HSBC and Standard Chartered may face an investigation by the UK’s financial watchdog over possible ties to South Africa’s Gupta family.
The possibility of an official inquiry by Britain’s banking regulator, the Financial Conduct Authority (FCA), comes after Peter Hain, a former Labour cabinet minister, wrote a letter raising concerns about the London banks’ potential exposure to the Guptas. They have been widely criticised for what is seen as their manipulation of the South African president Jacob Zuma in connection with their business dealings there.
According to the Financial Times, Mr Hain said allegedly illicit funds may have passed through the banks' operations in the Middle East and Hong Kong, where HSBC and Standard Chartered have large footprints.
“It will be no secret to financial crime experts that criminals target large and credible financial institutions for the same reasons that legitimate multi-national networks do – for their global reach,” Mr Hain, who grew up in South Africa, said in a September 25 letter to the UK chancellor of the exchequer, or finance minister, Philip Hammond.
“I have deep concerns and questions around the complicity, whether witting or unwitting, of UK global financial institutions in the Gupta/Zuma criminal network.”
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Standard Chartered said it was not able to comment on the details of client transactions, “but can confirm that after an internal investigation, accounts were closed by us by early 2014”.
In an emailed response to The National, the bank added: "Standard Chartered takes its responsibility to combat financial crime very seriously and is fully committed to doing business in accordance with local and international regulatory and legal requirements."
HSBC declined to comment. A spokesperson for the Gupta family also did not respond to a request for a comment.
The three Indian-born Gupta brothers are at the heart of South Africa’s biggest post-apartheid outcries over their alleged use of a friendship with Mr Zuma to control state businesses.
The Guptas have not been charged with any crime in South Africa, but the issue of their alleged activities is one of many that has dogged the Zuma presidency.
The UK Treasury passed Mr Hain’s letter on to the FCA and prosecutors at the National Crime Agency and Serious Fraud Office, saying “we take allegations of financial misconduct very seriously”.
An FCA spokesperson told The National that the regulator is already in contact with both banks and "will consider carefully further responses received".
Mr Zuma and the Guptas have always denied any wrongdoing.