The U.K. Serious Fraud Office opened a criminal
investigation after Tata Steel Ltd. identified a lapse in procedures at
its Speciality Steels business through an internal audit in 2015, the
company said in an exchange filing Saturday.
“Certain inappropriate testing and certification procedures
at the South Yorkshire-based Speciality Steels business were identified”
in the audit, the company said. “Amongst other bodies proactively
notified by Tata Steel UK was the Serious Fraud Office, which has opened
a criminal investigation.”
The company immediately stopped the practices after an
internal investigation, and suspended a number of Speciality Steels
personnel, according to the statement. The investigation found that the
“steel affected and supplied was always well within safety margins,”
Tata Steel said.
The Serious Fraud Office
said on Friday it had started the probe into activity at the company’s Speciality Steels unit in December.
The Mumbai-based steel manufacturer is scheduled to begin talks next
week with Liberty House Group about selling its Port Talbot plant and
its British processing operations, as it seeks to exit its U.K.
businesses.
Prospective buyers for the U.K. division “can raise some
concerns because of the liabilities” arising from the
investigations, Goutam Chakraborty, an analyst at Emkay Global Financial
Services, said by phone from Mumbai. “If it is a serious thing then it
will give the buyers more bargaining power and make things a little more
complicated."
The Indian producer said last week it’s considering selling
its unprofitable U.K. division, citing global oversupply, high costs and
rising steel exports that mean trading conditions in the U.K. and
Europe have deteriorated. The move may jeopardize about 40,000 jobs.
British Foreign Secretary Philip Hammond said Saturday he
had raised the issue of steel production over-capacity during talks with
Chinese Foreign Minister Wang Yi in Beijing.
"I urged China to accelerate its efforts to reduce levels of
steel production," Hammond said. "The U.K.’s focus is on finding a
long-term sustainable future for steel-making at Port Talbot and across
the U.K., and I welcomed the potential interest of Chinese companies in
investment in U.K. steel-making."
Steel companies across the globe are having to find ways to
deal with the impact of a heavily oversupplied market on their balance
sheets. Tata Steel is said to be in advanced talks with ThyssenKrupp
about starting a join venture between some European businesses.
ArcelorMittal successfully completed a $3 billion rights issue on
Monday, while Vallourec started a 1 billion euro capital raise Friday.
Post a Comment