SNP ministers are under pressure to provide urgent answers after it emerged the business empire of Liberty Steel owner Sanjeev Gupta is facing an investigation by the Serious Fraud Office. 

Scottish Labour insisted Rural Economy Secretary Fergus Ewing must appear before Holyrood to answer questions about the impact on jobs in Scotland. 

Meanwhile, Liberal Democrat leader Willie Rennie said taxpayers need a "full explanation" as to how they are being protected from potential losses.

The SFO is looking into suspected fraudulent trading and money laundering at companies in the GFG Alliance.

The probe will include the financing that was provided by failed company Greensill Capital, which entered administration in March.

The investigators said in a statement: "The SFO is investigating suspected fraud, fraudulent trading and money laundering in relation to the financing and conduct of the business of companies within the Gupta Family Group Alliance (GFG), including its financing arrangements with Greensill Capital UK Ltd.

"As this is a live investigation, the SFO can provide no further comment."

READ MORE: Who is Sanjeev Gupta, the owner of GFG Alliance?

Sanjeev Gupta carved out a name for himself in the 2010s when he saved several UK steel businesses from possible collapse - most famously in his Tata Steel deal in 2016.

His empire acquired the Dalzell and Clydebridge steel works in Lanarkshire, with the Scottish Government providing a £7 million loan to help restart the Dalzell site.

It also bought an aluminium smelter and hydro plant in Lochaber, with SNP ministers agreeing to underwrite the purchase for 25 years.

The guarantee's value has been estimated at more than £500 million.

Promises of 2,000 new jobs never materialised. 

In March, Mr Ewing told MSPs he had spoken with Mr Gupta and he was "open about challenges posed by the collapse of Greensill but also emphasised the underlying operational health of GFG’s Scottish operations".

Monica Lennon, Scottish Labour's economy spokeswoman, said the latest news was "potentially very serious and heightens the need for a plan to protect steel jobs and vital industries in Scotland".

She said: "SNP ministers must urgently advise the Scottish Parliament what action has been taken to mitigate the risk to jobs in Scotland, following the collapse of Greensill Capital and the difficulties facing GFG Alliance.

"Workers in Scotland cannot be left to pay the price of the Greensill lobbying scandal or poor due diligence.

"Scottish Labour will continue to stand up for workers and we expect ministers to be open, honest and transparent."

Mr Rennie said: “The Scottish Government’s exposure at the Lochaber smelter runs to hundreds of millions of pounds.

"We need a full explanation as to how they are protecting the taxpayer from this considerable potential loss.  

"We also need to understand the extent of the due diligence undertaken by the Government before they agreed to this considerable arrangement.

"Thousands of jobs were promised but next to none have been created. The Government must end the secrecy.”

A Scottish Government spokesman said its priority "is to support Scotland’s steel and aluminium sectors and the highly-skilled jobs they provide".

He added: "A ministerial task force and officials have been active throughout the election period, engaging with local management at Liberty Steel and the Lochaber smelter, union representatives, GFG and the UK Government.

"We continue to monitor developments closely.

"Rural Economy Minister Fergus Ewing delivered a statement to parliament immediately prior to the election recess and continues to keep members updated."

A GFG Alliance spokesman said: "GFG Alliance notes the UK Serious Fraud Office (SFO)'s announcement that it has opened an investigation into GFG Alliance.

"GFG Alliance will cooperate fully with the investigation. As these matters are the subject of an SFO investigation we cannot make any further comment.

"GFG Alliance continues to serve its customers around the world and is making progress in the refinancing of its operations which are benefitting from the operational improvements it has made and the very strong steel, aluminium and iron ore markets."

It previously emerged Mr Gupta's companies leaned heavily on Greensill Capital before it collapsed. Greensill had about five billion dollars (£3.6 billion) of exposure to GFG.

Its reliance on Greensill caused many to worry that GFG might itself be at risk following the finance firm's demise, which would threaten 5,000 UK jobs at Liberty Steel.

Equally, Greensill's demise might in part be linked to GFG's struggles. Greensill's lawyers said that GFG had already started to default on the debt.

The SFO did not reveal any further details about what it is looking into.

The Financial Times has previously reported Mr Gupta's companies handed suspicious invoices to Greensill, which the finance company paid for.

Greensill's model worked by placing itself between business customers and their suppliers.

It would immediately pay the invoices that suppliers gave to their customers, meaning the suppliers would not have to wait for months for payment.

The FT said one of Mr Gupta's companies had sent Greensill invoices for business it had supposedly done with four European metal companies.

The companies told the newspaper they had not dealt with GFG.

In response, GFG Alliance said the invoices were for products it expected to perhaps sell in the future.

It said: "Many of Greensill's financing arrangements with its clients, including with some of the companies in the GFG Alliance, were prospective receivables programmes, sometimes described as future receivables.

"As part of those programmes, Greensill selected and approved companies with whom its counterparties could potentially do business in the future."

Earlier this week Greensill founder Lex Greensill and former prime minister David Cameron, who lobbied for the company, appeared before MPs.