UK politician urges Hong Kong authorities to probe HSBC, StanChart over ‘illicit funds’ linked to South Africa corruption scandal

UK financial services regulator says it has already spoken to HSBC and Standard Chartered

Regulation

Alun John

Published: 7:00am, 20 Oct 2017

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A British parliamentarian has urged Hong Kong’s financial authorities to investigate his claims that banks in the city were used to process allegedly illicit funds linked to South Africa’s President, Jacob Zuma and the powerful Gupta family of businessmen.

Speaking in the House of Lords on Thursday, Lord Hain of Neath, a former government minister, asked Philip Hammond, the UK’s finance minister, to ensure that HSBC, Standard Chartered and other European banks tracked down what he described as the “corrupt proceeds of money stolen from [South African] taxpayers and laundered through Dubai and Hong Kong”, and return it to the South African Treasury.

Britain's Chancellor of the Exchequer, Philip Hammond, was asked to contact regulators in Hong Kong and the UAE. Photo: AFP

Hain’s question followed an exchange of letters between him and the chancellor in which he informed Hammond of his concerns about “the complicity, whether wittingly or unwittingly, of UK financial institutions in the Gupta/Zuma criminal network”.

“Based on my knowledge, the majority of these illicit funds have flowed through the UAE and Hong Kong. In both jurisdictions two of the UK’s largest financial institutions, HSBC and Standard Chartered, have their biggest footprints,” Hain wrote in a letter dated September 25.

“Can you also please get in touch with the authorities responsible for proper financial regulation in Dubai and Hong Kong to make enquiries?”

South Africa has been rocked by a scandal in which members of the wealthy Gupta family are alleged to have benefited financially and gained political influence from ties to President Zuma.

Both parties deny the allegations.

Can you also please get in touch with the authorities responsible for proper financial regulation in Dubai and Hong Kong to make enquiries?

Lord Hain in a letter to Hammond

Telephone calls and emails from the Post to President Zuma’s spokesman on Thursday went unanswered.

Calls to TNA Media, a company to whom the Post was referred by a member of staff at Oakbay Investments a holding company for the Gupta family’s businesses in South Africa also went unanswered.

A Standard Chartered spokeswoman in Hong Kong said: “We are not able to comment on the details of client transactions but can confirm that following an internal investigation accounts were closed by us in 2014.”

An HSBC spokesman in Hong Kong declined to comment.

This is not the first time Hong Kong has been cited in investigations into money laundering.

In August, Australia’s financial watchdog, Austrac alleged that laundered money deposited with the Commonwealth Bank of Australia had been transferred immediately to Hong Kong.

Indian businessmen, Ajay Gupta, right, and his younger brother Atul. The family owns businesses spanning sectors including energy, mining and technology. Photo: Gallo Images

At the start of the year, the Organized Crime and Corruption Reporting Project (OCCRP), an investigative journalism platform, alleged sums linked to Russian criminals passed through some Hong Kong banks.

“Like other major international financial centres, Hong Kong is fully committed to meeting international standards and global initiatives on anti-money-laundering and counterterrorist financing,” said a spokesman for the Hong Kong Monetary Authority.

“The HKMA cannot comment on specific matters relating to individual banks and will review the information to assess relevant implications for Hong Kong.”

A spokeswoman for the British Financial Conduct Authority said in a statement: “The FCA is already in contact with both banks named and will consider carefully further responses received”.

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