Prime Minister Keir Starmer of Britain suffered a new blow on Tuesday when his anticorruption minister, Tulip Siddiq, quit her post weeks after being named in an embezzlement investigation in Bangladesh.
Ms. Siddiq, 42, is the niece of Sheikh Hasina, the former prime minister of Bangladesh, who resigned last year after 15 years in power and fled the country amid a broad student-led protest movement against her repressive rule.
A junior minister in Mr. Starmer’s government, Ms. Siddiq had previously referred herself to the prime minister’s ethics adviser for investigation after questions arose over whether she had benefited financially from her ties to Ms. Hasina.
Ms. Siddiq has dismissed the allegations against her as politically motivated and insisted that she did nothing wrong. But in an official letter of resignation to Mr. Starmer on Tuesday, she wrote that the media focus on her risked diverting attention from the government’s political agenda.
“I want to assure you that I acted and have continued to act with full transparency and on the advice of officials on these matters,” Ms. Siddiq wrote. “However it is clear that my continuing in my role as economic secretary to the Treasury is likely to be a distraction from the work of the government.”
As economic secretary to the Treasury, a position she was given when the Labour Party came to power last July, Ms. Siddiq was responsible for tackling corruption in financial markets, including money laundering and illicit finance.
Mr. Starmer’s ethics adviser, Laurie Magnus, said on Tuesday that having reviewed the facts regarding Ms. Siddiq’s case, he concluded that she had not broken the code under which ministers serve. In a letter to the prime minister, he said he had found no evidence of impropriety or that she had made unusual financial arrangements.
However he added that it was “regrettable that she was not more alert to the potential reputational risks — both to her and the government — arising from her close family’s association with Bangladesh.”
And he added, “Unfortunately, I have not been able to obtain comprehensive comfort in relation to all the UK property-related matters referred to in the media.”
The departure is the second high-profile resignation from Mr. Starmer’s government in recent months, after Louise Haigh quit as transport secretary in November when it emerged that she had been convicted of a fraud offense involving a phone a decade ago.
Unlike Ms. Haigh, Ms. Siddiq was not a member of the cabinet, but she was regarded as a political ally of Mr. Starmer’s, and the nature of her government role added to the embarrassment. She has been replaced by Emma Reynolds, another junior minister.
Ms. Siddiq was named in December in an investigation into claims that her family had embezzled up to £3.9 billion pounds, or nearly $5 billion, from infrastructure projects in Bangladesh.
Officials of the new Bangladeshi government have accused Ms. Hasina and her associates of siphoning off billions of dollars from the country every year, bringing its economy to the verge of collapse.
Ms. Siddiq was born in London. Her father was an academic, and her mother, Sheikh Rehana, is the sister of Ms. Hasina. The two sisters were the only survivors of a 1975 military coup that massacred the rest of their family, including their father, Sheikh Mujib ur Rehman, the founding leader of Bangladesh.
The furor over the Bangladeshi investigation prompted a wider focus in the British news media on Ms. Siddiq’s ties to her aunt, including reports that she had lived in London properties with links to Ms. Hasina.
Bangladesh’s interim leader, Muhammad Yunus, said in an interview last weekend with The Sunday Times that Ms. Siddiq should apologize and that the London properties should be handed back to his government if they were gained through corrupt means.
On Tuesday, Kemi Badenoch, leader of the main opposition Conservative Party, criticized the prime minister for failing to take action earlier.
“It was clear at the weekend that the anti-corruption minister’s position was completely untenable,” she wrote on social media. “Yet Keir Starmer dithered and delayed to protect his close friend.”
In the official exchange of letters following Ms. Siddiq’s departure, Mr. Starmer wrote that his former minister had “made a difficult decision,” but added that “the door remains open” to her going forward — signaling that a return to a government might be possible for her in the future.
Mujib Mashal contributed reporting.