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Saturday, Dec 14, 2019

Unravelling in Mumbai a global trail of money

The reluctance of a top Swiss bank to help Indian investigators is slowing the unravelling of an intricate multinational trail of money transfers between an Indian horse owner and a fugitive Saudi arms dealer, report HT Correspondents. See graphics: Zurich to Pune: A chain unravels

india Updated: Feb 02, 2008 12:05 IST
Urvi Mahajani, Manish Pachouly and Yogesh Joshi
Urvi Mahajani, Manish Pachouly and Yogesh Joshi
Hindustan Times

The reluctance of a top Swiss bank to help Indian investigators is slowing the unravelling of an intricate multinational trail of money transfers — across Switzerland, New York, the British Virgin Islands and Pune — between an Indian horse owner and a fugitive Saudi arms dealer, officials told Hindustan Times on Friday.

<b1>A top Enforcement Directorate source confirmed that its officials had, in December 2007, advised the Indian government not to clear a Rs 467 crore plan by UBS (United Bank of Switzerland) AG, the world’s biggest wealth-management company, to buy the Indian mutual fund business of Standard Chartered Bank because the bank had not helped track international money transfers of Pune horse owner Hassan Ali Khan.

Hindustan Times has now accessed a secret ED report that reveals how officials investigating $8 billion in the Swiss bank accounts of Hassan Ali say they have evidence of a $300-million transfer to him (via a Chase Manhattan bank account in New York) from billionaire Saudi arms dealer Adnan Khashoggi, whose arms supplies to Tamil terrorists, the LTTE, were revealed during the probe into the 1991 assassination of Rajiv Gandhi.

As evidence the report quotes a notation, “funds from weapon sales”, made by UBS AG after it froze an account belonging to Hassan Ali following the $ 300-million transfer — it isn’t clear when — from Khashoggi.

“I would not like to talk about this,” said UBS India Managing Director and Chairperson Manisha Girotra, referring all questions to the bank’s spokesperson.

“As a truly global entity, our policy on such issues is to comply with the laws and regulations in each host country, while at the same time, complying with banking laws in Switzerland,” the UBS spokesperson said in an email to HT. On the arms-sales notation, the spokesperson said: “UBS does not wish to comment on such issues.”

The Bombay High Court is presently hearing an ED plea not to return passports to Hassan Ali and his wife Rheema. The government has told the court that the Khans are “virtually absconding”, and if they are allowed to leave India, investigations could collapse.

Khan’s counsel, Milind Sathe, told Hindustan Times his client “regularly appeared before the Directorate”. Asked where Hassan Ali was, his main lawyer, Mugdha Jadhav, said: “Can’t tell you, sorry.” She then disconnected the phone.

At Pune race course, Hindustan Times found Hassan Ali’s father-in-law, Abbas Ali Khan, who said his son was “not well” and in Mumbai. Abbas Ali dismissed all allegations as “bulls***” and “utter nonsense”.

<b2>Hassan Ali has three Indian passports – issued from Pune, Patna and Mumbai. He also applied for passports from Guwahati and Chandigarh. He and his wife have applied to Switzerland for citizenship, another Directorate source said. Passport authorities in those three cities are now trying to find out how three passports were issued to Khan.

Khashoggi – whose sister Samira is the mother of Dodi Fayed, Princess Diana’s Egyptian multimillionaire boyfriend – now lives in Monaco.
There is a British warrant out for his arrest.

A top Directorate source said Khashoggi’s $300-million transfer was “only the tip of the iceberg”; they were trying to connect the dots in the global trail, which also includes evidence of another $290 million in two “fictitious companies” created by Hassan Ali and a friend in the British Virgin Islands in the Caribbean.

All the money transfers are recorded in a laptop seized in January 2007 from Hassan Ali’s house in Pune. While investigators believe this is laundered money, there is no direct evidence of this. They would also need corroborative evidence to establish links with terrorism.

“These are all false allegations,” said Milind Sathe. Asked about the $300-million transfer from Khashoggi to Hassan Ali, Sathe said: “When the Enforcement Directorate questions us, we shall give a reply.”

The Directorate source said UBS told Indian investigators to get a letter rogatory, a formal request from an Indian court to a Swiss court.
This is complicated and would need to be routed through the Ministry of External Affairs, apart from presenting clear evidence of Hassan Ali’s links with terror.

It now seems apparent that UBS’s stand in the ongoing investigation led to the collapse of the Rs 467-crore plan by UBS AG to buy the Indian mutual fund business of Standard Chartered Bank.

An investigation done in December 2007 by Mint, HT Media’s business paper, revealed how the Indian banking regulator would not approve the deal over possible money laundering through the Swiss bank involving certain transactions of Hassan Ali.

On Friday, the RBI told Hindustan Times it would not comment. “We are a civil body,” the RBI spokesperson said. "Whenever we find violations, issues to be investigated, we hand over the information to the Enforcement Directorate. We have not issued any comments on the issue of UBS."

Mint's sources, while declining to quantify the amounts involved, said the money found its way to Switzerland and was not accounted for.
In December, Standard Chartered, the parent company of Standard Chartered Bank in India, sent a notice to stock exchanges in London and Hong Kong, where it is listed, saying it would not proceed with the proposed sale.

It did not give any reason other than saying the “contract with UBS...has expired. Standard Chartered will now seek a new buyer.”