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Missing crime link weakens case

The Supreme Court has asked why Pune businessman and horse owner Hasan Ali Khan should not be booked under the Prevention of Money Laundering Act. Manish Pachouly reports.

india Updated: May 06, 2009 01:37 IST
Manish Pachouly

The Supreme Court has asked why Pune businessman and horse owner Hasan Ali Khan should not be booked under the Prevention of Money Laundering Act.

The question has brought to the fore the failure of the Enforcement Directorate (ED) to unearth the conspiracy behind the stashing away of a large sum of money in a Swiss bank.

The ED in the city is investigating Khan for allegedly acquiring and holding eight billion dollars (Rs 36,000 crore in January 2007, when the case came to light) in a Swiss bank.

The ED booked Khan under the toothless Foreign Exchange Management Act and failed to charge him under the money-laundering law.

This is because the ED officials have so far failed to prove the money in the Swiss bank is the “proceeds of crime”, the chief criteria for applying the money-laundering law.

The ED had begun the investigation after the income tax raided Khan in January 2007. The investigation is based on only a few documents obtained from the income tax authorities, who had seized these during the raid, and some information found on Khan’s laptop.

The documents showed that as on December 8, 2006, Khan had a balance of eight billion dollars in an account with UBS AG Zurich.

This was found from a copy of a letter written by M. Rohner, Wealth Management, UBS Ltd, to Khan. The letter stated Khan could withdraw six billion dollars and the balance two billion would remain bound with UBS Ltd until January 15, 2007.

Among the seized documents were papers showing Khan had put away money in foreign banks since 1982.

The papers also showed transfer of 300 million dollars from the account of billionaire Saudi arms dealer Adnan Khashoggi in the Chase Mannhattan Bank, New York, to Khan’s account.

But the ED failed to establish the money could be called the proceeds of a crime or crimes.

A request from ED’s city office, seeking permission to book Khan under the money-laundering law, is pending in the New Delhi headquarters.

“The head office could not give a clearance to apply money laundering charges because of legal hassles,” an ED official in Delhi said, who requested anonymity before specifying that by legal hassles what was meant was such a move would be easily challengeable because of the failure to prove the Swiss bank money was earned from a crime.