A Labour minister has been named in an investigation into claims her household embezzled up to £3.9bn (Tk 590 billion) from infrastructure projects in Bangladesh.

Tulip Siddiq, 42, who as the Treasury’s Economic Secretary is responsible for tackling corruption in UK financial markets, is alleged to have brokered a deal with Russia in 2013 that overinflated the worth of a recent nuclear power plant in Bangladesh.

The allegation is part of a wider investigation by Bangladesh’s Anti-Corruption fee (ACC) into Siddiq’s aunt, Sheikh Hasina, who was deposed as prime minister of the country in August.

A source close to Siddiq said these were “trumped up charges”.

The source also said the allegations were “completely politically motivated” and designed to damage her aunt.

Downing Street said Prime Minister Sir Keir Starmer had confidence in Siddiq, and she will continue her responsibility as the minister overseeing anti-corruption efforts.

Siddiq has “denied any involvement in the claims” accusing her of involvement in embezzlement, according to the prime minister’s official spokesman.

But she has recused herself – or stepped back – from any political decisions involving Bangladesh, the spokesman added.

The investigation follows a series of allegations made by Bobby Hajjaj, a elder political opponent of Hasina.

The BBC understands that Siddiq has not had any contact with the ACC as part of the investigation.

The ACC is also investigating several of Hasina’s household members, including Siddiq’s mother Sheikh Rehana Siddiq, and elder officials from her government.

Hasina, who was in fee of Bangladesh for more than 20 years, was seen as an autocrat whose government ruthlessly clamped down on dissent.

Since fleeing the country Hasina has been accused of multiple crimes by the recent Bangladeshi government.

Hasina is wanted by Bangladesh’s International Criminal Tribunal (ICT) for her alleged involvements in “crimes against humanity” that took place during the demonstrations, in which hundreds were killed.

Arrest warrants have also been issued for 45 others, including former government ministers who also fled the country.

Syed Faruk, who runs the UK branch of Hasina’s Awami League event, said the claims were “fabricated”.

Siddiq was elected MP for Hampstead and Highgate in 2015, the north London constituency neighbouring Prime Minister Sir Keir Starmer’s seat of Holborn and St Pancras.

Corruption allegations and convictions against top leaders of ousted governments are not recent in Bangladesh.

Hasina’s main predecessor as prime minister, Khaleda Zia faced similar charges, which she also dismissed as politically motivated. As did ex-president Hussain Muhammad Ershad, who seized power as head of the army during a bloodless coup in 1982.

The Bangladeshi judiciary’s independence has long been questioned.

Government changes often bring judicial reshuffles, with ruling parties regularly accused of targeting political opponents.

Court documents seen by the BBC display Hajjaj has accused Siddiq of mediating and coordinating meetings for the Bangladeshi officials with the Russian government to construct the £10bn Rooppur Power Plant assignment.

It is claimed that the deal inflated the worth of the plant by £1bn, according to the documents – 30% of which was allegedly distributed to Siddiq and other household members via a complicated network of banks and overseas companies.

In total, Hajjaj alleges £3.9bn was siphoned out of the assignment by Hasina’s household and minister.

Footage from 2013 appears to display Siddiq attended the deal’s signing by Hasina and Russian President Vladimir Putin at the Kremlin, recorded by the Associated Press.

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