Tulip Siddiq has resigned as a Treasury minister after accepting the government was being harmed by the furore over her close ties to her aunt, the ousted prime minister of Bangladesh now accused of corruption.
Siddiq, who was the City and anti-corruption minister, stepped aside after an investigation by Laurie Magnus, the adviser on ministerial standards, into her use of properties given to herself and family by allies of the regime of Sheikh Hasina.
She was not deemed by Magnus to have broken any rules over her use of the homes and he found no evidence to suggest that any of Siddiq’s assets were derived from anything other than legitimate means.
The inquiry also looked into her presence at the signing of a 2013 nuclear deal between her aunt and Vladimir Putin in Moscow. The adviser accepted her explanation that she had been there only socially and as a tourist.
However, Magnus also said a lack of records and lapse of time has meant that he had “not been able to obtain comprehensive comfort in relation to all the UK property-related matters referred to in the media”.
The watchdog added that Siddiq could have been more alive to the reputational risks arising from her family’s ties to Bangladesh and suggested the prime minister would want to consider her responsibilities.
After Magnus submitted his conclusions, she resigned on Tuesday saying that she had fully declared all her financial interests and relationships but it was clear that the situation had become a distraction for the government.
It is the second resignation of a senior woman from Starmer’s government over an ethics issue after Louise Haigh quit as transport secretary last year over a conviction for fraud. Haigh had wrongly reported a mobile phone as stolen to police before she was an MP.
Siddiq is also under investigation by authorities in Bangladesh over allegations of corruption linked to her aunt’s collapsed regime, which she “totally refutes”.
In her letter to Starmer, Siddiq said that she had been keen for the independent adviser to show she had not acted improperly. “However, it is clear that continuing in my role as economic secretary to the Treasury is likely to be a distraction from the work of the government,” she said.
“My loyalty is and always will be to this Labour government and the programme of national renewal and transformation it has embarked upon. I have therefore decided to resign from my ministerial position. I would like to thank you for the privilege of serving in your government, which I will continue to support in any way I can from the backbenches.”
Starmer said he accepted her resignation “with sadness” and hinted at a swift ministerial comeback, saying that the “door remains open for you going forward”.
He added that he was clear Magnus had found no breach of the code and no evidence of financial improprieties. “I appreciate that to end ongoing distraction from delivering our agenda to change Britain, you have made a difficult decision,” he said.
Siddiq will be replaced as City minister by Emma Reynolds, a Department for Work and Pensions minister, who previously worked for TheCityUK, the financial services industry group.
It was previously reported by Bloomberg in December that Reynolds had been part of a lobbying campaign while at TheCityUK to exempt China from the strictest level of reporting requirements for a new registration regime for agents of foreign influence – a scheme that has not been brought forward so far by Labour.
Torsten Bell, a new MP and former chief executive of the Resolution Foundation, will take Reynolds’s position as pensions minister.
Siddiq had earlier this month referred herself to Starmer’s adviser on ministerial standards, after it emerged she had lived in properties associated with people with links to her aunt.
These include a two-bedroom flat near King’s Cross in central London, given to her by a person with links to her aunt’s regime in 2004. Siddiq had previously insisted to journalists the property was given to her by her parents, and told Magnus in his inquiry that she only more recently became aware it was in fact transferred as a gift from a Bangladeshi businessman.
She also lived for three years while an MP until 2018 in a Hampstead flat given to her sister in 2009 by another businessman with links to the former Bangladesh government. Siddiq currently lives in a £2m rented property owned by a businessman linked to the UK wing of her aunt’s political party, despite owning a flat of her own in the constituency.
Allies of the government defended Siddiq’s resignation, with Jonathan Ashworth, the chief executive of the Labour Together group, saying her behaviour “stands in some considerable contrast to Conservative ministers who refused to resign even though their behaviour was unbecoming”.
However, the Conservatives and Liberal Democrats criticised Siddiq and the government over the episode. Kemi Badenoch, the Conservative leader, said: “It was clear at the weekend that the anti-corruption minister’s position was completely untenable.
“Yet Keir Starmer dithered and delayed to protect his close friend. Even now, as Bangladesh files a criminal case against Tulip Siddiq, he expresses ‘sadness’ at her inevitable resignation. Weak leadership from a weak prime minister.”
Sarah Olney MP, the Liberal Democrat Cabinet Office spokesperson, said: “It’s right Tulip Siddiq resigned, you can’t have an anti-corruption minister mired in a corruption scandal. After years of Conservative sleaze and scandal, people rightly expected better from this government.”