British peer calls for London-based bank accounts of SOE's to be investigated

Johannesburg - British parliamentarian Lord Peter Hain has called for an investigation into any bank accounts held in London by South Africa’s state-owned entities. 

In a speech presented in the House of Lords before a money laundering bill committee, the Parliamentarian said the UK needed to be serious in ensuring its financial institutions stopped being used to pilfer public money from countries around the world. 

Hain said the amendment to the Money Laundering Bill they were proposing would make it easier to hold large global banks, like HSBC, to account, both for poor procedures and for turning a blind eye to handling corrupt wealth.

The majority of Hain’s speech focused on South Africa, and like his speech on November 1, he described massive money laundering which he said was organised from the very top of government - the Presidency itself - and "the systemic transnational financial crime network facilitated by an Indian-South African family, the Guptas, and the Presidential family, the Zumas". 

Hain said that South Africa had suffered enough repression during apartheid and the UK should not stand idly by while economic repression replaced racial repression "to serve the greed of corrupt leaders, when we have the ability to help stop it". 

He said British-based financial institutions like HSBC, Standard Chartered and the Bank of Baroda have been conduits for laundering hundreds of millions of pounds or billions of rand mostly through Dubai and Hong Kong. 

Hain referred to the South African parliament’s inquiry into state capture through state owned enterprises and Zola Tsotsi’s evidence on Eskom. 

"What resulted is the first ‘smoking gun’ implicating the President of South Africa, Jacob Zuma, as he exerted shadow-control over State Owned Enterprises, which have been exploited through large scale looting and money-laundering, from which his family and friends have benefited," Hain said. 

Hain said that this was done by deploying one of Zuma’s "nominees", the former chair of SAA, Dudu Myeni. 

"Evidence before the South African Parliamentary public inquiry, showed that as chair of the state-owned airline, Ms Myeni not only facilitated looting by the Zuma and Gupta families, but also sought to control, instruct and manipulate the running of state-owned power utility Eskom, from which the Gupta family, through an intricate network of companies, have siphoned off billions of rand via various banks, including London-based banks which I am asking the British authorities to investigate," Hain said.  

The speech then went into details from the testimony of Tsotsi at the parliamentary enquiry where he was allegedly called and met with Myeni and Zuma and was given instructions. 

Hain said Gupta stooges then bled the power utility dry so that it now faced bankruptcy and had been downgraded by international financial institutions due to governance failures. 

Hain explained Eskom’s finances in his speech.

He said that Eskom had more than R471bn in outstanding debt, the majority of which was guaranteed by the SA government.

In October it revealed it had R1.2bn left in its cash reserves. It should have had R20bn. It was estimated that by January 2018 Eskom would be running at a R5bn deficit. 

"The fact that Eskom virtually gave billions to the Gupta/Zuma syndicate, through nonsensical ‘consulting’ contracts, tenders for fictitious goods and services, and advances to allow them to buy coal mines from which they then sold back over-priced poor-quality coal, is the underlying cause of what went wrong," he said. 

Hain also mentioned the emergency Treasury funds given to SAA to help repay loans of R3bn.

"The bill is being picked up by taxpayers when there is such a shortage of decent schools, hospitals, housing and job opportunities those billions should be spent on," he said. 

Hain then mentioned the "shadowy figure" of Nick Linnell who he described as a "Mr-fix-it", who in the 1970s operated in Rhodesia (now Zimbabwe). He was hired by Eskom, on Myeni’s instructions, to assist in getting rid of certain executives to clear the way for the capture of Eskom.

"It has now emerged that South African Airways, through dubious unauthorised payments to Mr Nick Linnell working hand-in-glove with the remnants of South Africa’s notorious apartheid police, have deliberately targeted well-known anti-corruption activists." 

Hain said this resulted in unlawful arrests, detention and torture to stop them from exposing systemic state-sponsored corruption. 

"There should be an immediate investigation, by the City of London Police, the Metropolitan Police and the financial regulatory authorities, into all bank accounts held in London by any South African state-owned company," he said.  

Hain said authorities should start with SAA, who are known to bank in London "to ensure that their UK accounts have not been used for the illegal laundering of monies from the proceeds of financial crime in South Africa, or that payments into UK banks from South African Airways have not been used to pay off stooges that have unlawfully targeted corruption whistleblowers". 

He said that the exposure of HSBC, Standard Chartered and Baroda Banks to the "Gupta financial crime network" is currently the subject of international law enforcement investigations from the FBI to the FCA.

Hain explained that when dirty money from a global criminal network infected one financial institution, it would sequentially infect many others. One transaction could move through a chain of financial institutions from the point of payment, before it reached its intended beneficiary. Hain said this created significant money laundering and terrorist financing risks. 

He said umpteen domestic and regional banks would inevitably have been part of the money laundering chain of Gupta money. 

"These include in South Africa, Nedbank and Standard Bank; in the UAE, Habib Bank; in China, Citibank China and Bank of China; and almost certainly every well-known bank in Continental Europe."

He said that in the UK, Barclays Bank, together with Santander should be given red flag warning to check their exposure to Gupta money laundering.

The parliamentarian said that it was not good enough for these banks to say they reported suspicious transactions to their relevant domestic regulatory authorities.

If they had closed the accounts, even five years ago "and not simply in reaction to recent political and investigatory journalist pressures, South Africa might not be on her economic knees today". 

Hain said the message from the British Parliament should be loud and clear: that no UK commercial entity should have anything to do with the Guptas or Zumas.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
Rand - Dollar
Rand - Pound
Rand - Euro
Rand - Aus dollar
Rand - Yen
Brent Crude
Top 40
All Share
Resource 10
Industrial 25
Financial 15
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot