The Scottish Government has been accused of offering £500million to potential buyers of an industrial site in Lochaber, while ignoring a rival deal that would have involved no extra money.
GFG Alliance, run by Liberty Steel owner Sanjeev Gupta, bought the aluminium smelter and hydro plant from Rio-Tinto Alcan in November 2016.
The purchase came after the government offered bidders on the shortlist a guarantee of financial support, worth between £14million and £32million per annum over 25 years.
However, the Scottish Daily Mail reported that an Icelandic company worked to try and buy the smelter – the last remaining one in the UK for aluminium – in 2016, and would have done so without any public support.
‘Unaware of any support’
Bjarni Einarsson, chairman of the Iceland Energy Group, told the paper: “I did offer a few prominent business opportunities.
“Those opportunities would have benefited the economy in the area as there were strong businesses behind the intended job increase to more than offset jobs lost.
“I was unaware of any kind of financial support related to my intended projects, and I was offered none.”
Additionally, Mr Einarsson is quoted as saying he would still be prepared to take control of the site, which is located near Fort William.
Focus on the hydro plant and smelter has increased in recent months, as Mr Gupta’s business empire – including GFG Alliance – has come under investigation for fraud.
Among the subjects of the probe is the company’s financial arrangements with its key lender Greensill Capital UK, which collapsed in March.
Mr Gupta has been attempting to secure funding to ensure his sites, including the one in Lochaber, can continue to run.
Government response
A Scottish Government spokesman said: “In autumn 2016 the Scottish Government intervened to support continuing aluminium production in Lochaber.
“In November that year Scottish Ministers sought parliament’s permission through the Finance and Constitution Committee to provide a guarantee of the smelter’s power purchases. The committee reviewed and approved the contingent liability.
“The sales process and selection of the eventual purchaser was led by the vendor, Rio-Tinto Alcan.
“The Scottish Government’s support was made on an even-handed basis to all short-listed bidders with the company’s full knowledge and backing.
“Our support was offered to any short-listed bidder with plans for long term industrial operations of the Lochaber businesses.
“It prevented the break-up of the assets and closure of the smelter, protecting hundreds of skilled jobs.”