Czech government slams Liberty Steel for missed social payments and unrealistic promises

By Albin Sybera May 10, 2024

Liberty Steel, owner of the largest Czech steel mill, Liberty Ostrava, has once again been strongly criticised by the Czech government for its handling of the mill's serious financial problems.

Minister of Labour Marian Jurecka said on May 6 that Liberty Ostrava has outstanding social security tax payments, while Minister of Finance Zbynek Stanjura said the British-based steel group's restructuring plans were "not realistic".

“It would be a different attitude and different search of possible solutions and forms of cooperation if there was an owner here who submits plans that are realistic,” Jurecka alleged in a sharp statement.

“We are seeing a more than half a year-long constant transgression of [its] own commitments, goals, not meeting promised things,” Jurecka was also quoted as saying by Czech Television.  

Stanjura told Czech Television “our fears are being materialised, that the plans which [Liberty Steel owner] Mr. [Sanjeev] Gupta was submitting were not realistic,” pointing to the delays in re-opening part of the production at the Liberty Ostrava’s plant.

In the past the Czech government has accused Liberty Steel of not communicating with it and has also alleged that the group owes money to the Ostrava company. Last month Minister of Industry and Trade Jozef Sikela criticised Liberty Steel following his talks with Gupta, stating that the company should return CZK10bn to the Ostrava plant.

Liberty Ostrava won a reprieve last month when a majority of approved creditors backed its owner's restructuring plans after Tameh Czech, its key energy supplier and biggest creditor, was excluded from the vote. A court moratorium protecting the mill against some 1,300 creditors was  extended in March. Recently it has restarted some operations. 

Liberty Ostrava stated earlier this month that it is ending its cooperation with Tameh. Tameh’s spokesperson, Patrik Schober, has repeatedly told Czech media that Tameh will challenge the restructuring plan in court. Tameh is in insolvency following unpaid bills from Liberty Ostrava and claims CZK2.2bn from Liberty Ostrava.

The Czech state is also one of Liberty Ostrava’s creditors through a state export insurance company, EGAP. Stanjura told Czech Television that Liberty Ostrava did not abide to a previously agreed payment schedule with EGAP.   

Liberty Ostrava spokesperson Ivo Sterba said the outstanding social security payment has been made and that salaries to employees will be paid as planned. “We can confirm that we have made the payments in question to the Czech Social Security Office” (CSSZ), Sterba was quoted as saying by the Czech Press Agency (CTK).   

CTK noted that based on the details made available in the restructuring plan, Liberty Ostrava’s costs on salaries amount to €11.8mn a month. Most of the employees have been at home since December, and the production has been mostly shuttered.

The plant  employs about 5,000 persons, according to the media reports, and is one of the most significant employers in the struggling Moravian-Silesian region in the east of the country, with up to 30,000 jobs  dependent on the plant, according to unions. Liberty Ostrava said in March it did not plan any staff reductions.