HSBC should be hit with economic sanctions if it does not sever ties with a firm that is closely linked to the ethnic cleansing of Uyghur Muslims in China, according to senior Tory MP Sir Iain Duncan Smith.
City A.M. can reveal the former Conservative leader and a group of other MPs will write to the Treasury to ask them to take action against HSBC, after it was revealed the British bank is holding £2.2m of shares in a subsidiary of Xinjiang Tianye Group – a paramilitary organisation involved in Beijing’s campaign of oppression against the Muslim minority.
The shares are in the organisation’s subsidiary Xinjiang Tianye – a chemical and plastics company.
The group has been instrumental in helping the Chinese government monitor and detain Uyghurs in a campaign of ethnic cleansing which some international organisations have branded as genocide.
The firm has been hit with a series of sanctions by the White House, which make it illegal for US citizens to do transactions or services for Xinjiang Tianye Group.
This incudes American citizens who work for companies that are based in other countries.
The Sunday Times reports that HSBC makes money from the share holdings as it acts as a custodian for a client, however the bank disputes the value of the share holdings and says it is far below the reported £2.2m.
Business secretary Kwasi Kwarteng addressed the issue in parliament today, saying “the Treasury has direct ownership of that relationship and it’s something I’m discussing with the chancellor of the Exchequer”.
Duncan Smith told City A.M. that chancellor Rishi Sunak should tell HSBC that they must sell the shares, which are being held for an anonymous client, and sanction them if they refuse.
“We’ve had serious problems with HBSC and I believe they are behaving very badly,” he said.
“They are in breach of the modern day slavery rules and they are in breach of US sanctions.”
There has been growing concern among UK human rights groups about HSBC’s involvement with the Chinese government.
The bank supported China in imposing the National Security laws in Hong Kong, which effectively ended freedom of speech in the region.
A senior executive from HSBC – which is headquartered in the UK, but does much of its business in Hong Kong – explicitly and publicly supported the draconian new laws at the time.
HSBC executive Noel Quinn, shortly before the laws came into place, called for Beijing to stablise the security situation in Hong Kong after more than a year of local protests against the Chinese government.
The bank has also moved to freeze the accounts of pro-democracy activists in Hong Kong under command of local police.
An HSBC spokesperson said: “We can confirm that HSBC has not invested in and does not have any proprietary holdings in Xinjiang Tianye Co. Ltd. Xinjiang Tianye’s shares are listed on the Shanghai Stock Exchange and can be traded in Hong Kong through the Shanghai and Hong Kong Stock Connect.
“Authorised participants in that system, including financial institutions like HSBC, are required to comply with the applicable rules relevant to the Shanghai and Hong Kong Stock Connect. HSBC complies with all applicable laws and regulations in the jurisdictions in which it operates.”
Treasury was contacted for comment.