King Con: Hassan Ali Khan
by Dhiraj Nayyar and Shantanu Guha Ray
by Dhiraj Nayyar and Shantanu Guha Ray
http://indiatoday.intoday.in/site/Story/127982/Cover%20Story/hassan-ali-khan-has-$8-bn-in-black-money-in-a-swiss-account.html
Ask Hassan Ali Khan what he does and he replies with disarming nonchalance that he is a simple scrap dealer with an annual income of Rs 30 lakh. This "simple scrap dealer" has a Swiss bank account with $8 billion in deposits. This figure has been verified by INDIA TODAY from a letter written by UBS, Zurich, to Khan. The Government of India has confirmed the existence of this account in UBS, and ordered him to pay Rs 50,000 crore in tax on that wealth. Khan hasn't paid a rupee. He clearly could not care less. On January 24, Khan was seen placing bets at the Pune Race Course.
He believes he has protection from the powerful in Delhi. The authorities have enough evidence, but have done nothing for at least three years.
Hassan Ali Khan with his wife
The Government began an investigation into Khan's fabulous wealth (the source of which is still unknown) in January 2007, when the Income Tax (IT) Department conducted a series of raids on the premises of Khan and his associates in Pune, Mumbai and Kolkata. The information and documentary evidence gathered from the raids on January 5, 2007 formed the basis of the Enforcement Directorate's (ED) damning Enforcement Case Information Report filed on January 8, 2007.
The ED report and all the documentary evidence gathered in the raids were considered vital enough to become the basis of Letters Rogatory to five foreign governments requesting assistance in the investigations against Khan and his associates. The Letters Rogatory issued by the designated special court for cases under the Prevention of Money Laundering Act, 2002, in Mumbai, to authorities in Singapore, the US, Hong Kong, UAE and UK during the course of 2009 list details of five Swiss bank accounts operated by Khan and his associates. Each Letter contains a list of cross-border financial transactions from these Swiss accounts to specific accounts in the five countries. india today has exclusive possession of these letters.
The $8 billion is a minimum; Khan's total wealth could be far more as he has more than one account. Investigations suggest that this astonishing figure emerged through deals with a number of people in India and abroad, including international arms dealer Adnan Khashoggi. Khan has at least one close business associate in India, Kolkata-based businessman Kashinath Tapuriah, whose wife Chandrika has an outstanding it notice of Rs 20,000 crore. The Government suspects that at least some of the funds in Khan's account are proceeds from illegal commissions in aircraft deals that involve an American corporation and Air India, as said in the ED's Case Information Report.
Khan knows enough to provide unique and unprecedented information on massive 'hawala' operations out of India. But he has claimed complete innocence, in a single handwritten confessional statement. Verifiable facts expose this "confession" as a pack of lies. But the Government is doing nothing.
Khan believes he is immune to arrest or accountability. Public pressure over corruption has, at last, forced the Centre to stir, albeit just a little. The Government is still sitting on a list of 26 people with accounts in a Liechtenstein bank that was handed over by German authorities.
The Union Cabinet took note of the black money issue in a meeting on January 20. Prime Minister Manmohan Singh, however, has taken the position that the names of foreign account holders cannot be revealed as they have been received on the condition of "confidentiality", a decision that has provoked cries of "cover up" from the Opposition.
Click here to Enlarge
Finance Minister Pranab Mukherjee addressed a press conference on January 24 where he admitted "the menace of illicit funds generated both as a result of tax evasion and corruption". Confirming the Government's continued ambivalence on the issue of black money, he said, "So far there are no reliable estimates of black money both inside and outside the country… All these estimates are based on various unverifiable assumptions and approximations." He repeated the "confidentiality" argument. Even if there is merit in this view, the fact is that Khan's hawala stash and identity are known. When asked specifically about Khan, Mukherjee said, "Investigation is still continuing... The case is being pursued both by the Enforcement Directorate and the Income Tax Department." The information in this case was collected, in effect, in January 2007. Why has the Government refused to act for four years?
His explanation simply does not wash. The Government has every single detail and knows the entire truth on Khan. Who is protecting Khan and why?
The Case Against Khan
The Letters Rogatory, delivered to the relevant authorities in the five recipient countries by the Ministry of External Affairs in 2009, list Khan's illegal activities in devastating detail.
Says the Letter Rogatory to Singapore, "Mr Hassan Ali Khan S/O Late Mr Ghousuddin Ali Khan (date of birth: January 16, 1952), an Indian national resident, has been maintaining and operating the following Bank accounts in Switzerland. These accounts have been used by him and the other co-accused as the feeder source for receiving and channelising of the said proceeds of crime: A/C No. Z.A1-A1A with UBS Zurich, A/c No. 206-794-786 with UBS Zurich, A/c No. 206-789-758 with UBS, Zurich, A/C no. 206-790-786 with UBS, Zurich and A/c No. 0835-844346-61 with Credit Suisse Bank, Zurich."
CASH COUNTER
Names listed by the investigating agencies in their show-cause notices:
HASSAN ALI KHAN
Pune and Mumbai
RHEEMA ABBAS KHAN
Pune and Mumbai
KASHI NATH TAPURIAH
Kolkata
CHANDRIKA TAPURIAH
Kolkata
ADNAN KHASHOGGI
Monaco
DR PETER WEILLY
Location unknown
PHILIP ANANDRAJ
Zurich,Switzerland
FAIZAL ABBAS
Pune
SAYYED ABBAS AHMED NAQVI
Mumbai
MUSKAN ABBAS NAQVI
Mumbai
ANIL SHANKAR
Bangalore
SHESHADRI
Bangalore
The Letters Rogatory confirm that Khan had total deposits of more than $8 billion in UBS Ltd. A letter dated December 8, 2006 from M. Rohner of UBS Wealth Management to Khan, a copy of which is attached in the Letters Rogatory as Annexure F, clearly states that "the client can withdraw a part of his assets deposited with UBS Ltd, to the tune of $6,000,000,000 ($6 billion) of the total deposited $8,000,453,000. The client is free to invest this amount as and when he chooses to do so. The balance of $2,000,453,000 will remain bound with UBS Ltd, until January 15, 2007."
Investigating agencies found no source of income which could explain such large deposits. Referring to a secret letter written by the Additional Commissioner of Income Tax (Investigations), Mumbai, after the department's raids on Khan, ed Assistant Director Sanjay Tripathi writes, "Shri H.A. Khan's legal source of income as revealed by his non-existing income tax returns cannot support his lifestyle which includes purchase of costly properties, luxury cars, and travel abroad for long periods by first class. Certainly it appears that his lifestyle is being supported and sponsored by proceeds of crime."
There is extensive evidence of cross-border financial activity from the five Swiss bank accounts, which prompted the issuing of Letters Rogatory to five countries. There are at least seven transactions relating to entities with addresses in Singapore. There are 12 transactions from the accounts in Zurich directly to the US or via the US to accounts in Dubai and Hong Kong. One such transaction of $7 million was made from Khan to the account of business associate Chandrika Tapuriah in Dubai on March 12, 2001. The Letter Rogatory to the UK has evidence of three transfers to a Barclays Bank account in Edgware Road, London. The Letter Rogatory to the UAE lists seven bank accounts in Dubai, six in Standard Chartered and one in ABN Amro, operated by Khan and his associates. The ed has list of four transactions with entities in Hong Kong, two of which had accounts with HSBC in Kowloon, Hong Kong.
On the international money transfers, ED says, "The transactions are part of a series of transactions which involves several violations of Indian banking laws as well as an effort to manipulate the business contacts with criminal intent of slashing unaccounted assets abroad i.e. in Switzerland, a tax haven."
The ED drops a hint about the likelihood of corruption as the source of these funds. "Clear indications are there of corruption money involved in mega transactional deals representing commissions (which appear to be illegal) received on sale of Boeing aircraft held by Air India."
The conclusions from Tripathi's summary of information received from it Department are unambiguous, "It appears it is being used for money laundering purposes... It is suspected that these accounts contain money originating from various international destinations and are proceeds of heinous crimes such as terrorism, gun-running, corruption and organised forgery and fraud... The unholy nexus of this huge amount of illegal money generated with subversive activities and terrorism needs a deep probe."
The ED's Case Information Report has a long list of assets-properties, jewellery, cash-owned by Khan and his associates. The report notes a sudden increase in Khan's deposits in 2006. Says the report, "The increase in bank deposits maintained in UBS Bank, Zurich, from $6,620,565,431 as on 31.8.2006 to $8,000,453,000 as on 8.12.2006 is showing an exceptionally high increase of more than $1.38 billion in less than four months."
The Case Information Report lists five high value properties owned by Khan which, it suspects, are 'proceeds of crime'. These include a flat at Anand Darshan, Peddar Road, Mumbai; a flat at Valentine Society in Koregaon Park, Pune; a flat in Banjara Hills, Hyderabad; a property at Akbar Manzil, also in Hyderabad and a hotel Chateau Gutsch in Switzerland purchased, according to the ed, for approximately $25 million in 2001.
The ED suspects that for at least some of these properties "worth crores of rupees, payments were purportedly made in cash". It also lists Khan's collection of cars, including two Mercedes and a Porsche for which the ed says "payments are alleged to have been made in cash". The report also mentions the purchase of 15-20 horses worth several lakhs of rupees and the recovery of huge amounts of cash and jewellery worth crores. Racing is Khan's private passion.
The Money Laundering Trail
Khan denies all of this. "On being asked about any amount in any of the banks in Switzerland in the name of myself, my wife, Ms Rheema Abbas Khan, and my in-laws, I state that no account is there," Khan said in a handwritten five-page confessional statement, a copy of which INDIA TODAY has.
A LETTER FROM UBS TO Khan clearly states that "the client can withdraw a part of his assets deposited with UBS Ltd, to the tune of $6,000,000,000 ($6 billion) of the total deposited $8,000,453,000".
On December 29, 2008, Khan was served the first it notice for unpaid taxes of Rs 36,000 crore for the unaccounted $8 billion. Later, a revised IT notice pegged it at Rs 50,000 crore.
ED and IT officials suspect Khan-who once actually dealt in metal scrap from both Dubai and Hyderabad and exported rice and onions to the Middle East under the brand name of Al Samir Enterprises-eventually became a conduit for facilitating the transfer of illegal money of politicians and industrialists in Swiss banks. But the investigators have failed to establish the nexus in what could have been India's biggest foreign exchange scandals. The 140-page it show cause notice, a copy of which is with india today, meticulously details how Khan manipulated the system to grow his funds from an initial deposit of $1.5 million in 1982 to a hefty balance of $8 billion by 2006 (see box: Singapore to Switzerland Cash Trail) by working with a host of national and international contacts, including controversial arms dealer Khashoggi.
A multi-agency probe is currently on to determine the manner in which Khan transferred his monies and if the underworld was involved in transferring his loot.
Investigators are also examining whether there are any links between a $500-million investment by Khan and the financing of terrorist activities. This probe is being conducted by a three-member panel headed by Samir Bajaj, deputy director, ed, Mumbai; Rajiv Nabar, IT commissioner (appeal) and Sanjay Saxena, additional commissioner (economic offences wing) in the Mumbai Police. "He dealt in huge sums and this transferred over a period of time, we have some inkling of how it was routed but we are on the case," said a senior Intelligence Bureau official.
The Stud Farm Owner
Famous in Pune and Mumbai business circles as a stud farm owner, the 58-year-old Khan was always present at races that drew Mumbai's rich and sometimes infamous at the 211-year-old club that lies close to Haji Ali. The Grand Stand, the place for the rich, was one of them with his own crowd from 11 a.m. to 4 p.m. on all race days without fail. Officials of the Royal Western Turf Club of India remember Khan as an unassuming stud farm owner from Pune who was sometimes called to hand over prizes.
The prolonged interactions at the race course, claim ED and IT officials, became the biggest networking session for Khan, suspected to be India's number one hawala king.
Khan, known for his lavish parties and penchant for single malt Scotch whisky, lived in Pune's posh Koregaon Park after marrying Rheema, daughter of Pune-based horse trainer Abbas Ahmed Abbas. They met at Mumbai's Mahalaxmi Race Course. Earlier, Khan had divorced his first wife, Mehboob Unnisa Begum, with whom he used to live in Hyderabad's Banjara Hills, and eventually moved to Pune.
Khan's father was an excise officer, but the son preferred business. He initially sold antiques, claiming to be a descendant of the Nizam's family. Later, he started a car rental service in 1970, before switching to scrap metal trading in Dubai in 1983.
He downed the shutters on his business, called Great Ventures, in 1993 because, say sources, he had developed an interest in horse racing. His foray was in Hyderabad in 1991 with only two horses. He started racing in 1994 at the Mahalaxmi Race Course, where he also was a punter, and eventually expanded his horse racing activities to Pune, Delhi, Chennai and Bangalore.
The Business Associates
Khan told the ED in January 2007 that he was a Non Resident Indian (NRI) based in Dubai in order to escape the FEMA (Foreign Exchange Management Act) dragnet. But days later, when the ED officials accosted him with another notice, saying his NRI status in Dubai had expired in 2003, he had no answer. "He kept quiet when we showed him his correspondence with top managers of the UBS AG and the letter confirming that his last balance with the bank was $7.78 billion. And then, he coolly walked into the room of the interrogators and wrote on a piece of white paper that he had no account," said a senior police officer from Pune in a telephonic conversation."On being asked about any amount in any of the banks in Switzerland in the name of myself,my wife Rheema Abbas Khan, and my in-laws, I state that no account is there."
HASSAN ALI KHAN
The officer, speaking on condition of anonymity, further said it was Khan's former business associate, Kashinath Tapuriah, who not only confirmed Khan's expired NRI status but also shared confidential bank letters that confirmed the existence of $8-billion deposits and revealed Khan's links in the money laundering scandal. Tapuriah also offered the ED a document notarised by one Nicolas Ronald Rathbone Smith, of the Notary Public of London, who certified the genuineness of the signatures on Khan's passports. Interestingly, it was in this same statement that Khan had mentioned the opening of the first UBS Singapore account in 1982 and noted how Khashoggi's recommendation had helped him shift the account to Zurich.
Among the documents Tapuriah shared-available with india today-confirmed Khan's $300-million deal with Khashoggi, probably for a chateau Khan purchased in Switzerland. "If Tapuriah and one Philip Anandraj (one of Khan's business associates) had not shared documents and revealed Khan's foreign exchange transactions, it would have been very difficult to nail his lies," the officer said. In his confessional statement, Tapuriah has named two southern Indian politicians as the ones who had introduced Khan to him. "My businesses were running into losses and I was referred to Khan's name as he could have arranged finance/funds from his sources and resources. He was called Nawab and he had said to me that he was the great grandson of the Diwan to the Nizam of Hyderabad. He even told me that he had certain jewellery and items and showed me a piece or so but as I was not interested in the same, I did not get into details further. My interaction and friendship with Khan increased over time."
Khan, according to the statements of both Tapuriah and Anandraj, had offered them very lucrative business partnerships. No wonder then that everyone lined up before Khan; he was the man with the magical cash.
IT officials claim Anandraj, who once owned Kormasutra, an Indian restaurant in Zurich, was present at Khan's Pune residence during the IT raids. On being questioned, he told the investigators that he was there to recover $500,000 from Khan who wanted to acquire a hotel he owned. In his statement to the ed and it officials, Anandraj has admitted that he was aware of a host of accounts that Khan operated across Switzerland. "I returned to India after being declared bankrupt and stayed with Khan and travelled with him to Bangalore and Mumbai. During my stay with him, I stumbled upon a host of papers that I saved on my Mac PowerBook. I had done so with a view to enquiring about the huge amounts running into billions of dollars that Khan kept in those accounts," Anandraj stated.
Criminal Antecedents
Khan's first brush with the Mumbai Police was for possessing three passports, the first issued in Hyderabad, the second in Mumbai and the third in Patna. The case was filed in January 2008 at the Worli police station. Says India's Letters Rogatory referring to Khan, "The above named accused persons have been indulging in criminal activities of forgery, forgery for cheating and using as genuine forged documents on a very large scale for which about 10 complaints have been filed by the Andhra Pradesh Police... Mr Hassan Ali Khan had fraudulently obtained multiple Indian passports from different Regional Passport Offices of India by submitting forged documents."
Khan evaded the Mumbai Police for almost a year. He made an appearance at the Worli police station in December 2008. The police instantly seized Khan's passport, and that of his second wife Rheema, and handed it over to the ed which impounded the same.
Khan is out on bail in the forged passport case and, according to information available with the Mumbai Police, keeps shifting between apartments in Pune and South Mumbai. Around the time that he finally surrendered to the Mumbai Police, IT officials had attached his opulent houses, horses (32 of them) and vehicles. Between March and June 2008-when the police were hot on his trail-he sought and got shelter at a resort owned by Yusuf Lakdawala, one of Mumbai's top builders. Despite being the country's most sought-after IT defaulter, Khan is not flustered. On paper, he has refuted everything, his lawyers going to the extent of calling their client a humble man picked up for wrong reasons by the investigating agencies.
Man of Influence
The investigators are aware of his influence. In a meeting at the ED headquarters in Delhi last week, senior officers from Mumbai explained in detail Khan's powerful network that they fear could, slowly yet steadily, erase the global cash trail unearthed after a two-year-long investigation that ended in the second week of December 2008. "He has denied everything in writing," argues Mugdha Jhadav, one of his lawyers. Majid Memon, a senior member of the Nationalist Congress Party and one of India's topmost criminal lawyers, is also defending Khan though he admits it has been more than six months since he met his client.
ED and IT officials are worried that Khan has already converted a significant portion of his Swiss bank money into 'AAA' UBS bonds and transferred it to other banks there. Their investigation, at the moment, is restricted only to Khan's Zurich account.ED LISTS FIVE HIGH-VALUE PROPERTIES OF KHAN which, it suspects, are 'proceeds of crime'.These include flats in Mumbai,Pune and Hyderabad, and a hotel in Switzerland.
Many are aware of the former scrap dealer and stud farm owner's uncanny ability to shape things to his benefit through his powerful network in India's cash capital. For the record, three top officers investigating the case have been shunted out to relatively insignificant postings and top cops have been told to go slow during the interrogation. In his numerous interactions with the Mumbai Police, Khan dropped names at routine intervals, his long list reading like a virtual Mumbai hotlist. "Otherwise, he would talk of his numerous health problems that ranged from kidney and liver trouble to heart ailments. We would then call it a day and summon him on another date," said an inspector who was a part of the team that questioned Khan. His purported network of high-powered contacts worried investigators. "It was almost like leveraging debt just at the time when the financial system was on a precipice," said Ashok Deshbhratar, former deputy commissioner of Mumbai Police who interrogated Khan.
Police officers say Khan, over the years, also became concerned that his protectors in the state machinery were being spooked by relentlessly negative headlines. For a change, he stopped dropping names and played the safety card of a shattered, harmless, small-time businessman harassed by police to shield big criminals and their bigger crimes.
In February 2010, the Bombay High Court dismissed the state government's plea to cancel Khan's bail in the forged passports case, observing that the state itself was not interested in cancelling the bail granted to Khan. This astonishing observation hinted that the state had deliberately weakened its legal effort to put Khan behind bars. Justice D.G. Karnik remarked: "The state government is not interested in serving notice (to the accused) even after six months of filing an appeal. If the government is not keen on pursuing its own appeal, the court cannot waste time on it." This judgment, say those in the know, had rattled the morale of the investigators and at the same time helped Khan considerably to play the haplessly-prosecuted card.
"The fraud is staggering and his connections mindboggling. I doubt whether the real truth will ever come out," says Kirit Somaiya, national secretary of the BJP.
It is estimated that at least $500 billion of Indian money is illegally stashed away in tax havens overseas. Almost 2 per cent of this amount, or $8 billion, is held in the name of one individual alone: Hassan Ali Khan. Investigators have written to authorities in Singapore and the US requesting cooperation. The investigating agencies suspect that the money may be linked to gun-running and terrorism. Why is the Government hesitant to act?
Ask Hassan Ali Khan what he does and he replies with disarming nonchalance that he is a simple scrap dealer with an annual income of Rs 30 lakh. This "simple scrap dealer" has a Swiss bank account with $8 billion in deposits. This figure has been verified by INDIA TODAY from a letter written by UBS, Zurich, to Khan. The Government of India has confirmed the existence of this account in UBS, and ordered him to pay Rs 50,000 crore in tax on that wealth. Khan hasn't paid a rupee. He clearly could not care less. On January 24, Khan was seen placing bets at the Pune Race Course.
He believes he has protection from the powerful in Delhi. The authorities have enough evidence, but have done nothing for at least three years.
Hassan Ali Khan with his wife
The Government began an investigation into Khan's fabulous wealth (the source of which is still unknown) in January 2007, when the Income Tax (IT) Department conducted a series of raids on the premises of Khan and his associates in Pune, Mumbai and Kolkata. The information and documentary evidence gathered from the raids on January 5, 2007 formed the basis of the Enforcement Directorate's (ED) damning Enforcement Case Information Report filed on January 8, 2007.
The ED report and all the documentary evidence gathered in the raids were considered vital enough to become the basis of Letters Rogatory to five foreign governments requesting assistance in the investigations against Khan and his associates. The Letters Rogatory issued by the designated special court for cases under the Prevention of Money Laundering Act, 2002, in Mumbai, to authorities in Singapore, the US, Hong Kong, UAE and UK during the course of 2009 list details of five Swiss bank accounts operated by Khan and his associates. Each Letter contains a list of cross-border financial transactions from these Swiss accounts to specific accounts in the five countries. india today has exclusive possession of these letters.
The $8 billion is a minimum; Khan's total wealth could be far more as he has more than one account. Investigations suggest that this astonishing figure emerged through deals with a number of people in India and abroad, including international arms dealer Adnan Khashoggi. Khan has at least one close business associate in India, Kolkata-based businessman Kashinath Tapuriah, whose wife Chandrika has an outstanding it notice of Rs 20,000 crore. The Government suspects that at least some of the funds in Khan's account are proceeds from illegal commissions in aircraft deals that involve an American corporation and Air India, as said in the ED's Case Information Report.
Khan knows enough to provide unique and unprecedented information on massive 'hawala' operations out of India. But he has claimed complete innocence, in a single handwritten confessional statement. Verifiable facts expose this "confession" as a pack of lies. But the Government is doing nothing.
Khan believes he is immune to arrest or accountability. Public pressure over corruption has, at last, forced the Centre to stir, albeit just a little. The Government is still sitting on a list of 26 people with accounts in a Liechtenstein bank that was handed over by German authorities.
The Union Cabinet took note of the black money issue in a meeting on January 20. Prime Minister Manmohan Singh, however, has taken the position that the names of foreign account holders cannot be revealed as they have been received on the condition of "confidentiality", a decision that has provoked cries of "cover up" from the Opposition.
Click here to Enlarge
Finance Minister Pranab Mukherjee addressed a press conference on January 24 where he admitted "the menace of illicit funds generated both as a result of tax evasion and corruption". Confirming the Government's continued ambivalence on the issue of black money, he said, "So far there are no reliable estimates of black money both inside and outside the country… All these estimates are based on various unverifiable assumptions and approximations." He repeated the "confidentiality" argument. Even if there is merit in this view, the fact is that Khan's hawala stash and identity are known. When asked specifically about Khan, Mukherjee said, "Investigation is still continuing... The case is being pursued both by the Enforcement Directorate and the Income Tax Department." The information in this case was collected, in effect, in January 2007. Why has the Government refused to act for four years?
His explanation simply does not wash. The Government has every single detail and knows the entire truth on Khan. Who is protecting Khan and why?
The Case Against Khan
The Letters Rogatory, delivered to the relevant authorities in the five recipient countries by the Ministry of External Affairs in 2009, list Khan's illegal activities in devastating detail.
Says the Letter Rogatory to Singapore, "Mr Hassan Ali Khan S/O Late Mr Ghousuddin Ali Khan (date of birth: January 16, 1952), an Indian national resident, has been maintaining and operating the following Bank accounts in Switzerland. These accounts have been used by him and the other co-accused as the feeder source for receiving and channelising of the said proceeds of crime: A/C No. Z.A1-A1A with UBS Zurich, A/c No. 206-794-786 with UBS Zurich, A/c No. 206-789-758 with UBS, Zurich, A/C no. 206-790-786 with UBS, Zurich and A/c No. 0835-844346-61 with Credit Suisse Bank, Zurich."
CASH COUNTER
Names listed by the investigating agencies in their show-cause notices:
HASSAN ALI KHAN
Pune and Mumbai
RHEEMA ABBAS KHAN
Pune and Mumbai
KASHI NATH TAPURIAH
Kolkata
CHANDRIKA TAPURIAH
Kolkata
ADNAN KHASHOGGI
Monaco
DR PETER WEILLY
Location unknown
PHILIP ANANDRAJ
Zurich,Switzerland
FAIZAL ABBAS
Pune
SAYYED ABBAS AHMED NAQVI
Mumbai
MUSKAN ABBAS NAQVI
Mumbai
ANIL SHANKAR
Bangalore
SHESHADRI
Bangalore
The Letters Rogatory confirm that Khan had total deposits of more than $8 billion in UBS Ltd. A letter dated December 8, 2006 from M. Rohner of UBS Wealth Management to Khan, a copy of which is attached in the Letters Rogatory as Annexure F, clearly states that "the client can withdraw a part of his assets deposited with UBS Ltd, to the tune of $6,000,000,000 ($6 billion) of the total deposited $8,000,453,000. The client is free to invest this amount as and when he chooses to do so. The balance of $2,000,453,000 will remain bound with UBS Ltd, until January 15, 2007."
Investigating agencies found no source of income which could explain such large deposits. Referring to a secret letter written by the Additional Commissioner of Income Tax (Investigations), Mumbai, after the department's raids on Khan, ed Assistant Director Sanjay Tripathi writes, "Shri H.A. Khan's legal source of income as revealed by his non-existing income tax returns cannot support his lifestyle which includes purchase of costly properties, luxury cars, and travel abroad for long periods by first class. Certainly it appears that his lifestyle is being supported and sponsored by proceeds of crime."
There is extensive evidence of cross-border financial activity from the five Swiss bank accounts, which prompted the issuing of Letters Rogatory to five countries. There are at least seven transactions relating to entities with addresses in Singapore. There are 12 transactions from the accounts in Zurich directly to the US or via the US to accounts in Dubai and Hong Kong. One such transaction of $7 million was made from Khan to the account of business associate Chandrika Tapuriah in Dubai on March 12, 2001. The Letter Rogatory to the UK has evidence of three transfers to a Barclays Bank account in Edgware Road, London. The Letter Rogatory to the UAE lists seven bank accounts in Dubai, six in Standard Chartered and one in ABN Amro, operated by Khan and his associates. The ed has list of four transactions with entities in Hong Kong, two of which had accounts with HSBC in Kowloon, Hong Kong.
On the international money transfers, ED says, "The transactions are part of a series of transactions which involves several violations of Indian banking laws as well as an effort to manipulate the business contacts with criminal intent of slashing unaccounted assets abroad i.e. in Switzerland, a tax haven."
The ED drops a hint about the likelihood of corruption as the source of these funds. "Clear indications are there of corruption money involved in mega transactional deals representing commissions (which appear to be illegal) received on sale of Boeing aircraft held by Air India."
The conclusions from Tripathi's summary of information received from it Department are unambiguous, "It appears it is being used for money laundering purposes... It is suspected that these accounts contain money originating from various international destinations and are proceeds of heinous crimes such as terrorism, gun-running, corruption and organised forgery and fraud... The unholy nexus of this huge amount of illegal money generated with subversive activities and terrorism needs a deep probe."
The ED's Case Information Report has a long list of assets-properties, jewellery, cash-owned by Khan and his associates. The report notes a sudden increase in Khan's deposits in 2006. Says the report, "The increase in bank deposits maintained in UBS Bank, Zurich, from $6,620,565,431 as on 31.8.2006 to $8,000,453,000 as on 8.12.2006 is showing an exceptionally high increase of more than $1.38 billion in less than four months."
The Case Information Report lists five high value properties owned by Khan which, it suspects, are 'proceeds of crime'. These include a flat at Anand Darshan, Peddar Road, Mumbai; a flat at Valentine Society in Koregaon Park, Pune; a flat in Banjara Hills, Hyderabad; a property at Akbar Manzil, also in Hyderabad and a hotel Chateau Gutsch in Switzerland purchased, according to the ed, for approximately $25 million in 2001.
The ED suspects that for at least some of these properties "worth crores of rupees, payments were purportedly made in cash". It also lists Khan's collection of cars, including two Mercedes and a Porsche for which the ed says "payments are alleged to have been made in cash". The report also mentions the purchase of 15-20 horses worth several lakhs of rupees and the recovery of huge amounts of cash and jewellery worth crores. Racing is Khan's private passion.
The Money Laundering Trail
Khan denies all of this. "On being asked about any amount in any of the banks in Switzerland in the name of myself, my wife, Ms Rheema Abbas Khan, and my in-laws, I state that no account is there," Khan said in a handwritten five-page confessional statement, a copy of which INDIA TODAY has.
A LETTER FROM UBS TO Khan clearly states that "the client can withdraw a part of his assets deposited with UBS Ltd, to the tune of $6,000,000,000 ($6 billion) of the total deposited $8,000,453,000".
On December 29, 2008, Khan was served the first it notice for unpaid taxes of Rs 36,000 crore for the unaccounted $8 billion. Later, a revised IT notice pegged it at Rs 50,000 crore.
ED and IT officials suspect Khan-who once actually dealt in metal scrap from both Dubai and Hyderabad and exported rice and onions to the Middle East under the brand name of Al Samir Enterprises-eventually became a conduit for facilitating the transfer of illegal money of politicians and industrialists in Swiss banks. But the investigators have failed to establish the nexus in what could have been India's biggest foreign exchange scandals. The 140-page it show cause notice, a copy of which is with india today, meticulously details how Khan manipulated the system to grow his funds from an initial deposit of $1.5 million in 1982 to a hefty balance of $8 billion by 2006 (see box: Singapore to Switzerland Cash Trail) by working with a host of national and international contacts, including controversial arms dealer Khashoggi.
A multi-agency probe is currently on to determine the manner in which Khan transferred his monies and if the underworld was involved in transferring his loot.
Investigators are also examining whether there are any links between a $500-million investment by Khan and the financing of terrorist activities. This probe is being conducted by a three-member panel headed by Samir Bajaj, deputy director, ed, Mumbai; Rajiv Nabar, IT commissioner (appeal) and Sanjay Saxena, additional commissioner (economic offences wing) in the Mumbai Police. "He dealt in huge sums and this transferred over a period of time, we have some inkling of how it was routed but we are on the case," said a senior Intelligence Bureau official.
The Stud Farm Owner
Famous in Pune and Mumbai business circles as a stud farm owner, the 58-year-old Khan was always present at races that drew Mumbai's rich and sometimes infamous at the 211-year-old club that lies close to Haji Ali. The Grand Stand, the place for the rich, was one of them with his own crowd from 11 a.m. to 4 p.m. on all race days without fail. Officials of the Royal Western Turf Club of India remember Khan as an unassuming stud farm owner from Pune who was sometimes called to hand over prizes.
The prolonged interactions at the race course, claim ED and IT officials, became the biggest networking session for Khan, suspected to be India's number one hawala king.
Khan, known for his lavish parties and penchant for single malt Scotch whisky, lived in Pune's posh Koregaon Park after marrying Rheema, daughter of Pune-based horse trainer Abbas Ahmed Abbas. They met at Mumbai's Mahalaxmi Race Course. Earlier, Khan had divorced his first wife, Mehboob Unnisa Begum, with whom he used to live in Hyderabad's Banjara Hills, and eventually moved to Pune.
Khan's father was an excise officer, but the son preferred business. He initially sold antiques, claiming to be a descendant of the Nizam's family. Later, he started a car rental service in 1970, before switching to scrap metal trading in Dubai in 1983.
He downed the shutters on his business, called Great Ventures, in 1993 because, say sources, he had developed an interest in horse racing. His foray was in Hyderabad in 1991 with only two horses. He started racing in 1994 at the Mahalaxmi Race Course, where he also was a punter, and eventually expanded his horse racing activities to Pune, Delhi, Chennai and Bangalore.
The Business Associates
Khan told the ED in January 2007 that he was a Non Resident Indian (NRI) based in Dubai in order to escape the FEMA (Foreign Exchange Management Act) dragnet. But days later, when the ED officials accosted him with another notice, saying his NRI status in Dubai had expired in 2003, he had no answer. "He kept quiet when we showed him his correspondence with top managers of the UBS AG and the letter confirming that his last balance with the bank was $7.78 billion. And then, he coolly walked into the room of the interrogators and wrote on a piece of white paper that he had no account," said a senior police officer from Pune in a telephonic conversation."On being asked about any amount in any of the banks in Switzerland in the name of myself,my wife Rheema Abbas Khan, and my in-laws, I state that no account is there."
HASSAN ALI KHAN
The officer, speaking on condition of anonymity, further said it was Khan's former business associate, Kashinath Tapuriah, who not only confirmed Khan's expired NRI status but also shared confidential bank letters that confirmed the existence of $8-billion deposits and revealed Khan's links in the money laundering scandal. Tapuriah also offered the ED a document notarised by one Nicolas Ronald Rathbone Smith, of the Notary Public of London, who certified the genuineness of the signatures on Khan's passports. Interestingly, it was in this same statement that Khan had mentioned the opening of the first UBS Singapore account in 1982 and noted how Khashoggi's recommendation had helped him shift the account to Zurich.
Among the documents Tapuriah shared-available with india today-confirmed Khan's $300-million deal with Khashoggi, probably for a chateau Khan purchased in Switzerland. "If Tapuriah and one Philip Anandraj (one of Khan's business associates) had not shared documents and revealed Khan's foreign exchange transactions, it would have been very difficult to nail his lies," the officer said. In his confessional statement, Tapuriah has named two southern Indian politicians as the ones who had introduced Khan to him. "My businesses were running into losses and I was referred to Khan's name as he could have arranged finance/funds from his sources and resources. He was called Nawab and he had said to me that he was the great grandson of the Diwan to the Nizam of Hyderabad. He even told me that he had certain jewellery and items and showed me a piece or so but as I was not interested in the same, I did not get into details further. My interaction and friendship with Khan increased over time."
Khan, according to the statements of both Tapuriah and Anandraj, had offered them very lucrative business partnerships. No wonder then that everyone lined up before Khan; he was the man with the magical cash.
IT officials claim Anandraj, who once owned Kormasutra, an Indian restaurant in Zurich, was present at Khan's Pune residence during the IT raids. On being questioned, he told the investigators that he was there to recover $500,000 from Khan who wanted to acquire a hotel he owned. In his statement to the ed and it officials, Anandraj has admitted that he was aware of a host of accounts that Khan operated across Switzerland. "I returned to India after being declared bankrupt and stayed with Khan and travelled with him to Bangalore and Mumbai. During my stay with him, I stumbled upon a host of papers that I saved on my Mac PowerBook. I had done so with a view to enquiring about the huge amounts running into billions of dollars that Khan kept in those accounts," Anandraj stated.
Criminal Antecedents
Khan's first brush with the Mumbai Police was for possessing three passports, the first issued in Hyderabad, the second in Mumbai and the third in Patna. The case was filed in January 2008 at the Worli police station. Says India's Letters Rogatory referring to Khan, "The above named accused persons have been indulging in criminal activities of forgery, forgery for cheating and using as genuine forged documents on a very large scale for which about 10 complaints have been filed by the Andhra Pradesh Police... Mr Hassan Ali Khan had fraudulently obtained multiple Indian passports from different Regional Passport Offices of India by submitting forged documents."
Khan evaded the Mumbai Police for almost a year. He made an appearance at the Worli police station in December 2008. The police instantly seized Khan's passport, and that of his second wife Rheema, and handed it over to the ed which impounded the same.
Khan is out on bail in the forged passport case and, according to information available with the Mumbai Police, keeps shifting between apartments in Pune and South Mumbai. Around the time that he finally surrendered to the Mumbai Police, IT officials had attached his opulent houses, horses (32 of them) and vehicles. Between March and June 2008-when the police were hot on his trail-he sought and got shelter at a resort owned by Yusuf Lakdawala, one of Mumbai's top builders. Despite being the country's most sought-after IT defaulter, Khan is not flustered. On paper, he has refuted everything, his lawyers going to the extent of calling their client a humble man picked up for wrong reasons by the investigating agencies.
Man of Influence
The investigators are aware of his influence. In a meeting at the ED headquarters in Delhi last week, senior officers from Mumbai explained in detail Khan's powerful network that they fear could, slowly yet steadily, erase the global cash trail unearthed after a two-year-long investigation that ended in the second week of December 2008. "He has denied everything in writing," argues Mugdha Jhadav, one of his lawyers. Majid Memon, a senior member of the Nationalist Congress Party and one of India's topmost criminal lawyers, is also defending Khan though he admits it has been more than six months since he met his client.
ED and IT officials are worried that Khan has already converted a significant portion of his Swiss bank money into 'AAA' UBS bonds and transferred it to other banks there. Their investigation, at the moment, is restricted only to Khan's Zurich account.ED LISTS FIVE HIGH-VALUE PROPERTIES OF KHAN which, it suspects, are 'proceeds of crime'.These include flats in Mumbai,Pune and Hyderabad, and a hotel in Switzerland.
Many are aware of the former scrap dealer and stud farm owner's uncanny ability to shape things to his benefit through his powerful network in India's cash capital. For the record, three top officers investigating the case have been shunted out to relatively insignificant postings and top cops have been told to go slow during the interrogation. In his numerous interactions with the Mumbai Police, Khan dropped names at routine intervals, his long list reading like a virtual Mumbai hotlist. "Otherwise, he would talk of his numerous health problems that ranged from kidney and liver trouble to heart ailments. We would then call it a day and summon him on another date," said an inspector who was a part of the team that questioned Khan. His purported network of high-powered contacts worried investigators. "It was almost like leveraging debt just at the time when the financial system was on a precipice," said Ashok Deshbhratar, former deputy commissioner of Mumbai Police who interrogated Khan.
Police officers say Khan, over the years, also became concerned that his protectors in the state machinery were being spooked by relentlessly negative headlines. For a change, he stopped dropping names and played the safety card of a shattered, harmless, small-time businessman harassed by police to shield big criminals and their bigger crimes.
In February 2010, the Bombay High Court dismissed the state government's plea to cancel Khan's bail in the forged passports case, observing that the state itself was not interested in cancelling the bail granted to Khan. This astonishing observation hinted that the state had deliberately weakened its legal effort to put Khan behind bars. Justice D.G. Karnik remarked: "The state government is not interested in serving notice (to the accused) even after six months of filing an appeal. If the government is not keen on pursuing its own appeal, the court cannot waste time on it." This judgment, say those in the know, had rattled the morale of the investigators and at the same time helped Khan considerably to play the haplessly-prosecuted card.
"The fraud is staggering and his connections mindboggling. I doubt whether the real truth will ever come out," says Kirit Somaiya, national secretary of the BJP.
It is estimated that at least $500 billion of Indian money is illegally stashed away in tax havens overseas. Almost 2 per cent of this amount, or $8 billion, is held in the name of one individual alone: Hassan Ali Khan. Investigators have written to authorities in Singapore and the US requesting cooperation. The investigating agencies suspect that the money may be linked to gun-running and terrorism. Why is the Government hesitant to act?
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