If Transnet was a golden goose for the Gupta family and their associates, then global banking giant HSBC played the role of tending their illicit nest eggs. This week Open Secrets examines the role of a key global enabler in the State Capture network. As shown in The Enablers investigative report, it takes more than a few corrupt politicians to capture the state. It requires a global financial machinery – and HSBC was an important bank in this network.
The now infamous purchase of 1,064 locomotives by Transnet was fraudulently inflated to over R50-billion, primarily to facilitate kickback agreements between Gupta-linked front companies and the Chinese supplier – China South Rail (CSR). Ultimately, over R5-billion in kickbacks were dressed up in the language of “advisory services” and paid to firms owned by Gupta lieutenants.
Most of these payments went into HSBC bank accounts of these firms in the notorious secrecy jurisdictions of the United Arab Emirates and Hong Kong, and then rapidly distributed into hundreds of other accounts, many belonging to other front companies. This is a typical tool of money laundering. To do this, the Gupta network relied on HSBC, a global banking giant, to both hold the accounts and facilitate the payments. The bank did so in the face of overwhelming red flags and evidence that the transactions were suspicious.
This is not the first time that HSBC has been implicated in the facilitation of organised crime and grand corruption for the sake of profit. Arguably, its conduct in enabling State Capture in South Africa is a continuation of a pattern of behaviour where HSBC has accepted fines as a cost of doing business. South African authorities and the Zondo Commission have a unique opportunity to ensure that the impunity HSBC has enjoyed for too long comes to an end.
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