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EDINBURGH — Pressure from Lord Peter Hain, a UK politician who has campaigned vigorously for justice in South Africa, has sparked public disclosures by global graft enabler HSBC bank that it allowed Gupta funds to wash through its system. The bank has reluctantly disclosed that it was forced to shut Gupta bank accounts. But HSBC concedes, too, that moneylaunderers are sophisticated and that it is still looking at whether it has other Gupta-linked accounts in its system. Lord Hain got the ball rolling in the UK by asking UK and European authorities to investigate why Europe-headquartered banks were facilitating the moneylaundering of South African taxpayers’ funds “on an industrial scale”. He provided a list of individuals suspected of moneylaundering, including presidential hopeful Nkosazana Dlamini-Zuma. The HSBC revelations are a signal that pressure on international corporates involved in corruption is starting to knock the Gupta clique at the heart of the state capture scandal that has enveloped South Africa. He was Hain the Pain in the apartheid era when he campaigned for sports boycotts to get rid of the National Party regime. Now he is Hain the Pain to President Jacob Zuma and his friends. – Jackie Cameron
By Thulasizwe Sithole
HSBC has revealed that it closed accounts linked to South Africa’s Gupta family corruption investigation, admitting for the first time concerns about its potential ties to the snowballing scandal, the Guardian reports.
Read more: How world sees SA: The comprehensive Gupta saga from A(tul) to Z(uma)
“The bank said it had also flagged up its worries to the financial crime expert who has overseen its money-laundering controls since it was fined a record $1.9bn in 2012 for processing cash for Mexican drug lords and terrorists,” it says.
Regulators in the UK are already looking into whether HSBC had ties to the Guptas after former cabinet minister Lord Peter Hain – born in South Africa – passed a list of transactions to the chancellor warning of their “possible criminal complicity”.
The Guardian reports that HSBC admitted on Friday that it was forced to close bank accounts held by “front companies” associated with the Guptas.
“The bank has previously declined to comment on its involvement, but revealed its concerns after details of transactions linked to the Guptas emerged.
“The bank said: HSBC has been reviewing its exposure to the Guptas for some time, and has closed a number of accounts for associated front companies wherever we have found them.
“As we identify or are presented with new information, we will continue to investigate further and take appropriate action.”
The Guardian understands that HSBC closed the accounts in 2014, the same year that Standard Chartered said it had shut down accounts linked to the Guptas.
“It also notified Michael Cherkasky, who monitors the bank’s anti-money laundering controls as a condition of its 2012 settlement with the US Department of Justice and the UK’s Financial Conduct Authority (FCA).”
The Gupta family used HSBC Holdings PLC bank accounts in Dubai to transfer millions of dollars through companies that have been linked to suspected kickbacks for the sale of Chinese locomotives, according to documents reviewed by The Wall Street Journal.
“The documents show money moving among three United Arab Emirates-based firms in January and February 2013 through HSBC accounts while one of the firms was receiving payments from a Chinese rail company with a contract to sell locomotives to a South African state-owned enterprise. One of the documents, a spreadsheet of bank transactions, shows that the transfers among U.A.E.-based firms were made in dollars and cleared by HSBC in New York,” reports the leading media outlet.
The documents have buttressed longstanding suspicions among many South Africans that the powerful business clan leveraged its connection to President Jacob Zuma and other government officials to amass great personal wealth, says The Wall Street Journal.
“They also underscore the risks for banks of processing potentially illicit money flows. HSBC said it is determined to keep criminals out of the financial system. It said it “has been reviewing its exposure to the Guptas for some time, and has closed a number of accounts for associated front companies wherever we have found them.”