HSBC makes almost £100million from ‘bankrolling’ Malaysian rainforest destruction, watchdog claims

New report claims bank is earning millions in interest from loans to 'corrupt' logging companies who are destroying swathes of endangered rainforest

Names four companies who are receiving funds from HSBC while working in contravention of their regulations

Suggests HSBC could fall foul of global anti-money laundering rules

Allegations: HSBC has made nearly £100m through 'bankrolling' forestry companies who have destroyed vast swathes of the Malaysian rainforest

Global banking giant HSBC has raked in nearly £100m by bankrolling Malaysian logging companies who cause widespread rainforest destruction and abuse human rights, a watchdog has claimed.

The bank is also providing financial services to companies widely suspected of systematic bribery and corruption in Sarawak, Malaysia, according to an investigation by The Global Witness.

The region exports more tropical timber than South America and Africa combined and HSBC's loans and services to logging conglomerates have generated at least £80m in interest and fees.

The watchdog claim that these companies have devastated Malaysian Borneo's rainforests and carried out abuses against indigenous peoples.

These companies are currently logging in an area three times the size of Norway.

'HSBC has bankrolled some of the world's worst logging companies and in some cases got them off the ground with their first commercial loans,' said Tom Picken, Global Witness Forest Campaign leader.

'The destruction they have caused simply couldn't have happened without the services and kudos the bank provided.'

The Global Witness report, entitled 'In the Future There Will Be No Forests Left', also suggests that HSBC is at risk of violating international anti-money laundering regulations because of its links to Malaysia's 'corrupt' forestry sector.

Because Sarawak is headed by Chief Minister Abdul Taib Mahmud, currently under investigation by Malaysia's Federal Anti-Corruption unit, HSBC could fall foul of regulations requiring extra checks on clients linked to senior politicians.

Taib is widely believed to use his complete political control over the region's forestry licensing to benefit his family and associates, says the report.

Global Witness say they have obtained strong evidence showing Taib and members of his family are engaged in systemic corruption and money laundering.



Destruction: The report claims that four Malaysian logging companies are being bankrolled by HSBC while in breach of the company's own regulations

'In light of recent money-laundering scandals, HSBC and its financial regulators urgently need to find out whether the bank is handling illegal transactions from this notoriously corrupt and destructive sector,' added Picken.



The report names four forestry companies linked to HSBC who have violated the bank's 2004 forestry regulations, which state that operations must be certified to the Forest Stewardship Council (FSC). None of the four had any FSC certification.

They include:

The Shin Yang group, which is allegedly logging and clearing pristine rainforest in an area with designated national park status. Affected communities and former staff say the company has hired armed gangsters to intimidate those who speak out about their activities.

Sarawak Oil Palms, who are allegedly clearing high conservation value peat forests for oil palm plantations, releasing vast quantities of greenhouses gases.

WTK Group have been logging destructively in the 'Heart of Borneo' - triggering a series of catastrophic landslides that blocked a 50km stretch of Sarawak's largest river in 2010.

Ta Ann Group has been clearing rainforest which is home to the critically-endangered orangutan.

Endangered: Global Witness say at least one of the logging companies is devastating the habitat of orangutangs in Malaysia

Picken added: 'In 2004 HSBC brought in progressive world-wide forest policies designed to avoid precisely these sorts of commercial relationships and make the bank a market leader on sustainability.

'It has consistently traded on these commitments in public, yet failed to meet them in practice. The bank should hold its hands up, drop these clients immediately and compensate the victims for the mayhem it has helped cause.'

A HSBC spokesman said: 'HSBC cannot discuss current or former clients, whether individuals or corporates, for reasons of confidentiality - in fact to do so would be against the law.'

'HSBC remains committed to sustainable banking, working with interested parties and undertaking responsible engagement with clients to ensure they meet and continue to comply with its sector-specific policies.



'We value the information that NGOs can provide us to help us improve our Sustainability Risk Policies over time and also to help us assess the commitment, capacity and track record of our customers to implement them.