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The Default Option

The Default Option

Author: Rana Ayyub
Publication: Tehelka
Date: September 5, 2009
URL: http://www.tehelka.com/story_main42.asp?filename=Bu050909the_default.asp

Introduction: With his high-profile links, Hasan Ali Khan could escape criminal prosecution for money laundering, says Rana Ayyub

When Minster of State for Finance SS Palanimanickam revealed the list of tax defaulters earlier this month, heading it was Pune-based stud farm owner Hasan Ali Khan, with arrears of over Rs 50,000 crore.

But behind the tax default is a murky tale of hawala transactions, allegations of money paid into Khan's Swiss bank accounts by international arms dealers and the danger that among his customers - for money laundering - were notorious terrorists. Yet Khan could escape relatively unscathed, considering that the Enforcement Directorate (ED) is likely to book him under the Foreign Exchange and Management Act (FEMA), which carries financial penalties but no criminal charges.

The son of an excise officer from Hyderabad, Khan began as a small-time punter at Mumbai's Mahalaxmi racecourse and soon metamorphosed into a high-profile stud farm owner.

Officials from the ED and the Central Finance Department told TEHELKA that Khan's alleged transactions could not have been possible without the help of top bureaucrats or politicians. The ED had filed a charge-sheet against Khan in 2008 and another three charge-sheets have been filed by the Income Tax department, for having unaccounted funds over Rs 36,000 crore. He was also charge-sheeted by the Mumbai Police for money laundering.

But the case against him came to a standstill in 2008, when he was untraceable. Says Inspector S Worlikar, who interrogated Khan at the Worli Police station, "We are looking at the cancellation of his bail. Only then can we get more information from him."
An ED official in charge of investigating Khan told TEHELKA that he had never cooperated and kept naming the co-accused (Philip Anand Raj), a hotelier with business ventures in Zurich. "We were very close to obtaining leads and possibly getting his confession but he got out on bail."

When asked about the allegations made by the Union Bank of Switzerland (UBS) that documents against Khan produced by the ED were forged, the source says it was UBS that gave the ED documents pertaining to his links with international arms dealer Adnan Khashoggi: "They needed to know if the proceeds came from a criminal source. How could they call our work incomplete and forged," he asks.

Khan opened an account with UBS Singapore in 1982 and got $300 million from Khashoggi. ED and the IT officials also have evidence of Khan's $8 billion in a UBS account in Zurich. When questioned about Khan's proximity to a minister in the Maharashtra government, as well as a Kolkata-based businessman related to the late Priyamvada Birla, a key official in the state home department said: "It's not just about lack of evidence, this case also reeks of a lack of will to touch him."

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