* Report says banks took funds from corrupt politicians
* Urges tighter enforcement of money laundering rules
* HSBC says Global Witness findings are misguided
By Nick Tattersall
LAGOS, Oct 11 (Reuters) - Britain needs to enforce money
laundering regulations more strictly after some of its leading
high street banks accepted millions of pounds in deposits from
corrupt Nigerian politicians, a graft watchdog said on Monday.
Global Witness said in a 40-page report that five banks had
taken millions of pounds between 1999 and 2005 from two former
Nigerian governors accused of corruption, but had failed
sufficiently to investigate the customers or the source of their
funds. ( www.globalwitness.org )
It said that in failing to do so, Britain's Barclays
<BARC.L>, NatWest <NWB_pa.L>, Royal Bank of Scotland (RBS)
<RBS.L> and HSBC <HSBA.L>, and Switzerland's UBS <UBSN.VX>,
might not have broken the law but had helped to fuel corruption
in Nigeria.
HSBC said the allegations were "misguided". The four other
banks and Britain's regulator, the Financial Services Authority
(FSA), declined to comment.
"The FSA needs to do much more to prevent banks from
facilitating corruption. As yet, no British bank has been
publicly fined or even named by the regulators for taking
corrupt funds, whether willingly or through negligence," Global
Witness said in the report.
"This is in stark contrast to the United States, where banks
have been fined hundreds of millions of dollars for handling
dirty money."
Global Witness acknowledged that British regulation might
have moved on since 2005, but said there were still gaps in the
system, particularly regarding funds from "politically exposed
persons" (PEPs) deemed to pose a higher money laundering risk.
"As a bank that has been at the very forefront of developing
global PEP guidance over the last decade, we are deeply
disappointed with these misguided allegations," a spokesman for
HSBC said when asked about the report.
"Rest assured, rigorous and robust compliance procedures
were followed diligently. To ignore this is to ignore the
facts," he said.
Barclays, HSBC and UBS are all members of the Wolfsberg
Group, an international body set up in 2000 to try to improve
global anti-money laundering procedures.
An industry source said HSBC was one of the few banks to
have had a PEP policy in place since 2001, before regulators
introduced any such requirement.
ENDEMIC CORRUPTION
Global Witness said its findings were based on court
documents from cases brought in London by the Nigerian
government to get funds returned that it said had been stolen by
two former state governors -- Diepreye Alamieyeseigha of Bayelsa
state and Joshua Dariye of Plateau state.
Alamieyeseigha was accued of corruption in 2005 when he was
caught with almost a million pounds in cash in his London home,
and was briefly jailed in Nigeria after pleading guilty to
embezzlement and money laundering charges two years later.
Dariye was arrested in 2004 in London and was found to have
purchased properties worth millions of pounds even though his
legitimate earnings amounted to the equivalent of 40,000 pounds
($63,500) a year.
He returned to Nigeria, where the anti-corruption agency has
accused him of looting public funds. He has denied wrongdoing.
Global Witness did not provide evidence that the funds
accepted by the banks were the direct proceeds of any crime.
Africa's most populous nation is regularly ranked one of the
most corrupt countries in the world.
Most of its 150 million people survive on $2 a day or less,
yet the country is one of the world's top champagne importers
and its wealthiest residents are among Africa's richest.
The former head of its EFCC anti-corruption agency, Nuhu
Ribadu, has estimated that corruption and mismanagement swallow
about 40 percent of Nigeria's annual oil income.
"Without access to the international financial system, it
would be much harder for corrupt politicians from the developing
world to loot their treasuries or accept bribes," Global Witness
said in its report.
Britain's coalition government plans to revamp its financial
sector, scrapping the FSA by the end of 2012 and replacing it
with a regulator that will operate as a subsidiary of the Bank
of England; a new white-collar crime agency; and a new consumer
protection and markets authority. [ID:nLDE65F1L4]
(Additional reporting by Kate Holton in London; Editing by
Kevin Liffey)
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