Channels of blood money

Published : Jan 05, 2002 00:00 IST

One major reason for the continuance of violence in Jammu and Kashmir is the Central and State governments' failure to shut down the pipeline of funds for terrorist groups.


ALL that is needed to end the violence in Jammu and Kashmir is for Pakistan to turn off the tap at its end of the blood money pipeline. Or so the Indian media seem to believe. Unsurprisingly enough, readers have heard little about the even more sordid end of the story: India's own appalling failure to shut down the funnelling of funds to terrorist groups.

Last month's arrest of several Srinagar-based conduits of funds to terrorist groups has illustrated the truism that the rich and powerful can get away, in this case almost literally, with murder. On December 13, the Jammu and Kashmir Police arrested 16 persons on charges of using their legitimate businesses to move cash to organisations such as the Lashkar-e-Toiba, the Jaish-e-Mohammad and the Hizbul Mujahideen. The list of those arrested was something of a who's who of the Kashmir valley's rich and famous. Srinagar-based fertilizer magnate Iqbal Bukhari and Baramulla businessmen Samir Ahmad Lone were both, for example, members of affluent families with close links with the National Conference. But less than a week and a half-baked investigation later, all 16 were let off for lack of evidence.

It all began in November with an Intelligence Bureau (I.B.) operation targeting the flow of funds to terrorist tanzeems from Pakistan, using hawala operators based in the Gulf. While the mainly ethnic Kashmiri militant cadre of the early 1990s had survived off donations from sympathisers as well as extortion, things had since changed. The perhaps 3,000-odd terrorists in Jammu and Kashmir needed cash for food and supplies, transport, and the procurement of assets such as safehouses and vehicles. Groups like the Lashkar-e-Toiba had sources of funding in Pakistan and West Asia. Since it is impossible to cart across the Line of Control the Rs.6 crores a month or so needed, channels had to be in place to make cash available at Srinagar and the countryside.

This painstaking infiltration operation into the top leadership of the Hizbul Mujahideen threw up its first results on December 6. Police officials who carried out a raid at a safe house in Baramulla were treated to the spectacle of the Hizb's Baramulla commander Abdul Rashid Lone attempting to escape on foot with currency notes for Rs.40 lakhs stuffed into two fertilizer sacks. In the car he had used to arrive at the safe house, they found a satellite telephone set, which subsequent signals intelligence intercepts established was one of three the Hizb used to run its operations in Jammu and Kashmir. Lone, who operated under the code name Ishfaq Maulvi, told his interrogators that the cash run was his fifth since November, involving a total of Rs.1.33 crores.

Nazir Ahmad Itoo, the Hizb commander widely known in northern Kashmir by his code-name Shakir Ghaznavi, was waiting for the Rs.40 lakhs to arrive when Army and Special Operations Group (SOG) troops cordoned off his safe house at Gozbugh. Knowing that Itoo was expected in the area, the troops had carried out a massive search-and-cordon operation at Gozbugh. They correctly guessed that Itoo would now believe it was safe to hole out there, since such operations are seldom conducted twice in succession. The Hizb commander and his two guards were shot dead after being taken by surprise. Inside the home he had hidden out in, the troops found Rs.32.6 lakhs stashed away in sacks and bags, the remainder of a Rs.39 lakh-drop Lone had made days earlier. These funds were intended, intelligence officials believe, for distribution to Hizb cadre on the occasion of the Id festival, a time when many send cash to their families.

But who had actually brought the funds to Srinagar in the first place? Even as the firefight in Gozbugh was under way, I.B. operatives had led the city police to hawala operator Nasir Jamal. Jamal, a resident of Katra Gokul Shah in Delhi's Jama Masjid area, turned out to have handled funds regularly for the Hizbul Mujahideen, sent in through his business collaborators in Dubai. During searches of his premises, the police found Rs.14.89 lakhs in cash. And, crucially, they also learned that the funds routed through hawala operators like Jamal were routed to legitimate businesses in Srinagar, to be laundered and sent on to terrorist groups. While the hawala operator charged a commission of between 2 per cent and 3 per cent on each transaction, the businessmen received 4 per cent.

Raids on 11 business premises and homes in Srinagar and Baramulla followed. Sixteen people were arrested, and hundreds of pages of financial documents, along with computers and floppy disks, were seized. Most of those arrested had some business connections with the Gulf. Baramulla footwear dealer Bitta Vassal's brother Farooq Vassal, for example, operates out of West Asia. Both the Bukhari and Lone families too have substantial business interests in the region. Others picked up included Srinagar's most prominent terrorism-time rags-to-riches businessman Imtiaz Ahmad Khan, who owns a string of boutiques and department stores, all set up over the last decade. Some, like Nisar Ahmad Ahanger, had previously been arrested on suspicion of routing funds to terrorist groups.

Events now took a decidedly peculiar turn. Neither the Jammu and Kashmir Police nor the I.B. had the resources or skilled personnel needed to make sense of the financial evidence before them. Requests to New Delhi asking for follow-up involvement of the Directorate of Revenue Intelligence, the Economic Offences Wing, and the Income Tax authorities went unheard. The Central Bureau of Investigation, which has a single officer of the rank of Superintendent of Police in Jammu and Kashmir operating without the services of even one Deputy Superintendent, also showed no interest in the affair. Meanwhile, sources told Frontline, the Bukhari and Lone families turned up the heat on their long-time political contacts in the National Conference. Days later, all those let off were released without charge.

For those familiar with the funding of terrorism in Jammu and Kashmir, all of this was par for the course. The names of some of those arrested had figured in a confidential I.B. note published by Frontline in its 1997 expose on the hawala funding of top All Parties Hurriyat Conference leaders ("Kashmir's hawala scandal", September 5, 1997). The note had accused Iqbal Bukhari's father Altaf Bukhari, a former State government functionary allegedly responsible for several questionable business deals during G.M. Shah's term in office as Chief Minister, of handling funds intended for the Shabbir Shah-affiliated Muslim Janbaaz Force. The top insurgent Firdaus Asime, the note says, "is learnt to hold a grouse against Shabbir Ahmad Shah that money was not passed on to him to strengthen the militant outfit". All the cases filed as an outcome of the Frontline expose went nowhere.

AS things stand, it seems probable that the latest initiative to shut down the blood money channel will also go nowhere. The arrest of December were not, in some senses, exceptional. On September 23, 2000, the Srinagar Police arrested millionaire businessman Wasim Khatib on charges of helping to build an overground network for the ultra-Right al-Badr terrorist organisation. Investigators found that Wasim Khatib was handling hawala remittances from West Asia and Pakistan for al-Badr leader Arifeen Khan, who uses the code-name Lukmaan. Khatib was a prominent member of the Srinagar Golf Club, whose regular patrons include Chief Minister Farooq Abdullah. Again, no effort was made to ensure that Income Tax or Revenue Intelligence authorities acted against his front businesses.

Without such expert investigation, businessmen know they can channel terrorist funds with impunity. Until the Prevention of Terrorism Ordnance (POTO) came into force, India had no specific laws dealing with financiers of terrorism. In February last year, Qasim Fagtoo, the husband of far-Right political leader Asiya Andrabi, was caught red-handed with Rs.50 lakhs meant for terrorist groups. He was prosecuted, but she obtained bail with ease because the mere possession of funds is not a serious offence and there was little proof of just who it was meant for. Predictably, Fagtoo jumped bail and is now evading arrest. Section 22 of the POTO does provide for jail sentences of up to 14 years for financiers of terrorist groups, but the law is of no use in the absence of the kind of investigative resources that are essential in Jammu and Kashmir.

It takes little to see that without real action against the blood money trail, the elimination of 250-odd terrorists in Jammu and Kashmir each month means little. Consider, for example, the case of the Hizbul Mujahideen. Pakistan's intelligence establishment is attempting to re-establish the group at the cutting edge of insurgent operations to show that the war in Jammu and Kashmir is an indigenous national liberation movement. In October, the Hizb's central command replaced the pro-dialogue commander of the organisation, Abdul Majid Dar, with Ghulam Hassan Khan. Khan's second-in-charge Abdul Ahmad Bhat, a Sopore resident who uses the nom de guerre Umar Javed, was to have taken over from Dar's closest aide, one-time veterinary surgeon Khurshid Ahmad Zargar, who uses the nom de guerre Asad Yazdani. Javed Ahmad Rather, operating under the alias Zubair-ul-Islam, was to have taken control of the operations in north Kashmir from Dar's aide, Farooq Sheikh Mirchal, code-named Feroz.

The interdiction of funds in December has done not a little to discredit Khan among his own cadre and strengthen the pro-dialogue faction. Clamping down on funds, then, will have a major impact not just on terrorist groups but the larger support structures that enable widespread violence. Sadly, the fact is that terrorism in Jammu and Kashmir is one of the State's thriving businesses: the funds shipped in to finance killing keep the valley's rich in the style they are accustomed to. The authorities that ought to be asking suspect businessmen hard questions have chosen to maintain a safe distance from the State. All that police officials are able to do is to recover funds where they find them, with no hope whatsoever of being able to turn the pipeline off. That hunt continues. In one bizarre farce played out on December 26, undercover officials went to the home of village sarpanch Ghulam Nabi Najjar, one of them pretending to be Abdullah Makki, a top Lashkar-e-Toiba commander he had been instructed to hand over Rs.20 lakhs to. Najjar complied. However, before their colleagues in uniform could close in, the real Abdullah Makki showed up demanding his money. The sarpanch was kidnapped by the terrorists and has not been heard of since.

The real lynchpins of the blood money pipeline need fear no such outcome. They know there is no price for supporting terror - and that terror truly pays.

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