The business empire of Liberty Steel owner Sanjeev Gupta is under investigation by the Serious Fraud Office (SFO).
The probe is over suspected fraudulent trading and money laundering, including its financing arrangements with failed company Greensill Capital UK.
Greensill, a major lender to Mr Gupta’s business, collapsed last month.
GFG Alliance, Mr Gupta’s family conglomerate, said it would co-operate fully with the investigation.
“As these matters are the subject of an SFO investigation we cannot make any further comment,” a GFG spokesperson added.
GFG Alliance employs 35,000 people at companies stretching from Wales to Australia.
The company’s reliance on Greensill caused many to worry that it might itself be at risk following the finance firm’s demise.
On Thursday, former prime minister David Cameron, who worked for Greensill and lobbied the government on its behalf, appeared before MPs to answer questions about his role.
The announcement of a Serious Fraud Office investigation into the workings of Sanjeev Gupta’s metals-based empire has serious consequences, before any evidence is even heard.
First, the BBC understands that the Department for Business feels vindicated that it did not agree to give the so-called “saviour of steel” a requested government bailout of £170m.
Second, and perhaps more importantly, it sets back Mr Gupta’s attempts to raise new finance to replace the money it once received from the now defunct Greensill.
The government has promised to save the steel plants – owned by Gupta’s GFG alliance that are now in dire financial straits – but this investigation makes the chance of it surviving in its current form an increasingly remote possibility. The news comes a day after former prime minister and former Greensill employee, David Cameron, defended his role in lobbying the government to grant Greensill access to a government-backed Covid loan programme.
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