Money laundering scam worth $10bn

[Neo]

Money laundering scam worth $10bn ​

Khanani and Kalia arrested​

* Three other partners also held
* Nine NADRA officials arrested for making fake ID cards​

By Faraz Khan

KARACHI: Munaf Kalia and Javed Khanani, partners in top moneychanger firm Khanani and Kalia International, were arrested on Friday on charges of illegal transfer of about $10 billion out of Pakistan.

The Karachi and Lahore wings of the Federal Investigation Agency’s (FIA) Crime Circle also arrested three other partners in the company – Saleem, Yousuf Kalia and Anees Rajput – after the federal government ordered a crackdown against illegal transfer of foreign currency also known as Hundi and Hawala.

At least nine officials of the National Database and Registration Authority (NADRA) were also arrested from various offices including those in Kemari, Lyari, Awami Markaz and the DHA on charges of making fake identity cards.

An FIA official told Daily Times that the team raided the office of Khanani and Kalia International on II Chundrigar Road at around 9pm on Friday. They arrested Javed Khanani, a director of the firm, and seized computers, records and cash.

Raids were then made for Munaf Kalia’s arrest, the official said, and a warning was conveyed to him that his family would be held if he did not surrender. Munaf Kalia turned himself in later on Friday, and the FIA official said he was being questioned.

He said the government had sealed offices of the company all over the country and stationed FIA staff outside them.

The government has also formed four teams to make more arrests. Officials denied reports that several suspects had been put on the exit control list.

FIA Director General Tariq Pervez told Dawn News the agency had been monitoring Khanani and Kalia for two months and its franchise in Gujranwala had a special counter for Hawala transfers.

According to an APP report, FIA Director Zubair Mehmood told a delegation of moneychangers that records of Dunya Exchange in Gujranwala showed illegal transactions of ‘billions of rupees’ through Khanani and Kalia, and that the record in the Karachi office provided evidence.

He said that the State Bank, being a licence-issuing authority, had a right to take action against moneychangers involved in illegal transfers. Saturday’s arrests were made after significant evidence was found, he said, adding, “Innocent moneychangers will not be harassed.”

Malik Bostan, representative of the Forex Association of Pakistan, said the association would turn in anyone found involved in illegal transfers. “The FAP collects $7 billion foreign exchange annually and gives it to the government. If we are targeted and harassed, this money will not be received,” he said.

 

[ejaz007]

Govt widens dollar scam investigation
* Khanani remanded in FIA’s custody, Kalia to be produced in court today
* Govt mulls Interpol help to arrest suspects outside Pakistan
By Faraz Khan and Tahir Niaz

KARACHI/LAHORE/ ISLAMABAD/PESHAWAR: The government widened investigations into the alleged smuggling of billions of dollars out of Pakistan, as the Federal Investigations Agency (FIA) questioned top officials of key moneychanger firm Khanani and Kalia International.

A court in Lahore remanded Javed Khanani in the FIA’s physical custody for one day and Munaf Kalia will be produced in court today (Monday).

The sources said investigators had found important data from the firm’s computers in its sealed II Chundrigar Road office after Kalia made new disclosures on Sunday. They also seized important documents from his DHA residence.

A TV channel said the FIA had also arrested Altaf Khanani, the third director of Khanani and Kalia, from Karachi. It said the agency also raided an office of the company in Islamabad, and record showed illegal transfers of up to Rs 36.86 billion.

Sources said Kalia would likely be handed over to the Lahore wing of the FIA. An FIA official said a team from Lahore was due to arrive in Karachi.

In Peshawar, the FIA began gathering data on illegal foreign currency exchange said sources familiar with the investigations. But no arrests were made. Most of Peshawar’s currency dealers did not operate on Sunday and some went underground. There are about 400 currency dealers in the city – of which only 32 are registered – and about 700 Afghans involved in Hundi and Hawala. Any arrests would be made after the probe was complete, the sources said.

Interpol: Sources in Islamabad said the government was considering seeking help from the Interpol to arrest suspects not currently in Pakistan.

The Interior Ministry asked the FIA on Sunday to submit a preliminary report on the smuggling of foreign currency, the sources said. They said the State Bank had been conducting a probe into the reasons for the sharp rise in the exchange rate of dollar, and had recently asked the government to crack down on the companies involved in illegal transfer of foreign exchange outside Pakistan. The Interior Ministry had set up an FIA cell to deal with the issue, they added.


Daily Times - Leading News Resource of Pakistan

 

[ejaz007]

Senate questions FIA role in dollar scam crackdown
* Condemns killing of journalist in Swat
* Raza Rabbani says govt focusing on rebuilding houses in quake-hit areas of Balochistan
By Tahir Niaz

ISLAMABAD: Senators from the treasury and opposition on Monday questioned the legitimacy of the Federal Investigation Agency’s action against moneychangers for allegedly smuggling foreign currency out of Pakistan.

Senators Babar Ghauri, Ahmad Ali, Kamran Murtaza and Dr Khalid Ranjha said there was no law that barred the transfer of foreign currency out of Pakistan, and that action against the singled-out Khanani and Kalia International was discriminatory.

They said the State Bank should have taken timely action to stop the flight of capital and asked why other people involved in the practice had not been arrested.

Senator Ghauri raised the issue on a point of order and said the action against moneychangers was “an effort to harass the business community”. The arrested suspects are innocent until proven guilty, he said. Law Minister Farooq H Naik said that the action was taken on the basis of prima facia evidence collected by investigation authorities. He said the action followed an FIR against the suspects under the Foreign Exchange Regulation Act of 1947.

He said the House should wait for the probe to end.

Leader of the House Mian Raza Rabbani said the government would not harass businessmen. He and Senator Ilyas Bilour demanded a decrease in mark-up rates to give relief to the industrial sector.

Senator Salim Saifullah and Khalid Soomro opposed the privatisation of Qadirpur Gas Field. Saifullah suggested the issue be discussed in the Council of Common Interest. Senator Tahir Mashhadi said the government could not charge GST on electricity bills because the law described electricity as a service government provides to the public. He criticised the performance of KESC.

Raza Rabbani said the previous government had inserted the provision to charge GST on electricity in the Finance Bill. Mashhadi was part of the government, he said, which also privatised KESC – a move that the Pakistan People’s Party had opposed.

He said a committee would soon devise a new formula for electricity tariff. Senators from Balochistan recommended blacklisting a construction company, Husnain Cotex, which they said had ‘ruined the road infrastructure’ in Balochistan.

Senator Jamal Leghari criticised President Asif Zardari’s decision to take a large entourage with him to Saudi Arabia.

Killing of journalist in Swat: Professor Khursheed Ahmad from the Jamaat-e-Islami condemned the killing of a journalist in Swat on Sunday. Journalists staged a token walkout from the press gallery against the murder.

Raza Rabbani condemned the incident and said the government believed in the freedom of press.

He said an impartial inquiry would be made and the government would announce compensation for the journalist’s family. He also said the government would take steps to implement the Wage Board Award.

Balochistan: Responding to a point of order by Abdul Rahim Mandokhel, Rabbani said the government had shifted its focus to reconstruction of houses in the earthquake-hit areas of Balochistan because temperatures are dropping rapidly.

Senators Dilawar Abbas and Samiul Haq presented reports of the standing committees on Petroleum and Natural Resources and Religious Affairs respectively.

Daily Times - Leading News Resource of Pakistan

 

[Imran Khan]

Munaf Kalia handed over to FIA on physical remanded till Nov 17
Updated at: 0835 PST, Tuesday, November 11, 2008
KARACHI: Director of Khanani and Kalia Group Munaf Kalia, accused of being involved in the scandal of illegally transferring billions of dollars abroad was handed over on physical remand to FIA by local court today (Tuesday).

Munaf Kalia was presented in the court of Special Civil Judge Fasial Jameel. Local court handed over Munaf Kalia to FIA on physical remand till November 17. Strict security measures were taken on this occasion and media was not allowed within court premises.

Meanwhile, overnight raids were carried out to capture people involved in the scandal of illegal money transfer, however, no arrest was confirmed.

 

[Imran Khan]

Dollar scam linked to terror financing
By Faraz Khan

KARACHI: With the money-laundering scam being linked to financing of terrorism, moneychangers are gripped with fear and the Federal Investigation Agency (FIA) is chalking out a strategy for a major clampdown, sources privy to the matter told Daily Times.

Haji Masood Parekh, a major moneychanger would be among those whom the FIA would investigate, a source said.

Sources said FIA was also eyeing two other big names, Shakeel Raj and Mehboob Kapadia, but both of them are abroad at the moment and Interpol help might be sought for their return.

Answering a question about moneychangers’ links with terrorists or the underworld, FIA Deputy Director for Law Israr Ahmed told Daily Times, “It would be premature to say anything until the investigation is finalised.”

A number of moneychangers allegedly involved in money laundering and terrorism-financing are either hiding in the country or have fled abroad.

Home | National

 

[Imran Khan]

Scandal did not hurt forex situation



Tuesday, November 11, 2008

By Mehtab Haider

ISLAMABAD: The forex scandal of the exchange companies involved in transferring millions of dollars abroad through illegal means will affect the country’s growth prospects, but it was not a major cause of depletion in foreign exchange reserves, which had plummeted by $10 billion to nearly $6 billion during the last one year, a senior official in the finance ministry confided to The News on Monday.

The foreign currency reserves declined by $10 billion mainly because of macroeconomic imbalance owing to higher POL and commodities’ prices in the international market as well as the previous and incumbent regimes’ failure to generate desired dollar inflow during the last 12 months.

When the dollar demand witnessed new heights, the finance ministry recommended to the State Bank during the last couple of months to monitor activities of the exchange companies which, they alleged, were involved in the capital flight abroad, resulting in pushing up demand for the dollar and putting pressure on the Pak rupee.

“Yes, we communicated to the central bank for taking notice of activities of the exchange companies, resulting in capital flight from Pakistan,” the official said. “The country’s 50 per cent economy falls into informal sector and those involved in this undocumented sector were mainly responsible for sending their money through exchange companies abroad for investment in the Gulf region,” official sources told this scribe here on Monday.

Giving reasons for massive decline in foreign currency reserves by $10 billion, sources said Pakistan’s current account deficit went up to $14 billion during the last fiscal year 2007-08 mainly because of higher POL and commodities’ prices in the international market. The current account deficit (CAD) stood at $6.9 billion (4.8 per cent of the GDP) for 2006-07 which Pakistan could afford easily.

In 2007-08, sources said, the country’s import bill of POL stood at $11.4 billion against $7.3 billion for 2006-07, registering a net addition of $4.1 billion on this account. Pakistan paid an extra $756 million due to higher prices of palm oil in 2007-08. The wheat import caused additional import bill by $820 million during the last financial year, fertilizers was imported extra by $500 million and cotton import caused $645 million burden on the national exchequer in 2007-08.

“So the extra import bill of $6.83 billion caused depletion in foreign currency reserves during the last financial year because the government could not generate required dollar inflow,” the official said.

There are over $3 billion lying with the commercial banks, said the official and added the data was available with the government and it could take notice of any unusual movement in case of withdrawal of capital from banks and its flight abroad.

“It shows that the money has been transferred abroad through illegal means by influentials,” sources said and added the FIA has been conducting investigation and there were clues that some earthshaking revelation might surface. Finally, the State Bank has moved ahead by suspending licence of M/s Khanani & Kalia International (Pvt) Limited for 30 days pending further investigation/notice.

 

[Imran Khan]

Eradication of money laundering: WB team will visit Pakistan
Updated at: 1155 PST, Tuesday, November 11, 2008
ISLAMABAD: A World Bank (WB) delegation current month will be visiting Pakistan for reviewing measures taken here for stamping out the menace of money laundering.

Finance ministry officials told Geo News that special anti-money laundering cells have been set in the State Bank of Pakistan (SBP) and Securities and Exchange Commission of Pakistan (SECP) with the co-operation of International Finance Corporation (IFC). These cells aim at taking measures for wiping out the menace of money laundering and keeping an eye on the suspected transactions.

Finance ministry officials said that a World Bank team was expected to visit Pakistan from November 26 for reviewing the measures relating to the eradication of money laundering taken thus far, cases unearthed and the performances of the regulatory authority in this regard. Sources told Geo News that several suspected transactions have thus far been unearthed and an annual report on such efforts would be released at the end of the year

 

[Imran Khan]

25 politicians, traders on watch list | $40b transferred abroad
Rehman says those found involved in scam will be exposed | Kalia shifted to Lahore, remanded for three days

The Post Report

GILGIT: Advisor to the Prime Minister on Interior Affairs, Rehman Malik Monday said the State Bank of Pakistan had allowed movement of currency and anyone who is to transfer even 50 million dollars could not legally be prevented to do so. That is why such a large amount of foreign currency was sent abroad, he added.

Talking to media after addressing the passing out parade of Northern Scouts, he said it was three weeks ago that the government started noticing the increase in the transfer of dollar and euro. The families of those living abroad were receiving the money but there was no increase in Pakistan's foreign exchange remittances. The government gave the task of investigation into the matter to FIA's Cyber Crime Branch.

Rehman Malik said the FIA identified some of the web sites providing service of alternate banking. Record from one of such web site was seized after it was established that business of Rs39 billion was carried out from it and that it was more than what the SBP's records show.

He hoped that more such information will be revealed from websites that deal in transfer of currency and assured of bringing back the money transferred abroad illegally. Those government, political or trade figures found involved in the business of illegal transfer of money will be presented before the nation.

Another report from Karachi adds: Munaf Kalia, allegedly involved in money laundering and a financial scandal, has been shifted from Karachi to Lahore for further investigation by Federal Investigation Agency.

Talking to the media at Karachi airport, he said that he would prove his innocence and reveal facts after getting bail.

He also said that he was not feeling very good and had filed an application that he should not be shifted to Lahore on health grounds.

Munaf Kalia said he was not involved in any kind of illegal money transfers or money laundering and would prove wrong all allegations leveled against him.

A court Monday remanded Munaf Kalia in FIA's custody for three days.

According to reports the money changer has been taken to Lahore for interrogation. Kalia's lawyers submitted medical certificates to the court about his illness. He is accused of involvement in illegal transfer of the foreign exchange from Pakistan to foreign destinations.

A Lahore court remanded Javed Khanani and two others accused in foreign currency scandal in FIA's physical custody for four days on Monday.

Meanwhile, sources have disclosed that at least 25 leading politicians and traders from NWFP are expected to be arrested for their role in the illegal transfer of money.

After arresting the main characters of the money laundering case, FIA has started investigating government officials, employees of financial concerns, currency dealers and jewellers in all the four provinces.

In this regard FIA is collecting a list of the people who had been traveling to foreign countries during the last two months from all the international airports of the country including Peshawar airport. Sources said prominent politicians and traders from Peshawar, Kohat, Mardan, Khyber and Mehmand Agency were under strict observation of law enforcement.

State Bank suspends Khanani's licence

Associated Press of Pakistan

KARACHI: State Bank of Pakistan (SBP) has suspended with immediate effect the licence of Khanani and Kalia International (Pvt) Limited for a period of 30 days, pending further investigation/notice, for violation of its (SBP) rules and regulations. The exchange company, its head office, branches, franchises, payment booths and currency exchange booths have been debarred from undertaking any kind of business activity during the suspension period, says a release issued from SBP here on Monday.

 

[aabi]

Comment on Khanani and Kalia arrests in Pakistan: Only the top 2,000 businessmen and politicians or the “ruling class” in Pakistan would transfer big money being claimed in the media. They will not be prosecuted, convicted and sentenced. Money market analysts suspect KKI's political-business rivals are playing a game for the benefit of Mr 10% plus and his mafia gang, including interior advisor Rehman Malik (Mr oil for food UN-US scandal fame) who lectures 160m people and the global audience on “financial terrorism” which he links to “Afghan drug trade”! Does he know that trade is bred, fed, nurtured and protected by covert US agencies? Moreover, according to Rehman Malik, outgoing FDI is now classified as “financial terrorism”!

So, what led to seemingly kneejerk reactions? Well, due to oil price hikes in 2008 and other political corruptions, Pakistan reserves are down from over $16 billion to $4 billion. Lack of confidence in the corrupt Zardari-Sharif mafia style political-business alliance also reduced Karachi Stock Exchange (KSE) index by 41 per cent. Over a period of some 8 years, Shaukat Aziz created bubble economy boom, but so far in 2008 alone, the country has turned into a businessmen nightmare hell. That is nothing less than a remarkable miracle for the alliance that even Nawaz Sharif dare not topple in a country where inflation is now running at 25%. World Bank-IFC and IMF also imposed rules before lending Pakistan $15 billion in November 2008.

The reserves and the KSE index fell, and the rupee collapsed due to massive reductions in FDI, the remittances and the inflation. That also proves lack of confidence in the mafia. Those factors, therefore, have nothing to do with havala and hondi (HH) money transfer system, offering a variety of services including currency exchange, inward and out ward remittances, demand draft and travellers’ cheques. HH has been tried and tested over many centuries all over the world. It remains the most popular money transfer method from one city to millions of bankless villages in South Asia. The HH system has proven to be more reliable, trustworthy, faster and much cheaper than “free market” glocal banking cartels who received $1 trillion in bailouts and handouts in return for complete submission to the big brother governments and their governors in more than 150 countries worldwide.

Kalia and Khanani arrests are politically motivated. Their arrests would dry up remaining foreign direct investment (FDI) to Pakistan, and reduce up to $7 billions annual remittances coming to Pakistan, some 40% through Khanani and Kalia International (KKI). Since 1992, over 24 licensed HH exchange companies, including KKI operate in Pakistan to ISO 9001 standards that is something most government agencies and commercial outfits cannot live up to.

Who would dare and waste money on litigation costs in challenging shutting down licensed HH companies in the Pakistan kangaroo PCO courts? The HH companies contribute over $7 billion annually to Pakistan’s foreign reserve, much more than the glocal banking cartels.

The State Bank of Pakistan (SBP) regulations allow movement of currency in and out of Pakistan. So anyone who is to transfer even $50 million could not legally be prevented to do so. According to senators Ahmad Ali, Kamran Murtaza, Dr Khalid Ranjha and Babar Ghauri, there are no laws that barred the transfer of foreign currency out of Pakistan. In that context, the arrests of Khanani and Kalia, are politically motivated in order to divert public attention from the mafia’s schemes and failures, and with FIA threatening hostage taking, demanding ransom, aiding NRO Zardari gang extortion, updating exit control lists in a country where justice is dependent on kangaroo PCO judiciary and courts.

Former prime minister Shaukat Aziz can also learn a few more tricks from Zadari’s organised criminal gang that is busy monopolising cash flow to rape and loot Pakistan; hasten its meltdown, crippling its economy and any chance of recovery. Zardari wants to get his own cut from future giveaway “privatisation,” ensuring his ill-gotten loot is not challenged legally. Pakistan needs FDI in, but no FDI going out! Pakistan need to increase export, but wants to ban imports, including raw materials, energy, commodities, wheat, cotton, fertilizers, etc costing $6.85 billion more than previous fiscal year.

Why would investors not invest in Lehman Brother, and Bear Stearns? Why would any prudent investor invest in Pakistan? Why would investors want get his/her own money out of Pakistan, particularly when fundamentals are so wrong? Most investors know why NRO president Zardari and his puppet government would not restore all senior judges, including Iftikhar M Choudhary. What is Zardari afraid off? What has Zardari got to hide?

 

[pkpatriotic]

Too little, too late?
Wednesday, November 12, 2008

The government has come under fire in the Senate for acting only after a long delay to prevent huge amounts in foreign exchange being whisked away from the country, plunging it into what is proving to be its worst ever economic crisis. Opposition senators asked why the State Bank of Pakistan had not intervened earlier to prevent the flight of capital, and possibly prevent the situation we face today, with barely enough reserves left to pay import bills. Other questions are also being raised – with some already expressing fears of political victimization as the process begins of naming those involved in sending funds abroad. Allegations that money recovered from the offices of the Khanani and Kalia Forex firm, whose license has now been suspended, has not been recorded are also doing the rounds.

The Forex affair is of course yet another example of the seamy underside of our society. The scam needs of course to be properly investigated. We have seen too many cover-ups already in the history of high-profile crime. Another must be avoided. A priority though must also be to bring some of the money taken away back into the country. The authorities at present are in a position to make demands. Ten billion dollars, the amount stated to have been taken out since April this year, is after all a huge sum of money. Retrieving some of it would help Pakistan overcome its current cash crunch and also serve as a warning for the future to others who may contemplate similar, illegal action to take money overseas using informal methods that leave behind no records and no documentation.

 

[pkpatriotic]

11 people involved in transfer of dollars worth Rs38 bn: Khanani, Kalia
Wednesday, November 12, 2008

LAHORE: Javed Khanani and Munaf Kalia, accused of involvement in a major financial scam of the country, have during interrogation revealed that only in the last one month 11 people transferred Rs38 billion worth of dollars to foreign countries.

Out of these 11 persons, 9 belong to Karachi while 2 are from Lahore.

According to FIA sources, illegal business of transferring dollars, pounds and other foreign currencies has been going on in the country since 2006. The main centre of this business is Dubai where inflow and outflow of millions of dollars takes place on daily basis.

During interrogation the accused also disclosed that millions of dollars were also transferred abroad following declaration of emergency situation in the country by former president Pervez Musharraf last year, sources said.

The names of these eleven persons identified by the accused are being kept clandestine and they will be disclosed at an appropriate time later.

 

[EagleEyes]

$10 Billion gone from Pakistan. I dont even know if to be sad or not.

 

[pkpatriotic]

$10 Billion gone from Pakistan. I dont even know if to be sad or not.

Dear webby the $ 10billion scame now reached upto $38billion rather, figure as quoted by accused himself... ... to make easy now to decied to be sad or or not.....but even still
So here i would to highlight an important point to be noticed that, govt figured out $ 10 billion, while accused accepted crimes of their engagement in transfer $38 billion reather. It's enough to show the non-serious linient attitude and incompetencies by criminal negligence of govt institutions including State Bank & Ministry of Finance that how they neglected such a big difference of $28billion in our balance sheets
Such incompetencies offers 'thugs' to play with country's treasures and ruin the public funds as & when they desire.

 

[dr.umer]

Some politicians are also among the culprits but I wonder if their names would ever be mentioned ?

 

[Imran Khan]

this is pak police next few days after remand they will accept 50 or 100 bn$ also