With ‘saviours’ like Gupta, who needs enemies?

If you are rich enough, you can get richer still without spending a penny; it is the workers who pay when the vultures’ schemes collapse.

Proletarian writers

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Monopoly capitalists like Sanjeev Gupta are playing roulette with the lives of the working class.

Proletarian writers

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When the Indian multimillionaire Sanjeev Gupta was busy hoovering up steel businesses stricken by the global overcapacity in steel production, promising them a new lease of life under the ownership of the vast network of Gupta family businesses, some trusting souls were quick to dub Gupta the ‘saviour of steel’. Recent developments in the Gupta family saga are forcing a rethink, however.

It turns out that, in order to ‘save’ these flagging businesses, Gupta did not crucially rely on the family’s own very considerable cash reserves. Rather, he borrowed a great deal of somebody else’s money in order to make his purchases, gambling that these ‘leveraged’ buy-outs would subsequently deliver a handsome profit – handsome enough both to keep servicing the loans and to keep broadening the family’s lucrative horizons.

So long as the lenders kept on lending, and the ball kept on rolling, everyone was a winner: the family fortunes kept accumulating and Gupta could pose as a ‘saviour’.

Financial manipulations enable the rich to get richer

The immediate cause of Gupta’s current problems appears to be that he has failed adequately to spread his bets, relying too heavily on loans from one source only, and a source whose own interests were too closely allied with those of its illustrious debtor. That source was Greensill Capital, the brainchild of a former investment banker named Les Greensill.

David Cameron is amongst Greensill’s paid advisors, an indication of the company’s prestige on the financial markets, so it can be imagined what a shock it was when Credit Suisse announced that it was freezing withdrawals from up to £10bn worth of funds linked to Greensill, with the investment bank reportedly worried about the bank’s over-exposure to the Gupta family racket.

The BBC reported mutterings about Greensill’s imminent bankruptcy. 

The relationship between borrower and lender was cosy to the point of incest. Sanjeev Gupta had a close relationship with Les Greensill, the Aussie banker who founded the firm, and at one point even held a stake in Greensill himself, apparently creating a bizarre situation in which the borrower lends money to himself!

In the absence of other major lenders, Gupta leaned ever more heavily on Greensill, borrowing tens of millions of pounds in the last year alone. Now Greensill is looking over the precipice and Gupta is casting about to secure a new source of loans before his own creditworthiness erodes too far.

Seeing the way the wind was blowing, Gupta sought to rope in an alternative source of loans to keep the ball rolling. He had previously been in talks with investment banker Brookfield, angling for loans to enable him to buy yet another steel business, the German Thyssenkrupp. When Thyssenkrupp got cold feet, Gupta prolonged the talks with Brookfield, by now more concerned with loans to keep existing assets afloat than with further aggrandising the Gupta family empire.

But at the beginning of March, Brookfield walked out, taking with it the hundreds of millions of dollars that Gupta had hoped to secure as a loan.

Workers pay the price

None of this tale of woe for the Gupta dynasty would matter a jot, were it not for the fact that steelworkers in Rotherham, Stocksbridge, Newport and Hartlepool, all plants owned by Gupta, could soon find themselves out of a job. The titans of monopoly capital place their bets on red or black, and on the outcome of the gamble hang the livelihoods of the only real wealth-producers in the whole process – the wage slaves.

There are 3,000 direct steel employees in Britain in businesses owned by Gupta, and a further 2,000 employees on the engineering side. 

It is insane that, under the anarchy of production prevailing under capitalism, the livelihood of millions of workers should depend on a throw of the dice by the lords of the financial markets. It is high time that we made Sanjeev Gupta, Les Greensill and all their fellow gamblers redundant, socialised the means of production and took the brakes off rational, planned production under the firm control of the working class.