U.K. Lawmaker Peter Hain Rebukes Banks at South African Graft Probe

(Bloomberg) -- U.K. 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 Labour 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 500 billion rand ($33.9 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 center 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.

Banks’ Response

“HSBC fully supports the work of the judicial commission and will continue to fully cooperate” with it, the bank said in an emailed response to questions. “We will also continue to investigate any potential links to the Guptas or Gupta-related individuals and companies should new information come to light, and will exit any party with these links. This is no easy task given the lengths to which the Guptas have gone to disguise their activity.”

Standard Chartered said it found no evidence that it provided direct banking services for the Guptas, and that it closed all accounts it identified as linked to their business interests by early 2014.

“We cannot comment further due to client confidentiality, but continue to cooperate with the appropriate legal and regulatory channels,” it said in an emailed response to questions. “Standard Chartered takes its responsibility to combat financial crime very seriously and is fully committed to doing business in accordance with local and international regulatory and legal requirements.”

Hain, who has previously raised concerns about the banks’ conduct in the U.K. parliament, said the lenders’ refusal to reveal details of suspicious dealings on confidentiality grounds was unacceptable since criminal conduct had clearly occurred.

“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 responsiblity for monitoring transactions and ensure there is compliance.”

Hain called for individuals to be held personally accountable for helping facilitate illicit dealings and for them to be fined or even jailed for the most serious offenses.

--With assistance from Mike Cohen.

To contact the reporters on this story: Nkululeko Ncana in Johannesburg at nncana@bloomberg.net;Roxanne Henderson in Johannesburg at rhenderson56@bloomberg.net

To contact the editors responsible for this story: Paul Richardson at pmrichardson@bloomberg.net, Hilton Shone

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