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South Africa: Money Laundering and Corruption

Volume 800: debated on Thursday 17 October 2019


Asked by

To ask Her Majesty’s Government what plans they have to impose similar sanctions to those announced by the United States Department of the Treasury on 10 October against Rajesh Gupta, Atul Gupta and Ajay Gupta for money laundering and corruption in South Africa.

My Lords, I thank the noble Lord for raising this important issue and also for his recent letter to my right honourable friend the Chancellor of the Exchequer. We note with interest the recent announcement by the US Administration and will consider the noble Lord’s request very carefully. We are aware fully of the allegations relating to these individuals and are discussing with the South African National Prosecuting Authority how we can best support its work to pursue proceedings against those implicated in corruption.

I am grateful to the noble Lord for his Answer. Will the Chancellor follow the US Treasury in imposing sanctions on Rajesh Gupta, Atul Gupta and Ajay Gupta, to block all of their property and interests in property within the UK’s jurisdiction and, like US persons, prohibit UK citizens and UK-based financial institutions and other UK-based entities from engaging in any transactions anywhere across the world with them? Will the Chancellor also immediately contact the Dubai, Hong Kong and Indian authorities and ask them to do the same?

Through their corrupt criminality and shameful looting, blessed by former President Zuma, the Gupta brothers have ripped off South African taxpayers by well over £500 million, a lot of it laundered through London, Dubai, India and Hong Kong, and assisted by London-based corporates such as McKinsey, KPMG, Bain & Co and Hogan Lovells. Any failure by global Governments to act against all this would echo their failure to impose sanctions on apartheid South Africa.

My Lords, I am sure the noble Lord will appreciate that I cannot say any more on the specific matter he has raised at this point. We are in touch with the South African authorities. The noble Lord is also very much aware of the strong stance that the UK Government and indeed the United Kingdom have taken over several years in further strengthening our work on tackling corruption and illicit finance. He raised a specific question on the UAE and India and whether my right honourable friend would write. I have been informed that the South African authorities have already made mutual legal assistance requests to the Governments of those countries. Additionally, similar requests have been made to the Governments of Canada, Switzerland, Mauritius, Hong Kong and China. As I said, I am aware of the letter the noble Lord wrote to my right honourable friend and I know the Chancellor will respond to him shortly.

My Lords, at a time when South Africa is suffering the aftermath of a decade of the massive corruption of the Jacob Zuma regime, as well as an undermining of state institutions, what measures can be taken to root out the perpetrators of this corruption and assist the South African Government in reviving their moribund economy?

The noble Lord is right to raise that. We are working very closely, through not just the Foreign Office but the Treasury and DfID, with the South African authorities. I assure the noble Lord that the UK is playing a leading role, not just with South Africa, but in the global fight of fighting corruption. We have already committed £45 million over the next five years through the FCO-led, cross-HMG global anti-corruption programme. On South Africa specifically, we are engaging with a wide range of South African institutions to provide support to investigations with a potential UK link and to build capacity and capability, including specific support in areas such as procurement reform and promoting and facilitating regional co-operation. There are other schemes, including those in multilateral agencies through various UN representative offices, that we are also working together with South Africa on.

My Lords, we all know that, for sanctions to be truly effective, it requires a concerted action on behalf of the international community. I note what the Minister has said, but can he tell us whether there has been any consultation with the US Government and, of course, our partners in the EU, where we are still part of a sanctions regime? Can he tell us what we can do to try to get that concerted international action against these people?

I assure the noble Lord that this is very much ongoing, not just on the particular individuals concerned, but more specifically across the piece, both with the US and our European partners. In that respect, he will be fully aware, and as I have said repeatedly from the Dispatch Box, that for sanctions to be effective co-operation is required to stop the scourge of illicit financing and money laundering more generally. On sanctions specifically, we hope to introduce secondary legislation in due course very shortly, as part of the Sanctions and Anti-Money Laundering Act, specific provisions on the human rights element of the sanctions regime. I will update the House accordingly in that respect.

My Lords, I think the whole House would agree that the best way to prevent corruption is transparency, particularly of the various organisations that can be enablers. On that point, could the Minister tell us what progress has been made on public registers of beneficial owners in the overseas territories and Crown dependencies—an area where the Government have resisted many of the pressures introduced by this House?

I disagree with the noble Baroness’s final point. The Government have accepted the amendment that was made, and we are working closely with the overseas territories. She will also be aware that we have a very effective exchange of notes scheme already operational with key overseas dependencies, which provide law enforcement agencies and tax authorities with direct access. On the specific issue of registers, I am sure that she has observed very closely recent statements that have been made publicly, such as those by the Turks and Caicos Islands and by the Cayman Islands only yesterday, that they will be in line with the whole issue of public registers, reflecting European Union priorities and consistent with European priorities as will be required. The noble Baroness will be further aware that we are working directly with the OTs. We have technical groups set up to ensure public registers will be operational by 2023.

What assessment has the Foreign Office made of the efforts by the current South African Government to crack down on corruption?

As I have already said, we are working very closely with the South African authorities and the South African Government. The action that they have already taken is reflective of how they are tackling corruption at the core and heart of government which has plagued South Africa since the initiation of democracy. I assure my noble friend that we continue to support and co-operate with our South African colleagues through all channels.

My Lords, following on from the point made by the noble Baroness, Lady Kramer, can the Minister tell us when there is going to be a verified register of beneficial ownership in the United Kingdom?

A public register is already operational, and because of it we have already seen certain illicit flows of finance being tackled directly. The noble Lord shakes his head; I disagree with him. He will also know that the Government have prioritised this whole issue of tackling corruption and illicit finance. There are further proposals that will come forward, but public registers in themselves are not the only solution. It requires work across the piece, including tackling money laundering and having an effective sanctions policy. We are working on those proposals, as I told the noble Lord, Lord Collins.