Chancellor asks for scrutiny of UK bank links to South Africa corruption inquiry

The chancellor has asked UK enforcement agencies to look into whether British banking groups HSBC and Standard Chartered are linked to South Africa’s corruption inquiry into alleged ties between the wealthy Gupta family and President Jacob Zuma.

According to letters seen by the Guardian, Philip Hammond has passed concerns raised by former Labour cabinet minister Peter Hain to the Serious Fraud Office (SFO), National Crime Agency (NCA) and the Financial Conduct Authority (FCA).

Lord Hain, who grew up in South Africa and became a prominent anti-apartheid activist, wrote to Hammond last month, warning that whistleblowers have told him that hundreds of millions of pounds has been siphoned out of the country via Hong Kong and Dubai.

He asked the chancellor to look into whether UK financial institutions may have been exposed to illicit funds owing to their significant presence in those financial centres.

He said banks including HSBC and Standard Chartered should review transactions involving individuals and companies linked to the Gupta family – entrepreneurs with businesses from coal mining to computers – and Zuma.

The letters do not make any allegations of wrongdoing by the banks.

Ajay, Atul and Rajesh Gupta are Indian-born entrepreneurs at the centre of a corruption investigation in South Africa.

The brothers, who moved to South Africa in 1993, have denied a string of allegations about alleged corruption. The key allegation levelled against them is that they have used their ties to Jacob Zuma, the country’s president, to advance their own business interests.

The scandal has already claimed the scalp of UK public relations firm Bell Pottinger. It went into administration after it was accused of deliberately stirring up racial tensions in South Africa while working for a Gupta holding company, Oakbay Investment.

Zuma and the Guptas are the focus of an ongoing corruption inquiry in South Africa into allegations, denied by both sides, that their relationship gave the family undue influence on politics that benefited them financially.

The affair has already claimed the scalp of UK public relations firm Bell Pottinger, which counted Gupta holding company Oakbay Investments as a client and saw its business collapse when it was struck off by the UK PR industry body for its work with Oakbay. The South African bosses of accounting firm KPMG, which audited Gupta family businesses, also quit amid fallout from the affair.

Responding to Hain’s letter, the chancellor said he had referred his concerns to the SFO, FCA and NCA and had also asked his officials to discuss the matter with the UK High Commission in South Africa.

“The UK government takes allegations of corruption and money laundering extremely seriously and is committed to preventing the proceeds of corruption from entering the UK financial system,” he said.

In a statement, the Treasury said: “The government takes such allegations seriously and that’s why the letter has been passed on to appropriate authorities. It’s now for the authorities to determine what action to take.”

A spokesperson for the FCA said it was “already in contact with both banks named and will consider carefully further responses received”.

Hain is expected to follow up his letter with a question in the House of Lords on Thursday asking for an update on the chancellor’s progress on the matter.

Speaking to the Guardian, he said: “As a former anti-apartheid activist, whose parents were jailed and exiled from South Africa, I feel deeply pained by the betrayal of values of the freedom struggle that is occurring under the political leadership and its business cronies in South Africa today.”

He said he was not accusing British banks of complicity in money-laundering but wanted them to help recoup any funds that have left the country by illicit means.

He pointed to court filings by South African finance minister Pravin Gordhan about 6.8bn ZAR (£380m) in transactions involving the Guptas that were reported to South African anti-money laundering regulators.

“What I’ve asked the chancellor to do, and he’s agreed, is to have this investigated so that the necessary authorities can be notified. I hope that any stolen money will be identified and returned.”

The Guardian has contacted HSBC, Standard Chartered, the Guptas and President Jacob Zuma for comment.