HSBC and JP Morgan unwittingly processed payments for companies owned by the late Russian warlord Yevgeny Prigozhin.
Leaked documents reveal how Prigozhin’s Wagner Group was able to expand its empire by secretly funnelling transactions through the Western banking giants.
The revelations have been laid out in a report from a Washington-based think tank, which claims JP Morgan and HSBC accepted payments from a Sudanese mining company controlled by Prigozhin.
It is claimed that his Wagner mercenary group relied on a complex web of global financial networks to establish a foothold across Africa, bankrolled largely by mining operations in Sudan and the Central African Republic.
That was before Prigozhin, a hot-dog salesman turned billionaire, used his army of mercenaries to support Russia in its invasion of Ukraine.
Prigozhin played a key role in the war up until his death in a plane crash last year, which came weeks after launching a failed coup against Vladimir Putin.
His mercenary group has since been brought under Russian military’s control.
Outside Russia, Wagner has also provided support and security protection for several African governments in return for access to exclusive rights to gold and diamond mines.
In the latest report from the Centre for Advanced Defense Studies (C4ADS), it is claimed Wagner-affiliated mining companies used global banks to pay Chinese companies and local African suppliers.
This includes HSBC and JP Morgan, according to C4ADS, which inadvertently processed funds on behalf of Prigozhin in Africa.
C4ADS said: “In these instances, legitimate financial institutions facilitated the movement of funds – albeit unwittingly – that enabled PMC Wagner’s early operations on the continent.”
This system was part of the “complex financial manoeuvres” that Wagner used to expand across the continent, where the group has been accused of carrying out human rights abuses.
Leaked invoices obtained by the think tank appear to show Western intermediary banks being used to process payments for Meroe Gold, a Sudanese mining company which served as a front for Wagner.
This includes in 2017 when Meroe allegedly made a payment for diesel generators and spare parts to a Chinese company through Hang Seng Bank, which is part of HSBC.
The Sudanese company also allegedly used JP Morgan’s New York branch as an intermediary to send a payment to a seller in China that same year.
There is no evidence that either bank knew it was processing transactions made by Wagner front companies.
However, C4ADS called on companies to ensure they were not unwittingly servicing Wagner-affiliated entities by improving due diligence.
It said: “This includes identifying and addressing the risks associated with actors at every stage of the supply chain, including shippers, freight forwarders and intermediary banks.
“By interrupting Wagner’s access to legitimate channels for moving money and goods, its operating costs will significantly increase, which will reduce its available options for transit and banking, making it more expensive and challenging to sustain its activities.”
A HSBC spokesman said: “HSBC is deeply committed to combatting financial crime and to the integrity of the global financial system. We have invested significantly in building and maintaining an effective control framework to detect and mitigate this risk.”
JP Morgan declined to comment.
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