The scene was old-fashioned, a peer rising in the House of Lords, but what Lord Peter Hain brought with him on 1 November 2017 was not: bank-transfer printouts already sent to the chancellor, and a blunt accusation. A British bank, named in his letter as HSBC, should be investigated for “possible criminal complicity” in the laundering of money out of South Africa by the Gupta family, the business dynasty accused of buying influence over President Jacob Zuma. The family and the president both deny wrongdoing.
For South African taxpayers, this is the human side: money Hain believes should have been funding a young democracy instead moving abroad, about R7-billion by his September estimate, routed through the Guptas’ networks. The transfers he described ran for years, out of accounts in South Africa into accounts in Dubai and Hong Kong. The pattern was built to blur: each transaction began in one account, then split across several others, sometimes more than once, to disguise its origin. Because HSBC held no South African foreign-exchange licence, the money allegedly moved through Nedbank and Standard Bank as intermediaries.
The detail that turns audit into scandal sits inside the bank. Hain said he had been informed that suspicious transactions were flagged internally, and that the instruction from the bank’s UK headquarters was to ignore them. “Many of the transactions are legitimate, but many certainly are not,” he told the Lords, calling the failure “an iniquitous breach of legal banking practice” and “an incitement to money laundering, which has self-evidently occurred in this case and also been sanctioned by HSBC as part of [the] flagrant robbery of South African taxpayers of many millions”.
The machinery of response moved the same day. Chancellor Philip Hammond had already referred concerns about HSBC and Standard Chartered to the Financial Conduct Authority, the Serious Fraud Office and the National Crime Agency; a Treasury spokesperson confirmed the agencies were examining the transactions. HSBC chief executive Stuart Gulliver said the bank was “responding to those inquiries that have come in from the FCA and also from South African authorities, and there is nothing more I can really add at this point in time”. The FCA confirmed contact with both banks. Standard Chartered had shut accounts in 2014 over potential links to the affair. Hain also named the Bank of Baroda, US authorities were examining possible laundering through Gupta relatives in America, Dubai’s central bank ran its own review, and a whistle-blower supplied the evidence.
“Undoubtedly, hard questions will need to be asked of the facilitating banks, because they have aided and abetted the Gupta money-laundering activities,” Hain said, pressing his case in plain words: “Urgent action is needed to close down this network of corruption.”. For the people on the losing end of the many millions, that urgency was the point.
Sources
- HSBC 'complicit' in South Africa scandal, House of Lords told | HSBC | The Guardian
- Gupta money scandal: HSBC accused of 'possible criminal complicity'
