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Hawala bug bites two US firms

The collusion between Indian traders and US companies to transfer money has cost Indian exchequer Rs 40 crore.

india Updated: May 19, 2006 10:14 IST

When the Directorate of Revenue Intelligence (DRI) traced a hawala network to two US companies, it didn’t miss the irony. Post 9/11, the US had warned other countries to check money laundering and curb alternative remittance systems, but now two of its own were caught accepting hawala from Indian traders.

The DRI, while investigating a duty evasion scam in the import of pulp/paper products, came across reams of evidence that revealed how two US companies accepted part of the payment through hawala channels. The two companies, one of them the US arm of a Swedish firm, are leading traders in the world of pulp/paper.

This collusion between Indian traders and US companies to evade duty and transfer money through hawala has, according to initial estimates, cost the Indian exchequer Rs 40 crore. This isn’t the only case. Similar irregularities involving Indian traders and Europe/US-based companies have been observed in the import of other goods.

Investigators say these companies run the risk of being blackmailed by drug dealers and people who finance terrorist outfits. There is enough evidence worldwide that crime syndicates operate hawala channels.