Peter Hain. REUTERS/Stephen Hird

CAPE TOWN – UK politician Lord Peter Hain has implicated a London firm for its involvement in state capture in South Africa.

Law firm, Hogan Lovells has been referred to the UK’s Solicitors Regulation Authority (SRA) by Lord Hain. 

Hain said on Monday that the firm had helped to enable corruption at the South African Revenue Service (SARS).

“I have asked the SRA to withdraw Hogan Lovells’ authorisation as a recognised body and to examine what other disciplinary action can be taken against its leading partners, including withdrawing their permission to practice as solicitors,” he said. 

According to Hain, a "whitewashed" document by the firm had “spared” SARS chief Tom Moyane and top executive Jonas Makwakwa from “accountability for their complicity in and cover up of serious financial crimes”.

The UK law firm has an office in Johannesburg and was instructed to investigate Makwakwa in 2016. 

This was after the Financial Intelligence Centre (FIC) noted suspicious transactions between Makwakwa’s bank account and his partner Kelly-Ann Elskie.

The transactions apparently amounted to R1.7 million. 

Makwakwa has denied any wrongdoing. 

In the House of Lords, Hain accused the firm of creating an “incomplete, fatally flawed whitewash of a report, which ultimately cleared Makwakwa, despite reams of evidence to the contrary".

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It was based on this report that SARS concluded that Makwakwa was innocent of wrong doing. 

The Hogan Lovells report did not include add evidence provided by PricewaterhouseCoopers and by the Hawks, according to Hain. 

“That meant that Makwakwa has answered to only a fraction of the allegations levelled against him - a serious deviation from Hogan Lovells’ mandate”. 

Hogan Lovells has said that Hain’s accusations are “unfounded” and that he lacked insight and understanding in the matter. 

The firm went on to say that these statements were based on false media reports in SA. 

Hogan Lovells said that they were instructed to only investigate whether Makwakwa and his partner breached any “internal policies” in their work and employment contracts.

The firm was not asked to look at the R1.7 million transactions directly.

Lavery Modise, Hogan Lovells’s South African head told parliament in early December that the illicit divisions of the FIC’s case against Makwakwa were being looked into by the Hawks. 

Modise then went on to say that PwC was only investigating tax compliance evasions.

“I hasten to add therefore that any suggestion that Hogan Lovells decided not to investigate any aspect contained in the FIC Report is fallacious,” Modise said. 

Hain argues that the terms of reference of the inquiry into Makwakwa had been altered by SARS head Tom Moyane. 

Hain said that the UK firm was a “willingly gullible or malevolent accomplice” to Moyane’s “obfuscation”. 

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“Why has Hogan Lovells failed to release its documents - including the original terms of reference, its final report and any other relevant documentation which would help clear its name - to the South African Parliament?” he asked.

In September last year Hain claimed that London-based banks may have handled illicit funds linked to the Zuma family, President Jacob Zuma, and the Gupta family.

Hain wrote letters to UK Chancellor Philip Hammond and European Commission President Jean-Claude Juncker, to get them to investigate alleged money laundering by the two families.

Hain said that South Africa was "gripped by a political, economic, and social crisis, precipitated by a vast criminal network facilitated" by the Guptas and the Zumas.

He said the "criminal network" has lead to the state being regarded as captured with plummeting consequences on economic growth.

Hain said the majority of the illicit funds which flowed through Hong Kong and the United Arab Emirates where two of the UK's largest financial institutions which have "have their biggest footprints".

The 27 individuals named included, Nkosazana Dlamini-Zuma, Jacob Zuma and his sons Duduzane, Edward, and Mxolisi; the president's nephew Kulubuse; former Eskom CEO Brian Molefe; Rajesh, Atul and Ajay Gupta; as well as other Gupta family members; Zuma family members including two of president's wives; and their business associates. 

-BUSINESS REPORT ONLINE