainly the international press, in particular the Financial Times, the Sunday Times in the United Kingdom. Various industry journals and others have been following the connections between Greensill and GFG and related financing companies with interest for many, many months.

So the honourable member's article, to which he refers, is only one after a long series of articles over a long period of time canvassing broadly the similar issues. So, yes, I do follow these particular issues, but more importantly, Treasury officers and the like follow the particular stories with interest as well. Can I say, as a result of that I form no judgement about the accuracy or otherwise of claims that are made in various journals. The Wall Street Journal, for example, has written in recent days, as have a number of industry insider journals also made commentary, about the recent challenges of Greensill Capital.

In relation to the government's position on behalf of taxpayers, the former Labor government made an offer, a $50 million support package to Mr Gupta and GFG prior to the election. The incoming government indicated that it was prepared to honour the commitments made by the former Labor government in relation to this. Three years down the track I, as Treasurer, and on behalf of the government have not signed off on an agreement in relation to that $50 million support package.

It is fair to say that late last year and early this year there have been continued discussions about the nature of the support package previously offered by the Labor government in relation to GFG, and what it might entail. Broadly, the government has said, 'We're not interested in providing up to $50 million of taxpayers' money to fund the repayment of any debts or bills that the company might have.' If the government was going to follow it through, there needed to be tangible investments in the future of the steelworks in Whyalla that we could see, and it was quite clear that that is what the taxpayers of South Australia were investing in.

There have been ongoing discussions, but I can assure the honourable member that there has been no signing off by me as Treasurer on behalf of the government of that $50 million support package at this particular stage. It is also fair to say that during stages there have been discussions from the company's interests about whether or not there was interest from the government in relation to a more significant support package and I and others, on behalf of the government, made it quite clear that the former Labor government made a commitment to a $50 million support package and that was the extent of the state government's potential involvement or investment in the future of the steelworks, and that the company, if it was looking for further taxpayer support, should look to either the federal government or alternative sources of funding.

I don't propose to place any greater detail on the public record at this particular stage. I can only assure the Hon. Mr Pangallo. He has had dealings, as his colleague has had with me, in relation to taxpayer-funded support for business interests in the state. I take seriously that taxpayers' interests should be protected to the greatest extent that is possible. I can only give him that simple assurance on behalf of not only myself but also the Premier and the government.

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