Monday, April 11, 2016

News: Tata Steel confirms criminal investigation

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Tata Steel and the Serious Fraud Office (SFO) have both confirmed that a criminal investigation has been launched at Speciality Steels, a business unit of Tata Steel (UK) Ltd based in South Yorkshire.

After reports in the media last week, the SFO put out a short statement to say that it: "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 Indian-owned steelmaker, which formally put its UK business up for sale today, released a longer statement confirming the investigation. It read:

Tata Steel UK (a subsidiary of Tata Steel Europe) would like to clarify its position that this matter relates to events in 2015 when during an internal audit conducted by the Company, certain inappropriate testing and certification procedures at the South Yorkshire-based Speciality Steels business were identified. Speciality Steels produces around 225,000 tonnes of steel, comprising around 3% of Tata Steel Europe's total output, and £275m of turnover. It is Tata Steel Europe's only Electric Arc Furnace based business.

A full investigation was initiated internally and undertaken with the help of experts. Tata Steel UK took immediate action to address the issues uncovered. The practices were immediately stopped. A detailed investigation was carried out by a technical team from outside the Speciality Steel business, and its conclusions were verified by independent experts. The investigation found that the steel affected and supplied was always well within safety margins. Affected stock was quarantined and assessed, and was either scrapped, transferred to another order or released as appropriate. A number of Speciality Steels personnel were suspended.

In 2015 itself Tata Steel UK proactively notified the relevant bodies as soon as was practicable after the internal investigation had reached conclusions. These bodies included accreditation and certification bodies. A detailed dialogue has been undertaken with these bodies, who have undertaken their own investigations. These investigations have confirmed the thoroughness and adequacy of Tata Steel's response, risk assessment and disclosure programme. No accreditation has been withdrawn from Speciality Steels.

There was a wide ranging program of customer contact. Over 450 direct and 150 indirect customers have been informed. There have been no recalls of material in service by any customer and no customer has brought a legal claim to date.

Amongst other bodies proactively notified by Tata Steel UK was the Serious Fraud Office, which has opened a criminal investigation. Since this initial notification Tata Steel has been cooperating fully with the Serious Fraud Office on their investigation. It is not appropriate for Tata Steel to comment on that investigation.


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Investment in 2005 saw the Rotherham site at Aldwarke become the focus for steel making, casting and rolling of specialist steels. The steel is manufactured at the Rotherham site before undergoing further refining at the Stocksbridge plant or the Thrybergh Bar Mill to improve the quality.

Restructuring in 2012 saw the Bar business integrated into its Speciality Steels business when Tata Steel announced that it was investing a further £2.75m in the Rotherham site.

In July last year, the Indian-owned steelmaker announced proposals for the next stage in its plans to refocus its speciality and bar business on high-value markets such as aerospace which included changes that has resulted in a reduction in employee numbers, mainly at its Rotherham-based bar business. Around 500 jobs of the 2,000 in South Yorkshire were at risk.

Last week, the Indian-owned steelmaker made the decision to sell its UK operations. Following a review of the European operations of Tata Steel, the board concluded that it is exploring all options for portfolio restructuring including the potential sale of Tata Steel UK, in whole or in parts.

Tata Steel website

Images: Tata Steel

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