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Is he a big fish or he is just a middleman? We trace the story of Hassan Ali and how millions of rupees are illegally sent to India through Hawala to politicians, drug dealers and terrorists. 

Syed Nazakat in New Delhi

He could be India’s billionaire number 4, a man of Rs 35,000 crore of wealth. Hassan Ali, 53, is believed to come from a quiet successful business family in Pune. He owns a farm, apartments in Mumbai and bungalows in other parts of the country. The people who know Hassan believes that he is probably more involved in investing black money of politicians and bureaucrats in stock markets. Yet nobody knows is Hassan Khan intermediary, an agent or is he a big fish. But behind Hassan Khan’s story is a larger story of how millions of rupees are illegally send to India through Hawala to politicians, drug dealers and terrorists. 

“Hawala has become a channel for drugs trade, arms trade, human trafficking, and legalising kickbacks,” Joginder Singh, former director of CBI told Sahara Time. “It is also used to pay for insurgency in Kashmir, north east, to support terrorists outfits and fundamental parties”.

 Given its informal nature, there is no precise measure of how much money is sent to India through hawala. Interpol has placed the size of Hawala money in India at possibly 40 percent of the country’s gross domestic product. According to the most recent figures available from the Interpol website there is a huge $680 billion of money in the country’s Hawala system. The Audit giant KPMG International estimates that the amount can be up to $1.5 trillion, and some of that money ends up in the hands of terrorist groups. 

This huge inflow of dirty money into India is also region specific. According to the security experts money coming to Kashmir is normally coming from Pakistan and Gulf, money coming to Chennai is normally of expatriates working in South-East Asian countries, money coming to Mumbai normally comes from Dubai and belongs to the underworld and money coming to Punjab is of expatriates working in North America. 

Hawala is the easiest way to send money from one part of the world to other. Anyone can walk into a hawala shop in Pakistan, Dubai, or a thousand other cities in southern Asia, put down a stack of cash and ask that the sum be transferred to a recipient in another country. Money is sent around the world on a handshake and a code word and with hours the recipient will get the money. The transaction just takes to make a couple of phone calls or send a fax and the records of transactions are kept just until the deal is completed. Then they are destroyed. While expatriates use it to avoid tortuous banking channels and quick delivery at home, the terrorists use this route for fast, safe and untraceable transfer.  But at the heart of hawala system is huge black money of businessmen and politicians. It was only after ten years of over Rs. 1,000 Jain hawala scam, that former CBI joint director B R Lall revealed last year how CBI was forced to stop its investigation against top politicians who were main beneficiaries of Rs. 1,000 Jain hawala case.

Hassan Ali’s case too seems to be just the tip of a massive iceberg, which, according to reports, involves political heavyweights, industrialists, businessmen, and film financiers among others. As Income Tax Department and Enforcement Directorate officials are expected to go to Switzerland to get the Swiss bank lockers opened, which have reportedly been frozen, more sheletons are expected to spill out.

Hassan Ali’s story is of Hyderabad’s small time fraud who wanted to do something big in his life. He left Hyderabad in mid nineties, divorced his wife, and started his career from the downscale Musheerabad and used to claim that he was the maternal grandson of Aziz Jung, a noble in the court of Nizam. It was during this time in Pune he entered into money laundering business where he reportedly developed good contracts with businessman and politicians.  The route on which he is said to have operated is Switzerland, Saudi Arabia, Mauritius and India.

Former CBI director Joginder Singh says that political interference has dangerous potential of undermining the threat posed by the terrorism. “Money is sent through hawala from abroad to fund anti-national and terrorists groups in the country.  It is totally impossible to stop the illegal flow of money if politicians don’t support the agency’s functioning,” says Joginder Singh. Today as terrorist groups are expanding their network they need more money to support their network. Terrorists groups need money to motivate people to join their activities, to procure materials like arms and ammunition and to keep their network going. 

According to the security agencies almost all the funding to separatists leaders and militant outfits in Kashmir is going through hawala. K Srinivasan, Deputy Inspector General of BSF, who has served in Kashmir, says that huge hawala money is sent to Kashmir to support anti-India activities. “Every separatist leader in Kashmir is on the pay list. They receive huge amount from Pakistan and their sympathizers from abroad to support their anti-India activities, says K Srinivasan.The security agencies perception of terrorism has also brought more focus on funding of terrorist groups in the country.  In the national capital – New Delhi – the special cell of Delhi police has intensified its efforts to chock the hawala network.”We know that if we have to fight terrorism we have to stop their [terrorists] funds, says Deputy Commissioner (special cell) of Delhi Police, Alok Kumar. “We have busted many hawala rackets wherein money was routed from abroad for anti-India activities”. 

In Mumbai, the anti-terrorist squad of police believes that Faisal Sheikh, who was arrested along with his brother Muzammil for alleged LeT links in Mumbai last year, had developed solid network of hawala dealers who were transferring money from Gulf countries to India to support terrorist groups.

But the question is why tracking hawala money is so difficult?

“It’s difficult because offshore financial institutions, foreign banks, and tax havens like Switzerland stay beyond the reach of our intelligence agencies, says Joginder Singh. There are other difficulties also to track down the inflow of dirty money into India. The security agencies also admit they are also unable to stamp out hawala altogether, with even the burgeoning middle class using it to send money to their children in colleges abroad.

Box –1

Dirty money trail

Hawala money in India is at possibly 40 percent of the country’s gross domestic product. This huge inflow of dirty money into India is region specific Hawala is the easiest way to send money from one part of the world to other In Hawala money is transferred via a network of hawala brokers, or hawaladars. At the heart of hawala system is a huge black money of businessmen and politicians. Hawala is attractive to customers because it provides a fast, convenient and safe transfer of funds, usually with a far lower commission than that charged by banks. Hawala brokers often earn their profits through bypassing official exchange rates. Terrorists use hawala to transfer money to fund their activities. At least 173 countries have issued blocks on terror funding.

Box – 2

Who is this Hassan Ali?

A horse breeder, an antique dealer and suspected hawala trader

He came to Pune 10 years ago, posing as a descendent of the Nizam family from Hyderabad.

Using his so-called royal ancestry, Ali befriended businessmen in Pune

IT raids his house unearth Rs 350 billion hawala racket

He could possibly be one of the top five richest Indians or the fourth richest man in India.

He runs a thriving horse breeding farm, owns properties worth thousands of billion in Pune, Mumbai, Hyderabad and Bangalor

He was arrested in 1996 for issuing fake bank drafts to a few Marwaris in Hyderabad and he has three homes in the city.Former BJP MP Kirit Somaiya alleges that Ali is actually a frontman for two “‘powerful” Union ministers

BOX- 3

Some Big Hawala rackets

1990 – US$18 million

Hawala scandal was an big political scandal that implicated some of the country’s leading politicians including L. K. Advani who was then Home Minister. Hawala brokers, the Jain brothers were alleged connections with payments being channelledto militants in Kashmir.

1997  – 1 crore

Abdul Majid Dar disclosed that one senior leader Hurriyat persuaded him to open a cloth shop and accept the amount on behalf of his organisation

1997  –  40 lakhs

Mohd Nazir and Shafi Mir Supreme Commander of HM sent the amount to Kashmir via Dubai and through the owner of a carpet company.

January 14, 2002  39.59 lakh

Pre-Republic Day arrests of 4 militants including of a Gujarati Hawala Operator admitted to have handled Rs 20 crore in the past

October 18, 2003 – multi crores

Crime branch of the Haryana police busted a major international hawala racket having links in Dubai, Pakistan, Bangladesh and other countries.

3 March, 2005 – 1 crore

ED seized Rs one crore cash, documents and claimed to have unearthed a hawala transaction in Chennai

May 06, 2006 – 20 crore 

In Kochi DRI seized 10 international shipment containers of fibreboards imported by the private firm from a company owned by an Indian businessman in Malaysia.  Each container was found to hold fibreboards amounting to Rs.20 crores

December 27, 2006 – multi crore

Delhi police busted an international drugs module, arrested six alleged drug peddlers, including a Pakistani national and two Nigerians. The drugs were supplied to their conduits in India and the monetary transactions were done through hawala

November 9, 2006 – 64 crore

DRI busted a major hawala racket worth Rs 64 crore and arrested pharmaceutical manufactures involved in it from Hyderabad and Vijayawada

March 13, 2007 – multi crore

Three people from India were charged with hacking into brokerage accounts in the United States as part of a multimillion-dollar scheme to pump up the value of their shares

(Source: Enforcement Directorate, Ministry of Finance, New Delhi, CBI and Delhi police)

(Sahara Time, 2007)

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