London law firm accused over role in South Africa scandal

City law firm Hogan Lovells has been accused of helping enable the Gupta brothers’ “state capture”, and corruption in South Africa.

Peter Hain, a former Labour cabinet minister and veteran anti-apartheid campaigner, told the House of Lords on Monday that he had reported Hogan Lovells to the UK’s Solicitors Regulation Authority (SRA) over concerns that the firm produced a “fatally flawed whitewash” report into claims of money laundering at the South African tax agency.

Lord Hain said the flawed report made the firm “complicit in undermining South Africa’s once revered tax-collection agency, and thereby effectively underpinning President Jacob Zuma and his business associates, the Gupta brothers and others, in perverting South Africa’s democracy, damaging its economy and robbing its taxpayers”.

A spokeswoman for Hogan Lovells dismissed Hain’s allegations as “unfounded accusations”.

Hain’s speech has dragged Hogan Lovells, a global law firm with more than 2,500 lawyers, into the growing South African political scandal, which has already tainted several British companies.

Opposition South African politicians and campaigners accuse the billionaire Gupta brothers of exploiting their close friendship with Zuma to take control of some government affairs and win big state contracts for their family businesses. The Gupta family and Zuma deny the allegations, which were first leaked to the media last summer.

Several British companies have been caught up in the scandal, including public relations firm Bell Pottinger which collapsed into bankruptcy last year following revelations that it sought to stir up racial tension in the country on behalf of the Guptas.

Hain said in his speech to the Lords: “It should be a matter of shame that companies headquartered here in the UK have aided and abetted money laundering, corruption and state capture in South Africa – including Bell Pottinger, KPMG, McKinsey, SAP, and banks such as HSBC, Standard Chartered and Baroda – in total betrayal of Nelson Mandela’s legacy.

“I have just referred to the Solicitors Regulation Authority Hogan Lovells, the international law firm headquartered here in London, for enabling a corrupt money launderer to be returned to his post as second-in command of the critically important South African Revenue Service (SARS).”

Hain’s claims against Hogan Lovells relate to the firm’s investigation into allegations of corruption against the SARS deputy commissioner, Jonas Makwakwa, who, along with his lover, was alleged to have siphoned off about R1.7m (£100,000). Makwakwa denies any wrongdoing.

“The law firm issued an incomplete, fatally flawed whitewash of a report, which ultimately cleared Makwakwa, despite reams of evidence to the contrary,” Hain said. “Most damning of all, Hogan Lovells failed to include crucial evidence from the PwC report and the status of the Hawks [economic crime police] investigation in their own report.”

Hain said Hogan Lovell’s report led to the reappointment of Makwakwa. He accused him and his boss, the SARS commissioner, Tom Moyane, of continuing “their looting and dirty work of robbing taxpayers”.

Hain called on the SRA to withdraw Hogan Lovells from the solicitors trade body and consider withdrawing its partners’ permission to practise as solicitors.

Hogan Lovells said: “Lord Hain’s unfounded accusations reflect a lack of understanding of the work we were asked to carry out for the South African Revenue Service. We have fully reported the details of our engagement to the independent South African parliament standing committee on finance and we are very confident in its accuracy and probity.

“If Lord Hain does have evidence of corruption, then that should be reported to the appropriate authorities in South Africa. We look forward to working closely with the SRA on any complaint that Lord Hain might have made to them.”