Mumbai: Transactions running into hundreds of millions of dollars, more links with Saudi arms dealer Adnan Khashoggi, a close friendship with well-connected Kolkata businessman Kashinath Tapuriah, and at least a passing acquaintance with two politicians.
These are just some of the findings of an ongoing investigation by India’s Enforcement Directorate (ED) into Pune-based real estate consultant Hassan Ali Khan, who has been charged with violating Indian foreign exchange laws by holding $8 billion (nearly Rs39,000 crore) in an account in UBS AG, Zurich. ED, which began the investigation in 2007, suspects the money has been laundered.
Also See Khan’s Fast Lane (Graphic)
Based on the findings, ED— that investigates violations of the country’s foreign exchange laws—is preparing to issue another so-called show cause notice (basically a request for information, backed by a legal threat) to Khan, his alleged accomplice Philip Anandraj, a Switzerland-based hotelier, and Tapuriah.
“We will serve him (Khan) and his associates another show cause notice under Fema (India’s Foreign Exchange Management Act) within two months. However, investigations under money laundering case may take six months before we arrive at a conclusion,” said A.K. Singh, assistant director of ED, who led the investigation.
On 29 December, K.N. Rao, special director of ED, had issued a show cause notice to Khan for the violation of Fema by holding $8 billion in his UBS account in Zurich.
Singh claimed UBS may not be the only bank where Khan has stashed his money and that there could be three other foreign banks where he has done so. “ED is in the process of gathering information on his (Khan) bank accounts with Credit Suisse, Credit Lyonnais and Bank Sarasin in Switzerland.”
Singh’s investigation report, which has been reviewed by Mint, reads like a crime thriller. It refers to bank transactions across continents, and to efforts by Khan, whom it describes as a scrap dealer from Hyderabad who called himself “Nawab” and claimed to be the great grandson of the Diwan (prime minister) of the Nizam of Hyderabad, to buy a luxury hotel in Switzerland, and his dealings with Khashoggi.
Khan, who also owns a few race horses, declined comment. His wife, Reema Khan, said, “The investigation is on and my husband is fully cooperating with the agencies. We would not like to make any comment at this point of time.”
Tapuriah, who was questioned by ED in January 2007, said over phone from Kolkata that he was unwell and had been asked by his doctor not to strain himself. “Hence, I am not fit to talk to you.”
ED’s findings have disclosed Khan’s plan to finance a $500 million project of Khashoggi in a notarized document signed by him on 29 June 2003 in London.
A notarized document is certified by a licensed public officer who serves as an impartial witness to the signing of documents and establishes the authenticity of the signatures.
According to the investigation report prepared by Singh, and previewed by Mint, Khan had written “a private and confidential letter to Prabhu Guptara, director organizational development at Wolfsberg Executive Development Centre, Switzerland—a subsidiary of UBS—and asked for assistance in clearing up a situation” after UBS AG froze an account belonging to Khan, following a $300 million transfer from Khashoggi, labelling them as “funds from weapon sales”.
While the report is silent on the nature of the Khashoggi venture in which Khan was expected to invest or, indeed, how he met the Saudi arms dealer, it says that Tapuriah and Khan first met in the late 1980s.
At the time, the report says, Tapuriah was chairman of Incab Industries and was visiting Hyderabad to raise funds to revive his sick company.
“Khan’s name was referred by A.S. Chowdhary, who was an MP (member of Parliament), and Vijay Bhaskar Reddy of Andhra Pradesh, and was told that he (Khan) could arrange finance/funds from his sources and resources,” the ED report said, quoting Tapuriah.
The friendship between the two grew, and the Kolkata businessman claims to have helped Khan win contracts “for supply of scrap to Steel Authority of India Ltd and Tata Steel Ltd”.
The report claims Khan had $8.04 billion in his UBS account as on 8 December 2006. The report quotes a letter written by M. Rohner, wealth management executive at UBS, in 2006 that said: “Khan can withdraw $6 billion and was free to invest this amount as and when he chooses to do so and that the balance amount of $2.04 billion would remain bound with UBS until 15 January 2007 and after which Khan was free to invest the same as and when he chooses to do so.”
While investigations against Khan began in January 2007, it was only in February 2008 that the Mumbai Police booked him—for holding three fake passports.
Following this, Khan filed an anticipatory bail application in the Bombay high court, which was rejected. He remained at large, however and on 30 April 2008, a Mumbai court declared Khan a “proclaimed offender” after he failed to appear for a hearing at the court. After eight months, Khan surrendered at a Mumbai police station on 15 December 2008.
On 2 January, Khan was granted bail by a court in the fake passport case on condition that he would not leave India and appear before ED every alternate day for a month.
Graphics by Ahmed Raza Khan / Mint