UK audit watchdog sanctions firm over GFG Alliance conflicts

Britain’s audit watchdog has punished a small accounting firm for signing off a sprawling industrial empire while relying heavily on that same client for revenue, a relationship it said exposed an “egregious” lack of objectivity and independence. The Financial Reporting Council sanctioned King & King and partner Milankumar Patel over audits tied to Sanjeev Gupta’s GFG Alliance, saying the pair concealed “clear self interest threats” across more than 140 GFG audits.

The regulator said the work covered four British businesses: Liberty Specialty Steels, Alvance British Aluminium and Liberty Steel Newport for the year to 31 March 2019, and Liberty Performance Steels for the year to 31 March 2020. It said the audits showed pervasive breaches of ethical standards and basic failures in planning, risk assessment, income and expense recognition, going-concern judgments and financial-statement disclosures.

Patel, who signed the audit reports in each case, was fined £326,184, publicly reprimanded, banned from statutory audit work for three years and stripped of responsible-individual status for two years. King & King was fined £52,000, barred from the audit register for five years and prevented from taking on high-turnover clients for two years. The firm was also ordered to undergo external monitoring and ethics training, with some penalties reduced because both parties settled early.

The FRC said the independence breach was aggravated by King & King’s dependence on GFG work. The firm recognised more than 30% of its total income from GFG entities in its 2020 financial year and more than 40% in 2021, a level of fee reliance that the watchdog said compromised its judgment.

The case adds another regulatory hit to Gupta’s industrial network, long marketed as a rescue story for Britain’s steel sector. Gupta, once dubbed the “saviour of steel,” saw his empire come under severe strain after the 2021 collapse of Greensill Capital, his main lender.

The Serious Fraud Office is investigating suspected fraud, fraudulent trading and money laundering involving GFG Alliance and its financing arrangements with Greensill Capital UK Ltd. A GOV.UK case page dated 29 November 2024 recorded that probe, and GFG said in February 2025 that it had reached a debt-settlement agreement with Greensill creditors. For markets, creditors and workers still exposed to opaque corporate structures, the latest sanctions underline how late audit enforcement can arrive after the damage is already visible.