HSBC Closes Accounts Linked to South Africa’s Gupta Scandal

Sunday, November 12, 2017    11.16AM / The Guardian /  News

HSBC has revealed 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 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 US$1.9 billion in 2012 for processing cash for Mexican drug lords and terrorists. 

The scandal began when the Indian-born Gupta family was accused of allegedly using its vast wealth to wield influence over South Africa’s president, Jacob Zuma. The Guptas and Zuma deny any wrongdoing.

British regulators are already looking into whether HSBC and Standard Chartered had ties to the Guptas after former cabinet minister Peter Hain passed a list of transactions to the chancellor warning of their “possible criminal complicity”. 

After previously ­declining to comment on its involvement, HSBC admitted on Friday it was forced to close accounts held by “front companies” associated with the Guptas. “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,” it said. 

“As we identify or are presented with new information, we will continue to investigate further and take appropriate action.” 

HSBC is understood to have 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 British Financial Conduct Authority. 

The bank issued a statement in response to evidence contained in the GuptaLeaks, a tranche of files released in South Africa and reported in The Wall Street Journal. The documents reportedly reveal HSBC accounts in Dubai were used to channel millions of dollars via companies linked to contracts to sell Chinese rail locomotives to South Africa. 

The Guptas have previously denied any wrongdoing. 

Fresh details about transactions involving HSBC could see the bank facing investigation by authorities in the United States, as they were made in dollars and cleared by its New York office.

Lord Hain raised concerns about British banks’ links to the Guptas last month. He told the House of Lords earlier this month he had information that “shows illegal transfers of funds from South Africa made by the Gupta family over the last few years from their South African accounts, to accounts held in Dubai and Hong Kong”. 

“Many of the transactions are legitimate, but many certainly are not,” he said. 

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