Inside Mumbai’s new extortion economy

Parveen, a close aide of fugitive gangster Dawood Ibrahim Kaskar, was collecting part of the ₹10 lakh extortion payout from a dry fruits trader who had received multiple calls. The caller was Ejaz Lakdawala, Parveen’s boss in the D-company hierarchy and, importantly, in jail since his arrest in 2017.

How Lakdawala managed to run his extortion network from behind bars was laid bare in an enquiry report that Director General of Police Sanjay Pandey painstakingly—and bravely—put together. This report was stalled by two senior-most officers in Mumbai Police and a highly-placed bureaucrat, Pandey told the government in March.

His report detailed the gangster’s extortion network, which included police officers who would even decide targets and amounts; the gangster allegedly squealed that a high-ranking IPS officer was his “boss". A letter by another gangster in 2018, and another letter by a retired assistant commissioner of police sent to the Maharashtra chief minister also pointed to this officer who has held significant posts including that of chief of Economic Offences Wing and the chief of the Anti-Terrorism Squad. Except the Aam Aadmi Party, no other entity expressed shock or demanded a thorough probe.

The cold reality is that extortion lies at the intersection of commerce, police, politicians, and gangsters. The raging story of the 1990s across many India’s cities, but primarily centred on Mumbai, is once again back in the headlines after discovery of the SUV outside Ambani’s residence set off a series of political upheavals that threaten Uddhav Thackeray’s government in Maharashtra.

Extortion is not mere blackmail; it’s an economic edifice with a silent rhythm of its own. The extortion economy’s tentacles tap into every aspect of urban life, from street vendors and large industries to the law enforcement agencies and the underworld.

It receded from headlines for a while but never went away. Instead, the old edifice changed its contours to include new avenues and targets, adopted new communication systems, including from within the jails, expanded to new geographies in the maximum city which saw a boom in land and property deals, morphed into cyber extortion, and so on.

As with cricket, so with extortion: the game remains the same; its formats and playing techniques change.

Institutionalised extortion

Organised collection of money is ultimately linked to politics and specifically to the elections, which tend to be funded with this money. So, irrespective of the party in government, a certain amount is collected," DGP Pandey told Mint. Key and willing officials in the system become channels for the collection. “There’s the small-time extortion for breaking traffic rules and from street vendors. It’s visible but small. Then, there’s the macro-level organised network in which extortion is institutionalised and spoils are shared up a hierarchy," Pandey explained.

The current controversy has, once again, blown the lid off this “institutionalised extortion", bringing out corruption and criminalisation within a section of the police hierarchy. The trail from the SUV led to the controversial assistant police inspector Sachin Vaze, whose revelations sparked off the unceremonious transfer of Mumbai police commissioner Parambir Singh, who then implicated Maharashtra home minister and Nationalist Congress Party (NCP) leader Anil Deshmukh.

The BJP has riffed off this controversy to try and topple Thackeray’s government. Its leader and former chief minister Devendra Fadnavis sought a CBI enquiry into extortion charges and lambasted Thackeray for running “a government of extortion, by extortion, and for extortion".

Fadnavis cherry-picks here, as the Aam Aadmi Party leader Preeti Sharma Menon remarked to Mint, “It was his government which did not probe alleged underworld connections and extortion claims which were made back in 2018." Parambir Singh was one of the top cops who had stalled the 2018 enquiry, according to DGP Pandey’s recent letter to Thackeray. Incidentally, Pandey has been consistently overlooked for the Mumbai commissioner’s post. “The inference is clear," he said. He won’t be benign towards the extortion economy; those in power don’t want him in the powerful seat.

The Thackeray government’s survival will depend on complex political equations involving NCP chief Sharad Pawar’s agenda and the Congress’ willingness to withstand this storm. The two parties partnered Thackeray’s Shiv Sena to form the Maha Vikas Aghadi government in November 2019.

It would be naïve to believe that extortion will end with a change of government. The last 30 years have seen governments of all ideologies except the Left in Maharashtra. The extortion economy did not suffer. It’s a well-greased matrix with its lines extending across business and commerce, bureaucracies and administration, political parties, entertainment industry, hospitality and transport sectors, street economy, and more.

Extortion, colloquially hafta or vasooli, is not exclusive to Mumbai either, but its depiction in popular culture and in movies has made it almost synonymous with the city—as the necropolis beneath the urban glitter.

In local parlance, hafta is “protection money" paid to a representative of the system in return for pardoning violations or to the mafia for defence against the system. Vasooli is typically “recovery" of an agreed amount in return for favours—a host of people with power, including politicians and gangsters, could demand it.

Figures are hard to come by but the extortion economy is believed to be worth thousands of crores. It remained unaffected by Prime Minister Narendra Modi’s demonetisation in 2016, which was supposed to end black money.

“I’m surprised by the scale and depth of the extortion now, but it’s not a new thing," M N Singh, former Mumbai police commissioner, told Mint. “What we know about extortion attempts and the transfer-postings racket within the police force has happened in the past too, but there seems to be complete chaos in handling this now. A strong police commissioner and home minister can keep the extortion network in check."

The back story

The hafta-vasooli culture in Mumbai has a deep history that goes back to the cotton trade of the British era and the unaccounted-for-wealth which got parked in cinemas and real estate. Fast forward to the 1970s, bootlegging became a thriving business. This, coupled with other illegal activities, made the underground extortion economy flourish by hoodwinking the system with the connivance of officials within it.

This spawned exclusively underground activities such as matka or a form of gambling, and hawala or money-laundering. Gradually, extortion became part of the legitimate economy, the money helping finance political activities. Funders aligned with parties and operated with quid pro quos—an early version of electoral bonds, so to speak.

One of the earliest dons was an Ahmedabad man, Abdul Latif, whose bootlegging operations thrived in the officially no-alcohol Gujarat. Goods were routed via Bombay where strongman Varadarajan Mudaliar’s bootlegging and smuggling “businesses" boomed to make him “Anna"; he diversified into dock thefts, contract killings, and even ran a parallel “court" of justice. Haji Mastan, Karim Lala, Yusuf Patel began as petty criminals and established independent gangs, each with its network of small-time crooks and contract killers. The gangs of the 1980-90s treated Bombay as their chess board, knocking off one another in a bid for supremacy. Dawood Ibrahim’s gang, with its large number of foot soldiers, made hafta-vasooli the norm in the post-liberalisation years and invested the money in hotels, dance bars, travel agencies, shopping complexes, and in Bollywood.

Gangs of Chhota Rajan, Arun Gawli, Ashwin Naik, Ravi Pujari and others used this template too. Areas of the city were demarcated between gangs. Violent crime, property deals, drug trafficking, illegal arms trade, fake currency rackets, contract or supari killing rode within the hafta-vasooli network.

“I remember being an intern in my uncle’s business in Chembur nearly 30 years ago," recalled AAP’s Preeti Sharma Menon. "Men would regularly come to collect hafta. Everyone paid up. One of these men later became a top politician in Maharashtra and even held a constitutional post."

Between 1961 and 1991, the incidence of violent crimes in the city increased by 341%, according to a research paper by the Tata Institute of Social Sciences (TISS). From 1995 to 2000, the number of people approached for extortion spiked by a whopping 153% but the number of cases registered increased only by 31%. The implication: the rest had “settled" with extortionists. Over the past two decades, there have been crackdowns on organised crime and a slight waning of the underworld’s footprint in sectors such as Bollywood, but extortion networks have weathered it out—and expanded.

The new avatar

Hardly any person or business in Mumbai is untouched by the extortion economy; white-collar professionals, while not directly affected, see their corporates coerced into contributing. The expanded geography now covers Mumbai’s far suburbs like Vasai-Virar and Kalyan-Dombivli, and satellite cities such as Panvel, Navi Mumbai and outskirts of Pune and Nashik—all of which are areas that witnessed exponential growth in real estate in the last decade.

Lakdawala, in his last extortion, grabbed four apartments from a builder in addition to money. Holiday towns on Mumbai-Pune route like Lonavala and Talegaon have seen a rise in extortion linked to land deals whose trails often lead to local politicians. “Only the underworld is not as dominant as in Mumbai," said a high-profile couple from Mumbai who relocated to Lonavala recently and were greeted with indirect extortion attempts.

The pandemic, especially the lockdown, saw online and cyber extortion cases rise too, said a police officer. “Cyber extortionists track people who visit pornographic sites, send their passwords and browser histories back to these people to extort money," explained an officer. Five new cyber police stations for Mumbai were inaugurated this January.

Along with new geographies have come new techniques of extortion too. It’s no longer only money. Control or possession of land; construction rights of old buildings which are redeveloped or sleeping partnerships in real estate companies; front companies to finance films and international distribution rights of big-budget Bollywood movies are some of the newer strategies.

The incidence of creating false cases to later reach an out-of-court settlement is also on the rise, especially in the far suburbs, according to social activists. Filing false cases requires the local police to be in the loop; the case can be on any grounds such as Prevention of Atrocities Act or anti-sexual harassment law—the complainant offers to withdraw the case for an amount, and shares the dosh with cops who were party to the charade.

There are dozens of stories—a middle-rung cop’s wife received a packet with currency notes at the end of the month in which her husband passed away; the constable who delivered it told her it would be the last but he had been posthumously given his “rightful share"; filmmaker Mahesh Manjrekar received multiple calls during the lockdown last year from a man who claimed to be gangster Abu Salem’s man and demanded ₹35 crore as hafta; a bureaucrat joined a real estate company and helped builders negotiate haftas; a top builder routinely travelled to Dubai to “settle" on a lower vasooli; other builders paid the mafia’s local agents or became politicians.

“Extortionists from the underworld or otherwise become politicians or political strongmen to gain acceptability and immunity in society," pointed out MN Singh. “However, because they don white kurtas doesn’t mean extortion has stopped or the cancer of extortion has been removed from society."

Arun Gawli, now serving his life imprisonment in Nagpur jail, launched Akhil Bharatiya Sena in 1997 and was elected as a member of the Maharashtra Assembly in 2004; his daughter Geeta is a corporator in the Mumbai municipal corporation.

All political parties have their share of one-time extortionists in the ranks. Dawood Ibrahim’s brother Iqbal Kaskar was arrested in 2017 for extortion by senior police inspector Pradeep Sharma, head of Thane’s anti-extortion cell, who was himself accused of extortion. Sharma unsuccessfully contested the 2019 Assembly election.

To divorce corruption in the police or politics from the larger extortion economy, and attack one or the other without seeking to decimate the basic structure of this economy, would be to miss the woods for trees. The skeins appear distinct and different, but the point at which they intersect is complicated, noxious and nasty.

Businessmen, filmmakers, and others have paid with lives for being in the cross-hairs. Chief ministers have been rattled. Uddhav Thackeray is no different.

How he negotiates his way out of the political crisis will be keenly watched. To eradicate the extortion economy calls for a complete socio-economic-political rese—and a brave politician who is not invested in the system.

Smruti Koppikar is a Mumbai-based senior journalist and urban chronicler.