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U.S. and UK regulators probe banks' ties to South Africa's Gupta case

JOHANNESBURG/LONDON (Reuters) - Regulators in the United States and Britain are looking into links between South Africa’s Gupta family, the country’s government, and banks they may have used to move money amid an escalating graft probe.

FILE PHOTO: South Africa's President Jacob Zuma in Pretoria, South Africa, August 19, 2017. REUTERS/Siphiwe Sibeko/File Photo

The FBI has opened a formal investigation into individuals, bank accounts and companies in the United States for ties to alleged corruption involving the South African business empire, the Financial Times reported on Thursday, citing people familiar with the matter.

In Britain, the Financial Conduct Authority (FCA) and the National Crime Agency said they were looking into the matter following a prompt to do so from the finance ministry.

The Guptas and their companies have not been charged with any crime in South Africa, but allegations by government and opposition politicians that they used a friendship with President Jacob Zuma to control state businesses are among many scandals that have dogged Zuma’s presidency.

The Guptas and Zuma have denied any wrongdoing. Gupta family spokesman Gary Naidoo could not be reached for comment and the U.S. Embassy in Pretoria had no immediate comment.

The family, founders of a business empire spanning media, mining and consulting, have been named in a trove of leaked emails alleging graft in dealing with South Africa’s state-owned companies, which also named several global firms.

Britain’s FCA said it was in contact with banks HSBC and Standard Chartered.

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That comes after lawmaker Peter Hain asked the finance ministry to look into the lenders’ possible ties to the Gupta family and Zuma.

“We take allegations of financial misconduct very seriously, and have passed Lord Hain’s letter on to the Financial Conduct Authority and relevant UK law enforcement agencies,” the finance ministry said in a statement.

In the British parliament’s upper House of Lords, Hain said South African whistleblowers had told him HSBC and Standard Chartered among other banks “must have been conduits” for the laundering of around 400 million pounds.

Standard Chartered in London said it was not able to comment on details of client transactions but added that “after an internal investigation, accounts were closed by us by early 2014”. HSBC said it had no comment on the matter.

Zweli Mkhize, one of several potential candidates to replace Zuma as head of South Africa’s ruling African National Congress in December, said the United States and Britain were within their rights to investigate.

“If there is any information suggesting corruption or irregularities, it needs to be investigated across the borders. It should not be restricted to South Africa,” he told reporters.

Local media have reported extensively on the so-called “Gupta-leaks” -- thousands of emails between the Guptas and their lieutenants and state-owned companies, politically connected individuals and private sector firms.

Reporting by Ed Cropley, TJ Strydom, Alex Winning, Kirstin Ridley and Lawrence White; Editing by James Macharia and Catherine Evans