Balli Group, the controversial steel trader which is being investigated for fraud in Germany, has expressed an interest in buying some of the assets of the ailing Corus.
The troubled Anglo-Dutch group suffered another blow on Friday when Moody's downgraded its debt rating, putting pressure on it to sell assets to help repay a £1.4 bn loan. It put out feelers to the steel industry to see if anyone would want to buy some of its less profitable assets – with its UK plant in Scunthorpe top of the "for sale" list.
So far Ispat, run by Indian businessman Lakshmi Mittal, has admitted to talks. Balli, which is owned by three Iranian brothers, Vahid, Hassan and Nasser Alaghband, is also running the rule over Corus. "We are observing the situation with a lot of interest," said a spokesman.
Corus has asked McKinsey to conduct a strategic review of the company. Its attempt to sell its aluminium firm was blocked by the Dutch supervisory board earlier this year.
Balli would be a controversial buyer for Corus assets as it is under investigation for fraud in Germany, where it bought the famous Rhineland steel business, Klockner, in 2001. The Alaghbands are accused of removing €120m (£82m) from the company. The German authorities have frozen the business and banker WestLB is threatening to foreclose on a loan to Klockner. The Alaghbands are now looking to sell out, probably taking a large loss.
Vahid Alaghband was arrested in Switzerland last year under orders from the German authorities. He is not allowed to leave Switzerland until the case is closed. A Balli spokesman said: "We aim to sort out the situation by the end of the second quarter."
Balli is also well known to Lakshmi Mittal as it is his partner in the Sidex steel venture in Romania, which hit the headlines last year. Mr Mittal, a substantial Labour Party donor, was accused of obtaining undue help from the UK Government and the ambassador to Romania when he bid for Sidex.