Two senior Tata Steel executives are among 10 people suspended by the beleaguered company over forgery allegations that have prompted a criminal investigation by the Serious Fraud Office.
The Guardian understands that Mark Broxholme, the managing director of the company’s speciality steels and bar business was suspended last November. Andrew Parker, the commercial director of the division, was also suspended and has since left the business.
The suspension of such senior figures within Tata Steel highlights the seriousness of the claims. The investigation is a further blow to the UK steel business, which is battling to survive after Tata announced it planned to pull out of the country, putting 15,000 jobs at risk. The speciality steels and bar business covers two ofTata’s biggest sites in Rotherham and Stocksbridge, both in Yorkshire, and employs more than 2,000 people.
The potential scandal was discovered when an internal audit by Tata found certificates that verify the quality and composition of its steel may have been falsified. The company then informed the SFO about its findings.
The SFO said in a statement on Friday: “The Serious Fraud Office confirms it opened a criminal investigation in December 2015 into activity at Speciality Steels, a business unit of Tata Steel (UK) Ltd. We can make no further comment at this time.”
The documents being investigated cover steel sold to about 500 customers, including BAE, Rolls-Royce, and oil and gas firms. Rolls has confirmed it has been contacted by Tata. The safety of the steel is not thought to have been compromised.
Tata is understood to have suspended nine people over the allegations last November and another employee in 2016. Broxholme did not respond to calls and emails seeking comment. Emails to his address are met with an automated response that simply says: “Away.”
The Tata executive has worked for the company and its predecessors – Corus and British Steel – since 1980. He is a leading business figure in the local community and sits on the board of the Barnsley & Rotherham Chamber of Commerce.
Broxholme has run the speciality steels and bars business since 2011. As well as the sites in Rotherham and Stocksbridge, the division has service centres in Bolton, India and Suzhou and Xi’an in China.
Parker was commercial director of the business between April 2013 and November 2015 according to his LinkedIn profile. Since December he has been “actively seeking a new challenge”, according to the website. Parker could not be reached for comment.
Tata Steel said: “We won’t be commenting on the individuals concerned.”
The allegations have emerged as the government tries to find a saviour for Tata Steel in the UK, which employs 15,000 people and includes the Port Talbot steelworks.
However, the scale of the challenge facing any buyer has been laid bare by Ratan Tata, the former chairman of the Tata group and now head of the charitable funds that control the conglomerate. In his first intervention since the Indian firm announced it was selling its loss-making UK business, Tata said job cuts would be necessary to make the Port Talbot steelworks profitable.A number of potential buyers have emerged, including Liberty House, which is run by metals tycoon Sanjeev Gupta, Greybull, the investment firm, and ThyssenKrupp, the German industrial conglomerate. A management buyout is another option, although this would need financial backing from a third party.
Speaking at a US Export-Import Bank conference in Washington DC, Tata said the “bottom just opened up” at the UK steel operation after Chinese steel exports poured into Europe.
“Right now the problem is that the English facilities are underinvested [and] overmanned,” Tata was quoted as saying by the Financial Times.
He said a potential buyer at Port Talbot would need to “cut back on the size and the scale of the operations and make them profitable”. This would be “extremely challenging” but not impossible.