UK’s anti-corruption minister, Tulip Siddiq, has stepped down after being named in an embezzlement investigation in Bangladesh.

Ms Siddiq’s resignation came barely two months after Louise Haigh, British PM Keir Starmer’s transport secretary, resigned after being convicted of a fraud offence involving a phone years ago.

Ms Siddiq, 42, a niece to the ousted former prime minister of Bangladesh, Sheikh Hasina, had repeatedly denied any wrongdoing following a self-referral to the prime minister’s ethics adviser, Laurie Magnus.

In the resignation letter addressed to Mr Starmer on Tuesday, Ms Siddiq noted she could no longer continue in her capacity, stating she took the decision after wider consultations.

“It is clear that continuity in my role as Economic Secretary to the Treasury is likely to be a distraction from the work of the government”, Ms Siddiq 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.”

Meanwhile, Mr Laurie, in a letter to the prime minister on Tuesday, confirmed that Ms Siddiq had not broken the code under which ministers serve, following the review of facts regarding her case.

However, he noted 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.”

Ms Siddiq was identified in December in an investigation into claims that her family had embezzled up to £3.9 billion from infrastructure projects in Bangladesh.

Ms Hasina and her associates have been accused of embezzling billions of dollars from the country on a yearly basis, making the Bangladeshi economy vulnerable to collapse.