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.
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.