International banks accused of turning a blind eye to State Capture corruption

UK lawmaker Peter Hain accused international banks including HSBC Holdings Plc and Standard Chartered Plc of aiding and abetting graft in South Africa during former President Jacob Zuma’s rule and earning considerable fees in the process.

The lenders enabled members of the Gupta family, who were Zuma’s allies and in business with his son, to launder stolen funds and remove them from South Africa by allowing them to open accounts and granting them access to their banking network, Hain told a judicial panel headed by Deputy Chief Justice Raymond Zondo in Johannesburg on Monday.

“All the warning signs were there and they turned a blind eye to them and now they claim they know very little about it, which frankly I do not believe,” said Hain, who is a Labor Party member of the House of Lords and has campaigned against graft in South Africa, where he was born. “They are international operations and they should be held accountable.”

More than R500 billion was pilfered from state companies and government departments during the previous administration, according to President Cyril Ramaphosa, who succeeded Zuma in February last year.

Zondo’s panel has heard testimony that places the Gupta brothers at the centre of the looting spree that occurred with Zuma’s tacit consent. Zuma and the Guptas deny wrongdoing.

HSBC shuttered accounts associated with the Guptas in 2014 and instigated a review of any possible involvement in suspicious transactions, with the assistance of external investigators. The bank has undertaken to cooperate with Zondo’s commission, said Paul Pretorius, the head of the panel’s legal team.

Standard Chartered said in a statement read out by Pretorius that it was committed to operating within the law and cooperating with investigators.

HSBC and Standard Chartered didn’t immediately respond to emails sent by Bloomberg requesting comment.

Hain, who has previously raised concerns about the banks’ conduct in the UK parliament, said the lenders had refused to reveal details of suspicious dealings, citing client confidentiality. That defense was unacceptable since criminal conduct had clearly occurred, he said.

“My plea is for the international community to acknowledge its own role in this sorry and sordid saga,” he said. “The banks have got to take full responsibility for monitoring transactions and ensure there is compliance.”


Read: HSBC shuts Gupta-linked accounts amid investigation

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International banks accused of turning a blind eye to State Capture corruption