Peter Hain also demanded an investigation into global bank HSBC for its potential complicity in money laundering by the network linked to South Africa's President Jacob Zuma. RODGER BOSCH/AFP
Peter Hain also demanded an investigation into global bank HSBC for its potential complicity in money laundering by the network linked to South Africa's President Jacob Zuma. RODGER BOSCH/AFP

UK lawmaker calls for probe of accounts linked to South African President Zuma



A prominent British lawmaker has called on financial investigators in four countries to investigate accounts linked to South African president Jacob Zuma and his business associates because of their alleged role in laundering millions of pounds of corrupt state funds.

Peter Hain – a veteran anti-apartheid campaigner and former government minister – told the UK’s parliament that he had obtained banking records showing how the powerful Indian Gupta family had used accounts in the UAE to launder money earmarked for state-funded projects.

Mr Hain also demanded an investigation into global bank HSBC for its potential complicity in money laundering by the network linked to Mr Zuma and the three Indian-born brothers from the Gupta family, according to media reports.

The bank, headquartered in to UK, allegedly ignored warnings of suspicious transactions linked to the Guptas, who are accused by campaigners in South Africa of exploiting their close links with the president to further their business interests. Zuma’s son has been a director at Gupta companies. The Guptas and the Zumas have always denied any wrongdoing and no-one has been charged in South Africa with any criminal offence.

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Mr Hain has passed the documents to the UK’s finance minister Philip Hammond and the US ambassador in London and said they showed illegal transfers of funds from South Africa by the Gupta family over the past few years. He called on financial investigators from both the US and the UK to investigate.

“I’m also asking the [UK] government to press the financial authorities in Hong Kong and Dubai to cut all links with the Guptas and Zumas,” he said.

Mr Hain did not name HSBC during comments in the British parliament's upper house but it was identified as the UK-headquartered bank by the Financial Times and the BBC on Thursday, citing the documents passed to Mr Hammond. Mr Hain did not respond to a request for comment.

Mr Hain told parliament that some of the illicit transactions were flagged as suspicious internally at the “bank concerned” but added that he had been “reliably informed that they were told by the UK headquarters to ignore it”.

The government has previously confirmed an investigation had been launched following claims by Mr Hain that banks including HSBC and Standard Chartered, may have acted as conduits for laundered cash.

The allegations are the latest damaging claim faced by HSBC about poor anti-money laundering controls which has prompted an overhaul of its financial crime department.

In 2012, it paid a record £1.2 billion (Dh5.85bn) settlement to the US authorities after it was found to have been a conduit for Mexican drug gangs to launder money. In 2008, a whistleblower leaked bank details which showed how its Swiss banking arm had helped wealthy people to evade taxes and turned a blind eye to illegal activities.

During his 25-minute speech in parliament on Wednesday, Mr Hain cited the case of a public-private project to set up a dairy farm to benefit 80 impoverished people and their families in the Free State province of South Africa.

He claimed that the majority of £6 million aimed at the project was instead transferred to a Gupta company in the UAE, registered in Ras Al Khaimah, which had an account with the London-headquartered bank Standard Chartered.

Using shell companies and other banks, the money was returned to South Africa where some of the money was used to pay for a lavish four-day wedding which included some £1,000 spent on chocolate truffles and £20,000 for fireworks, according to Mr Hain.

Mr Hain told parliament that there were “disturbing questions around both the complicity, witting or unwitting” and the “wilful blindness” of UK global institutions about transactions linked to the corruption saga.

HSBC’s chief executive, Stuart Gulliver, said on Monday that the bank was responding to inquiries from the UK’s financial regulator and the South African authorities following Mr Hain’s complaints.

The UK regulator, the Financial Conduct Authority, said on Thursday that it was “already in contact with both banks named and will consider carefully further responses received”.

The fallout from the South African scandal has already brought down public relations firm Bell Pottinger – which ran a secret campaign for the Guptas – and executives from the South African arm of KPMG, which audited Gupta companies.

'Nightmare Alley'

Director:Guillermo del Toro

Stars:Bradley Cooper, Cate Blanchett, Rooney Mara

Rating: 3/5

How green is the expo nursery?

Some 400,000 shrubs and 13,000 trees in the on-site nursery

An additional 450,000 shrubs and 4,000 trees to be delivered in the months leading up to the expo

Ghaf, date palm, acacia arabica, acacia tortilis, vitex or sage, techoma and the salvadora are just some heat tolerant native plants in the nursery

Approximately 340 species of shrubs and trees selected for diverse landscape

The nursery team works exclusively with organic fertilisers and pesticides

All shrubs and trees supplied by Dubai Municipality

Most sourced from farms, nurseries across the country

Plants and trees are re-potted when they arrive at nursery to give them room to grow

Some mature trees are in open areas or planted within the expo site

Green waste is recycled as compost

Treated sewage effluent supplied by Dubai Municipality is used to meet the majority of the nursery’s irrigation needs

Construction workforce peaked at 40,000 workers

About 65,000 people have signed up to volunteer

Main themes of expo is  ‘Connecting Minds, Creating the Future’ and three subthemes of opportunity, mobility and sustainability.

Expo 2020 Dubai to open in October 2020 and run for six months

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%3Cp%3E-%20Congress%20is%20one%20of%20three%20branches%20of%20the%20US%20government%2C%20and%20the%20one%20that%20creates%20the%20nation's%20federal%20laws%3C%2Fp%3E%0A%3Cp%3E-%20Congress%20is%20divided%20into%20two%20chambers%3A%20The%20House%20of%20Representatives%20and%20the%20Senate%3C%2Fp%3E%0A%3Cp%3E-%C2%A0The%20House%20is%20made%20up%20of%20435%20members%20based%20on%20a%20state's%20population.%20House%20members%20are%20up%20for%20election%20every%20two%20years%3C%2Fp%3E%0A%3Cp%3E-%20A%20bill%20must%20be%20approved%20by%20both%20the%20House%20and%20Senate%20before%20it%20goes%20to%20the%20president's%20desk%20for%20signature%3C%2Fp%3E%0A%3Cp%3E-%20A%20political%20party%20needs%20218%20seats%20to%20be%20in%20control%20of%20the%20House%20of%20Representatives%3C%2Fp%3E%0A%3Cp%3E-%20The%20Senate%20is%20comprised%20of%20100%20members%2C%20with%20each%20state%20receiving%20two%20senators.%20Senate%20members%20serve%20six-year%20terms%3C%2Fp%3E%0A%3Cp%3E-%20A%20political%20party%20needs%2051%20seats%20to%20control%20the%20Senate.%20In%20the%20case%20of%20a%2050-50%20tie%2C%20the%20party%20of%20the%20president%20controls%20the%20Senate%3C%2Fp%3E%0A

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

All the Money in the World

Director: Ridley Scott

Starring: Charlie Plummer, Mark Wahlberg, Michelle Williams, Christopher Plummer

Four stars