Hawala trader
Hasan Ali's $ 8 billion (about Rs 36,000 crore) network of illegal money transactions is unravelling.
On Saturday, Ali revealed to agencies probing his accounts that a substantial portion of the thousands of crores in his Swiss bank and other accounts elsewhere belonged to top Indian politicians and bureaucrats, including three former chief ministers of Maharashtra.
This breakthrough has come as a breather to the investigating agencies that have been at the receiving end of the courts for their lacklustre probe into Ali's case.
In what could place Ali at the centre of a devious parallel banking network for the country's most corrupt politicos and babus, investigators have found an ingenious money- laundering mechanism that succeeded in turning black money into legitimate earnings through the stock market.
Following these revelations from Ali, the investigators have summoned Indian representatives of international banks such as UBS, Barclays and Credit Suisse to share more information on his transactions with them.
According to probe agencies, Ali took unaccounted black money from Indian politicians out of the country through the hawala channel and parked them in bank accounts in various countries across the globe, especially Mauritius.
He would then bring this money back to India, invest it in the stock market through participatory notes to buy up shares for people named by the politicians. At times, the money would come in as foreign investment straight into companies floated by friends and family of these politicians.
"In those years, especially the late 1990s and early 2000s, the stock markets had huge black money riding on it, which was often untraceable. Ali smartly bought participatory notes which were not required to be registered with SEBI. In the same fashion, some of the money would also come into companies that would have a beneficiary of the politician's family or in some cases, a completely new business entity in the name of a beneficiary of the politician," said a source close to the probe agencies. Through this strategy, Ali is believed to have pumped in money into the businesses of the son-in-law of one of these former CMs.
Ali was remanded to four days' custody of the
enforcement directorate (ED) on March 17. His custodial interrogation was extended by the Supreme Court by another three days.
Ali has told his interrogators that between 1990 to 2000, he got in touch with several top bureaucrats as well, who like the politicians wanted him to launder their ill-gotten wealth. "He says these introductions then became permanent contacts and he did launder money for them several times, also getting his own share of the profit from these transactions. However, he claims that he was just a small fish in the entire episode," said another official source.
Officials however are not yet ready to give out the names of the politicians, bureaucrats or bankers whose names Ali has allegedly revealed. They are piecing the hawala jigsaw together to crack the case before letting out the details of the network. Ali's claims of laundering black money for politicians and bureaucrats probably explain why no probe was initiated against him for a very long time.
According to sources, Ali has told investigators that he did not have any direct links with most politicians whose money he handled but were in fact introduced to them by his friends and partners in his hawala affairs.
Although he claims to be a small fish, the investigators are not willing to buy the claim. The ED has apparently sought explanation from Ali regarding the initial deposit of Rs 5 crore in his bank account with the UBS Bank, Singapore, in 1982, which mysteriously grew to US $1 billion (`4,500 crore at current conversion rates) in 1999, a year-and-a-half before the 9/11 attacks in the US.
"This aspect of his business is something we must look into as his close connections with Adnan Khashoggi, the international arms dealer, run very thick," says an official. Investigators probing the Pune businessman's accounts have found a phenomenal jump in his assets after 2001, with money coming in from 'suspicious' accounts from countries such as Dubai and Saudi Arabia, among others.
The date is significant because investigators believe that after the terror attacks in September 2001, the US and other countries had stopped transactions of money in different bank accounts related to terrorist organisations. Ali's account on the other hand just kept growing with money flowing in from many Middle Eastern countries. This has what raised eyebrows among the many investigating agencies.
" The money could have been routed to his account as other banks were being pressured to freeze accounts. This explains how the money in his account jumped from a few hundred crores to thousands of crores.
The alarming jump and the freezing of funds after the terror attack could not be a coincidence," said an investigator.
The Comptroller and Auditor General's report ( CAG report) indicates how Ali's income jumped from Rs 529 crore in 2001- 2002 to Rs 5,404 crore in 2002- 2003.
From here, it kept soaring as Rs 54,268.6 crore were accumulated in his account in 2006- 2007. Investigators believe that Ali's income did not match with the money coming in to his account.
" He has claimed to be a businessman, a stud farm owner and a scrap dealer. However, even if you do all this together you can't have so much money in your account," said the investigator. He said that Ali has not been able to explain where the money had come from.
" Forget about the thousands of crores. To date, Ali has not been able to explain the source of Rs 5 crore, which was the initial deposit in his UBS Bank account in Singapore in 1982. Apart from arms dealer Adnan Khashoggi, we believe he could be in touch with other sources too," said the officer.
It remains to be seen whether the ED would seriously investigate or simply ignore Ali's revelations as the agency has been unable to initiate any action since 2007 against the money- launderer, until the SC rapped the government on its knuckles. The ED's veil of secrecy on Ali's revelations also does not inspire confidence that it will pursue the hawala trail.
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