Hawala (Arabic: , meaning transfer), (also known as hundi) is an informal value transfer system based on the performance and

honor of a huge network of money brokers, which are primarily located in the Middle East, North Africa, the Horn of Africa, and the Indian subcontinent. It is basically a parallel or alternative remittance system that exists or operates outside of, or parallel to traditional banking or financial channels.

Origins Hawala has its origins in classical Islamic law and is mentioned in texts of Islamic
jurisprudence as early as the 8th century. Hawala itself later influenced the development of the agency in common law and in civil laws, such as the aval in French law and the avallo in Italian law. The words aval and avallo were themselves derived from hawala. The transfer of debt, which was "not permissible under Roman law but became widely practiced in medieval Europe, especially in commercial transactions", was due to the large extent of the "trade conducted by the Italian cities with the Muslim world in the Middle Ages". The agency was also "an institution unknown to Roman law" as no "individual could conclude a binding contract on behalf of another as his agent". In Roman law, the "contractor himself was considered the party to the contract and it took a second contract between the person who acted on behalf of a principal and the latter in order to transfer the rights and the obligations deriving from the contract to him". On the other hand, Islamic law and the later common law "had no difficulty in accepting agency as one of its institutions in the field of contracts and of obligations in general".[1] Hawala is believed to have arisen in the financing of long-distance trade around the emerging capital trade centers in the early medieval period. In South Asia, it appears to have developed into a fully-fledged money market instrument, which was only gradually replaced by the instruments of the formal banking system in the first half of the 20th century. Today, hawala is probably used mostly for migrant workers' remittances to their countries of origin.

How hawala works

In the most basic variant of the hawala system, money is transferred via a network of hawala brokers, or hawaladars. It is the transfer of money without actually moving it. In fact, a successful definition of the hawala system that is used is money transfer without money movement.

Hawala example transaction; see text for an explanation The figure shows how Hawala works: (1) A customer (A, left-hand side) approaches a hawala broker (X) in one city and gives a sum of money (red arrow) that is to be transferred to a recipient (B, right-hand side) in another, usually foreign, city. Along with the money, he usually specifies something like a password that will lead to the money being paid out (blue arrows). (2b) The hawala broker X calls another hawala broker M in the recipient's city, and informs M

about the agreed password, or gives other disposition instructions of the funds. Then, the intended recipient (B), who also has been informed by A about the password (2a), now approaches M and tells him the agreed password (3a). If the password is correct, then M releases the transferred sum to B (3b), usually minus a small commission. X now basically owes M the money that M had paid out to B; thus M has to trust X's promise to settle the debt at a later date. The unique feature of the system is that no promissory instruments are exchanged between the hawala brokers; the transaction takes place entirely on the honor system. As the system does not depend on the legal enforceability of claims, it can operate even in the absence of a legal and juridical environment. Trust and extensive use of connections, such as family relations and regional affiliations, are the components that distinguish it from other remittance systems. Informal records are produced of individual transactions, and a running tally of the amount owed by one broker to another is kept. Settlements of debts between hawala brokers can take a variety of forms (such as goods, services, properties, transfers of employees, etc.), and need not take the form of direct cash transactions. In addition to commissions, hawala brokers often earn their profits through bypassing official exchange rates. Generally, the funds enter the system in the source country's currency and leave the system in the recipient country's currency. As settlements often take place without any foreign exchange transactions, they can be made at other than official exchange rates. Hawala is attractive to customers because it provides a fast and convenient transfer of funds, usually with a far lower commission than that charged by banks. Its advantages are most pronounced when the receiving country applies unprofitable exchange rate regulations (as has been the case for many typical receiving countries such as Pakistan or Egypt) or when the banking system in the receiving country is less complex (e.g. due to differences in legal environment in places such as Afghanistan, Yemen, Somalia). Moreover, in some parts of the world it is the only option for legitimate funds transfers, and has even been used by aid organizations in areas where it is the best-functioning institution.[2] Furthermore, the transfers are usually informal and not effectively regulated by governments, which is a major advantage to customers with tax, currency control, immigration, or other concerns. In some countries however, hawalas are actually regulated by local governments and hawaladars are licensed to perform their money brokering services.

Hawala scam
The Hawala scandal startled Indian public as it was the first case when the Prime minister himself was accused of corruption. Adding to it was the expose that Rajiv Gandhi held secret accounts in Swiss banks. Hawala scam involved payments allegedly received by politicians through hawala brokers, the Jain brothers. It was a US$18 million bribery scandal that implicated some of the country's leading politicians. There were also alleged connections with payments being channelled to Hizbul Mujahideen militants in Kashmir.

The Scam
The case broke out on March 1991, with the arrest of two Kashmiri militants, Shahbuddin Ghauri and Ashfaq Hussain Lone, in March 1991. They had, in turn, led the CBI to high-profile hawala operators Shambhu Dayal Sharma and Moolchand Shah. It was the testimony of the hawala operators that led to the unfolding of the case. Ghauri and Lone's complicity proved that militants were involved in international hawala deals. Ghauri who was doing aPhD at Delhi's Jawaharlal Nehru University at the time was believed to be the ``international militancy coordinator of the Hizbul Mujahideen. Lone was also suspected to be a member of the group. Investigations showed that the duo had links with militant groups all over the world, including many in Pakistan, Canada and the United States. Some cheques of Pakistani origin and a bank draft of over Rs 15 lakh were recovered from them. On July 23, 1998, the two militants were convicted under the TADA and FERA. Sentenced to seven years' imprisonment, they were released last month as they had already been in jail for about that period.The hawala operators, Sharma and Shah, told the agency during interrogation that they had been working for the Jain brothers, N.K. Jain and S.K. Jain. This led to the immediate arrest of the Jain brothers. In his 1995 confession, S.K. Jain alleged that he had paid a number of politicians, including the then Prime Minister, P.V. Narasimha Rao. He also claimed that the names of allthose who had received money from him were recorded in the now famous ``Jain diaries.

Prosecution
However, the CBI's entire case against the prominent personalities cutting across party lines named in these diaries collapsed in court. Special CBI Judge V.B. Gupta held that none of the statements and confessions of the accused was admissible in court since they were given to the CBI. He also stated that he found there was nothing that could be converted into legal proof against the accused, and that the crucial diaries were ``inadmissible evidence. Since then, the cases have gone out the door, one by one. As for the Jains, they are still in trouble but with the Income-Tax Department. They have a tax liability of Rs 79 crore for five assessment years and their appeal is pending with the I-T tribunal in Nagpur. They were supposed to also pay a huge amount as interest, but the Appeals Commissioner waived it. Interestingly, on 10th Feb 2000, Mr. BR Lal, DGP Haryana, (who was the then Joint Director, CBI incharge of Hawala investigations) told the nation on Prime Time show of Zee TV, that CBI had sufficient evidence against Hawala accused politicians but there was tremendous pressure from its Directors and from above to conceal the same or file flimsy charge sheets, so that the politicians could be let off.

Kashmir's hawala scandal

A tale of inept investigation and political apathy.
An investigation by Frontline into a marriage between financial sleaze and secessionism in Kashmir exposes a crucial aspect of terrorism in Kashmir. Through documents and interviews, the following story shows that two top leaders of the Hurriyat Conference, Syed Ali Shah Geelani and Abdul Ghani Lone, were involved in the handling and transmission of enormous sums of money. They have no credible explanation as to where it came from, or proper accounting of how it was spent.

Frontline also explored persistent allegations that the funds received by key Hurriyat leaders through hawala channels were intended to fund terrorist activity, but that they were often siphoned off for personal benefit. No tangible evidence was found to back up this charge. However, new evidence emerged that funds collected for the reconstruction of the Chrar-eSharief shrine and the town, destroyed in a confrontation between the Indian Army and forces led by Mast Gul Khan in May 1995, had been mysteriously disbursed in cash, without even a semblance of record-keeping. The Congress(I) is meanwhile seeking to expand its meagre strength in Jammu and Kashmir by allying itself with some figures in the Hurriyat hierarchy. This political fact may explain perhaps the most startling discovery of this investigation: that despite a mass of evidence unearthed by the Jammu and Kashmir Police and the Intelligence Bureau, the Central Bureau of Investigation appears less than serious about prosecuting those responsible for Kashmir's hawala racket. The Congress(I)'s opportunism, whatever its short-term political outcome may be, is fraught with danger. If it may serve to erode the authority of the National Conference and Chief Minister Farooq Abdullah, those who recall the Congress(I)'s dangerous initial flirtation with the Bhindranwale phenomenon in Punjab will be fully aware of the dangers. PRAVEEN SWAMI in Srinagar TERRORISM is possibly Jammu and Kashmir's sole profitable enterprise; although 10 years of violence have ruined the State's people, the protagonists of the crisis appear to have transformed tragedy into sleaze. A Frontline investigation has unearthed evidence that suggests that at least two senior members of the All Party Hurriyat Conference (APHC), which is committed to Kashmir's secession from India, have been siphoning off funds received for their struggle for yet to be investigated ends. People's Conference leader Abdul Ghani Lone and the Jamaat-e- Islami's Amir (chief), Syed Ali Shah Geelani, the investigation discovered, have used proxies and dummy bank accounts to harbour illegally obtained funds. Frontline's five-month investigation also found hard proof that massive sums of money collected for the reconstruction of the Chrare-Sharief shrine, and for the relief of the town's residents, have vanished.
M.LAKSHMANAN

Abdul Ghani Lone (left) and Majid Dar in the

former's residence. There has been no follow-up action on evidence that the Hurriyat leader held, in the name of Dar, a bank account that has seen heavy transactions. There is no hard evidence to show where the enormous sums of money received by the Hurriyat came from; nor could it be established, Frontline found, that the leaders converted the funds into personal assets. The mysteries of where the money came from, and what it was spent on, remain. The Central Bureau of Investigation (CBI) filed First Information Reports (FIRs) charging the two leaders with hawala offences earlier this year, but the Central investigative apparatus is displaying a curious reluctance to go deep into the matter.
V.SUDERSHAN

The Chrar-e-Sharief shrine after it was gutted in 1995. UNDERSTANDING the significance of these discoveries requires an understanding of the mechanics of funding terrorism in Kashmir. Since the 1991 arrests of Ashfaq Lone and Shahabuddin Ghowri in New Delhi on charges of channelling hawala funds to Kashmir terrorist groups blew the lid off the Jain brothers' hawala scandal, it has been known that illegal inflows have been central to sustaining terrorism in Kashmir. An internal briefing document of the Intelligence Bureau (I.B.) acquired by Frontline suggests that Pakistan's InterServices Intelligence (ISI) routinely uses the West Asian hawala network as well as "Kashmiri pressure groups working from the U.K. and United States" to fund politicians affiliated to terrorist groups (see box). This money is then passed on by these leaders to armed organisations. The I.B. document suggests that much of this money is skimmed off by the Hurriyat leaders, as well as their proxies, who include businessmen and journalists, for personal benefit. It is then laundered through the acquisition of legitimate assets like property and financial assets, which are claimed to be organisational acquisitions rather than personal ones. Thus, international funds arriving through hawala channels have served two purposes: they have not only paid for terror, but created a political vested interest in continued bloodshed. The need to initiate a meaningful investigation into the Hurriyat's marriage of secession and sleaze should be evident. Hurriyat politicians have frequently been accused by their critics, albeit with little proof, of acting as depositories for these funds and misappropriating them for personal benefit. Although the CBI's FIRs were seen as a sign of the Government's intention to resolve the last remaining strand of the Jain hawala case and to attempt to establish the I.B. proposition that terrorism in Kashmir was sustained through hawala inflows, nothing of the kind has so far happened. At a top-level meeting at the Union Home Ministry on May 5, 1997, the minutes of which Frontline has acquired, the Special Secretary in charge of Jammu and Kashmir affairs, V.S. Mathur, warned that any further delay in the investigations would "affect the credibility of the Government." Many officials believe that influential State Congress(I) leaders, who seek to subvert the authority of the Farooq Abdullah Government by opening a dialogue leading to an electoral arrangement with sections of the Hurriyat, are engineering the demise of Kashmir's hawala investigations. Prime Minister I.K. Gujral's recent revelation in Srinagar that the Hurriyat leadership consisted of his "old friends", too, has done little to enthuse investigators to discover the truth.

1. The Jamaat-e-Islami trail Syed Ali Shah Geelani's Jamaat-e-Islami has frequently been described as a state within a state, controlling schools, hospitals and charitable trusts, as well as a substantial network of political cadres committed to its fundamentalist politics. The Jamaat's armed wing, the Hizbul Mujahideen, was, until the recent decimation of its top leadership by the Jammu and Kashmir Police, the State's most feared terrorist group. Intelligence officials have long believed, though without hard evidence, that the Hizbul Mujahideen's mysterious Amir-e-Jihad (supreme leader of the Jihad) was in fact Geelani himself. Although rumours that the veteran politician had benefited not inconsiderably from his political empire had for long been in the air, it was only in April 1997 that the CBI acted against him.
M.LAKSHMANAN

Syed Ali Shah Geelani. An FIR registered in New Delhi by the CBI's Special Investigation Cell II alleged that Geelani had violated Section 23 of the Foreign Contributions (Regulation) Act by receiving 2 million rials (Rs. 19.4 crores at current exchange rates) from Saudi Arabia and a separate donation of Rs. 10 crores from the Kashmir American Council. These payments, the FIR alleged, were collected from hawala dealers in New Delhi. While part of these payments were sent on to terrorist groups, investigators believed, substantial diversions took place to buy property. Geelani's defence is as follows: he does not deny the allegation that he has been involved in property purchases, but insists that the purchases were made with party funds for the use of the Jamaat-e-Islami. DOCUMENTS available with Frontline show that on May 4, 1997, the Army's 20 Grenadiers unit stumbled on information that could have explained how funds received by the Jamaat were channelled to terrorist groups on the ground. Abdul Ahad, a Srinagar shopkeeper, was found in possession of 12 bank drafts worth Rs. 5,95,000, all issued in favour of a Sopore company, Riyaz & Co. Army officials discovered that the account was held by Riyaz Ahmad Lone, an employee of the Sopore head office of the Kamraz Rural Bank.
M.LAKSHMANAN

The Jammu and Kashmir Bank branch in New Colony, Sopore. Investigations led to the recovery of more drafts, worth a total of Rs. 11 lakhs. Each had been purchased against payment of cash. One of these drafts (all of them were dated April 24) was worth Rs. 3 lakhs - in violation of the rule that no draft for over Rs. 50,000 can be purchased by any means other than a crossed cheque (Frontline has in its possession copies and details of some of these drafts.) Abdul Ahad told officials of 20 Grenadiers that the drafts were handed over to him by the Jamaat-e-Islami's office clerk, Qazi Ahadullah, and Geelani's predecessor as chief of the Jamaat-

e-Islami, Ghulam Mohammad Bhatt. Such drafts, he claimed, were routinely made to be transferred onwards to Jamaat- e-Islami sympathisers across the State. An FIR was filed by the police on May 10, 1997 and Bhatt was arrested. The former Jamaat- e-Islami chief claims to have in fact been picked up earlier, which, though not implausible, is irrelevant to the hawala trail. (Frontline has a copy of the 'Handing Over Certificate' issued by 20 Grenadiers to the Jammu and Kashmir Police, the legal instrument issued by the Army when it fulfils its mandatory duty to turn over all persons it arrests to the local police. It also has a copy of the FIR filed by the police against G.M. Bhatt.) Subsequent developments can only be described as passing strange. The May 10 FIR made no mention of the recovery of bank drafts from Abdul Ahad, and no FIR was registered against their intended recipient, Riyaz Ahmad Lone. Although Army officials in Srinagar insisted that Riyaz Ahmed Lone was "absconding", Frontline found him at his desk at the Kamraz Bank in Sopore. He told Frontline that he had indeed been receiving the drafts on behalf of a Hizbul Mujahideen unit. "Their leader Irshad Wani approached me," Lone said, "saying that two consignments of cash the Jamaat-e-Islami sent from Srinagar had been captured by the Army. He wanted a safer route for the money to be sent, and told me I would be given drafts to pay into my account."
M.LAKSHMANAN

The head office of the Kamraz Rural Bank in Sopore. In April, Riyaz Ahmad received drafts for Rs. 11 lakhs but says that he continued to stall as far as he could. "Before I could encash these drafts," he claims, "Irshad was killed and I decided to hold on to the drafts, because I was afraid I could get into trouble later." This explanation, however, leaves open the question of why the second set of drafts was prepared for him on May 3, for his reluctance to encash the first set should by then have given the Jamaat-e-Islami sufficient reason to look for other conduits. Riyaz Ahmad had no answer to this question, but the Army was satisfied. "They picked me up on May 6," he says, "and I stayed in their camp in Sopore for 40 days. Finally they asked me to write out a cheque for the total value of the drafts and let me go." Facsimilie of a draft favouring 'Riyaz and Company'. The Army was presumably convinced of Riyaz Ahmad's innocence. It had reason to be. The Rs. 16.95 lakhs that he had received, Frontline learnt from local banking sources, was paid by cheque number 1431466 from Riyaz & Co.'s account into account number C-4/8041 of the State Bank of India's Palhalan branch on July 3, 1997. This account is held by the Commanding Officer of 5/9 Gurkha Rifles, the unit operating in Sopore. This action constitutes, on the face of it, an impropriety if not an offence, since all material evidence seized in the course of an investigation belongs to the trial court, and can be altered in any way only with the court's permission. The Army had obtained no such order, for it is not empowered by the Code of Criminal Procedure to carry out investigations in the first place. By law, the Army

should have handed over the drafts to the local police after they were recovered and left the business of further investigation to them. A page from the bank ledger pertaining to Majid Dar's account No. 191/2 at the Jammu and Kashmir Bank's Rawalpora branch in Srinagar. These records establish the scale of funds that Dar handled for Geelani, and the fact that enormous withdrawals were made in cash.

Details of bank drafts seized by 20 Grenadiers from Abdul Ahad, allegedly Jamaat-e-Islami funds to be passed on to the Hizbul Mujahideen. The Criminal Investigation Department of the State police, which should have monitored the affair, found itself helpless in the face of the challenge of pursuing hawala cases outside the State's boundaries. The CBI, too, made no effort to use the evidence on offer in the bank drafts case to substantiate its allegations against Geelani. Just why all these agencies acted as they did, Frontline was unable to ascertain: officials agreed to speak only off the record and then offered nothing of substance. The Army's inept management of the demand draft affair and the State CID's incompetence have in effect crippled any real chance of arriving at the truth of Geelani's funding sources and their deployment. There was no real evidence to back the central charges in the CBI's FIR, that Geelani received hawala funds from overseas sponsors and that these funds were converted into personal assets in a corrupt manner. Abdul Ahad's bank drafts, properly investigated, might have thrown light on that point. "We could have pursued the leads against Qazi Ahadullah and Bhatt," says a senior State police official, "and tried to establish just where the money had come from, and precisely what it was intended for." "Now," he concludes, "the lack of coordination between investigative agencies has created a situation where even if we find out the truth, our case will most likely be laughed out of the trial court." Syed Ali Shah Geelani, though he may strenuously deny the proposition, could owe his political future to the Indian Government. 2. Abdul Ghani Lone and funds for Chrar-e-Sharief

If the mishandling of the drafts case illustrates the lack of purpose in the Kashmir investigations, recent revelations of proxy accounts allegedly held by People's Conference leader Abdul Ghani Lone illustrate the CBI's apparent proclivity to let otherwise solid hawala cases die through sheer neglect. In April 1997, the CBI Special Investigation Cell II in New Delhi filed an FIR alleging that Lone had, inter alia, received Rs. 30 lakhs a month from the ISI, accepted payments for an overseas trip in 1995 from the Kashmir American Council, and used part of the cash that he received to build homes in Rawalpora and Delhi. Frontline's investigations led to some interesting findings. Although there was substantial evidence that Lone, along with other members of the Hurriyat Conference leadership, had siphoned off or mishandled funds intended for relief and reconstruction at Chrar-e-Sharief, the allegations made by the CBI that these funds were used to acquire personal property and to travel abroad have not been substantiated. Critically, there has been no follow-up action by the CBI on evidence that Lone held a bank account in the name of a neighbour, Majid Dar, into which lakhs of rupees were credited and debited in cash without even an effort at accounting. Majid Dar, who owns a cloth store opposite Lone's Srinagar home, was arrested on July 9 by the crack Special Operations Group of the Jammu and Kashmir Police. (Majid Dar's bail order, a copy of which is with Frontline, mentions charges of sponsoring terrorism.) One key document was recovered from him. It was the passbook of his account, bearing the number 191/2, at the Jammu and Kashmir Bank's Rawalpore branch in Srinagar. The account showed an exceedingly curious pattern of activity. From October 1994, the period from which Frontline could obtain documentation, large sums of money began to be paid in through demand drafts and in cash. On October 12, 1994, for example, Rs. 1 lakh was paid in by demand draft, and two cheque withdrawals of Rs. 50,000 were made days later, leaving a balance of just Rs. 455. Heavy deposits and withdrawals continued regularly. These withdrawals and deposits reached a peak in 1995, with Rs. 13,00,000 being deposited in cash on a single day, June 13. Dar told curious bank staff that the money was for the reconstruction of Chrar-e-Sharief. No further questions were asked, even when Rs. 14,10,000 was paid in just weeks later - on August 8. Dar's withdrawals were equally heavy. Self cheques of Rs. 5 lakhs and Rs. 10 lakhs were routinely presented and money was withdrawn, with the quantum of transactions topping a crore of rupees in just seven months of 1995. (See a part of Majid Dar's bank account record reproduced in facsimile.) IN custody, Dar told his interrogators that he had merely held account No. 191/2 on his politician-neighbour's orders, handing over signed blank cheques as and when they were asked for. Lone merely told him that the heavy transactions of 1995 were for Chrar-e-Sharief and the shopkeeper made no further enquiries. Shortly after a national newspaper carried this story, Dar was released. Speaking to Frontline at Lone's house, he said that his confessions had been made under duress, following sustained torture by the Special Operations Group. The newspaper's correspondent, he said, had interviewed him while he was being tortured. "I did deposit Chrar-eSharief money in the account," Dar said, "which we collected from people in Rawalpora and adjoining areas. We collected Rs. 8.5 lakhs between 10 a.m. and 4 p.m. on the first day, and when we asked the Hurriyat leaders what to do with it, they asked me to keep it in my account, to hand over to the Alamdar Fund that had been set up to provide relief."

During his tape-recorded interview with Frontline, however, Dar made several inconsistent statements. One was that while there was a deposit of Rs. 8.5 lakhs in cash into the account, this had been preceded by the larger deposits in cash, of Rs. 13,00,000 and Rs. 14,10,000. Asked how public collections came in such neat figures, rounded off to five zeroes, Dar had no answer. Finally, there is little to explain why residents of middle class Rawalpora were so generous. Frontline obtained records of donations to the Alamdar Fund by professionals from the Psychiatric Diseases Hospital in Srinagar by way of comparison. The highest donor was Dr. M.A. Chesti, who gave Rs. 215. THE most curious fact about Dar's account is that most of the money deposited in it was not in fact deposited into the Chrar-e- Sharief Alamdar Fund in the first place. Three cheques were paid to the Alamdar Fund in January 1996, months after the money was collected, worth a total of Rs. 30 lakhs. Two other cheques for Rs. 10,00,000 each were encashed in November, and though Dar claims that these too were for the fund, he could provide no proof. Dozens of other self cheques, and cheques to various parties, notably Ghulam Nabi and Ghulam Mohammad, the Kashmiri equivalent of Joe Ordinary, were written out for sums ranging from just a few thousand to several lakhs of rupees. Lone told Frontline that these cheques, unlike the direct donations to the Alamdar Fund, were withdrawals to meet the immediate cash needs of Chrar-e-Sharief victims (see interview). Asked for proof of these disbursals, he first reacted with hostility, saying that he did not have to answer "the Indian Government and its press." When this correspondent pointed out that as a public figure he did have to answer to the people, he said that the Hurriyat's accounts were deliberately hidden to avoid official reprisals against donors and recipients. The politician also claimed that several of Majid Dar's transactions were undertaken with his own business funds. This proposition, however, is problematic, since business revenues would have seen a steady growth in the account, rather than a pattern of massive deposits followed by equally massive withdrawals. Despite the breakthrough provided by the discovery of Dar's account, the CBI appears to have done little to investigate the case. Lone dismisses its FIR with more than some degree of conviction: "They say I bought this house with hawala funds, but that's nonsense. Anyone can tell you I bought it in the late 1970s and rented it out for many years." BY way of evidence, Lone provided Frontline a copy of an income tax notice served on him in 1982-1983 by the Income Tax Officer, Srinagar B ward. The notice pointed out that his returns for that year showed an income of Rs. 5,690 from property, the first such income his returns had ever shown. It demanded details of the consideration for which the property had been purchased, its cost of construction, and the sources from which the investment was made. Lone did not provide Frontline these details, but his case is prima facie plausible. "The CBI also says," he rubs in the point, "that I went abroad in 1995, when the Government they serve took away my passport in 1993. They say I have property in Delhi. Let them point to one and they are welcome to have it, free of cost." 3. The Hurriyat corporate: Milking the people

If there had been an elaborate financial swindle, it would be of a piece with the Hurriyat Conference's collective handling of the Chrar-e-Sharief relief. Internal Hurriyat correspondence obtained by Frontline shows that the supposedly autonomous Alamdar Fund set up by the Muslim Auqaf Trust to administer relief was in fact functioning on the instructions of the secessionist body. Of Rs. 1,50,00,000 disbursed through the Alamdar Fund's account bearing number 7356/74 at the Gole Market, Karan Nagar, Srinagar branch of the Jammu and Kashmir Bank, just Rs. 20 lakhs were actually paid directly to the Sheikh-ul-Alam Relief Committee, which was organising ground-level relief work at Chrar-e-Sharief. (Frontline has obtained details of debits from the Alamdar Fund account.) A sum of Rs. 60 lakhs was paid by cheque to the Committee through People's Conference leader and Lone's deputy, Dr. G.M. Hubbi. Hubbi received three further cheques between October and December 1995 for a total of Rs. 30 lakhs, while his fellow Hurriyat politicians, Ghulam Qadir and Ghulam Nabi Sumji, received Rs. 10 lakhs and Rs. 35 lakhs respectively. None of the recipients of cheques from the Alamdar Fund was a trustee or was formally associated with the organisation. The Hurriyat Conference's direct involvement in the supposedly apolitical Alamdar Fund began in late May 1995. On May 26 and 27, nine trustees of the Muslim Auqaf Trust, a historic body hijacked by secessionist parties during the years of the Kashmir insurgency, met to discuss the handling of the Alamdar Fund. The trustees decided to maintain a separate bank account for the trust, but only after "a long discussion and persuasion by the executives of the APHC" (according to a resolution of the Muslim Auqaf Trust on the Alamdar Fund, a copy of which Frontline has obtained). The Hurriyat's "persuasion", Lone told Frontline, was merely the insistence that "the Alamdar Fund carry on its relief work separately from the Hurriyat, since we were waging a larger battle for freedom." In the event, the Alamdar Fund did not maintain even a measure of independence. Large sums of cash were handed over by the Fund to Hurriyat functionaries on the basis of scrawled slips from the organisation's office. On April 12, 1996, for example, the Auqaf Trust's G.Q. Drabu sent a hastily typed note to Hurriyat chairman Mirwaiz Umar Farooq. "Haji G.M. Sumji," the note reads, "appeared in this office today, the 11-4-96, asking for issuance of a cheque for ten lacs from Alamdar Fund. He was asked to produce a letter of authority from your good self, instead of producing a letter of authority he asked me to contact you on phone." In the note, Drabu proceeds to plead for a letter of authority to be issued. (Frontline has obtained a copy of the note.) Similar casual slips of paper were the basis for several lakhs of rupees being issued out of trust funds. One of them is a letter issued by the Hurriyat office to Drabu on December 2, 1995 instructing the Auqaf Trust chairman to "hand over" Rs. 6 lakhs to the bearer of the letter, G.M. Hubbi, acting for the Sheikh-ul-Alam Relief Committee. Geelani flatly refused to discuss the Hurriyat's role in Chrar-e- Sharief relief. "I had nothing to do with it," he asserted. "I kept out of it from the beginning." Speaking to Frontline, Lone attempted to defend these transactions: "The funds that were paid by cheque directly to the Alamdar Fund were for the reconstruction of the shrine itself. But the bulk of the money was to provide relief to the victims of the Indian security forces, who destroyed Chrar-e-Sharief. This task, because of the disturbed situation, simply could not be carried out by the Alamdar Fund's trustees. Those

discovered with money by the security forces risked having their houses blown up. So the Hurriyat had to become directly involved in the process. The money was taken in cash and given according to a sliding scale to the victims." Lone, however, acknowledged that no detailed accounts had been kept of disbursals. Asked why many people at Chrar-e-Sharief complained that they had received no compensation, he said: "Ask a Congress supporter there, and he'll tell you the Hurriyat- wallahs are thieves. Ask a National Conference supporter and he'll tell you we ate it all up. Ask our supporters and they'll tell you the truth about how much each one got." THE truth must be established. The FIRs filed by the CBI's Special Investigative Cell II rest on two central propositions: first, that hawala funds were received by Hurriyat leaders, and secondly, that they misappropriated large parts of these donations. Yet the investigative handling of the Abdul Ahad drafts and the Majid Dar account gives little reason to believe that the CBI intends to follow up its FIRs with prosecutions. In the case of Abdul Ahad, the agency failed to monitor a key discovery and to ensure that the financial point of origin of the drafts and their intended end use were established with evidence that could be introduced in a trial court. In Majid Dar's case, little has been done to establish that the money was received through hawala channels and that Lone had consistently misappropriated funds received in this way. At the May 5 Union Home Ministry meeting, the CBI, represented by Joint Directors M.L. Sharma and Sharad Kumar, blamed the absence of progress on the lack of "meaningful input from other agencies at this juncture". This argument was evidently designed to deflect responsibility from the organisation in the face of Special Secretary V.S. Mathur's wrath. The minutes of the meeting, recorded by Under Secretary Chandan Singh in file 13026/54/96-K (M) (Volume II) dated May 13, show that I.B. Deputy Director Kulbir Krishan rebutted the CBI's position, pointing not only to "additional information which has been shared with the CBI in early April," but also to the fact that "several documents which could be useful had been recovered which the CBI may follow up." The CBI's evident lack of desire to do so was apparently shared by others. All that the Enforcement Directorate's P.K. Roy could contribute to knowledge of the issue was the claim that while his organisation had identified "some properties, telephone numbers and bank accounts," these were "not in the names of the persons charged". Paragraph 10 of the minutes records that the Income Tax authorities - who despite being invited had not sent a representative to the meeting - had earlier sent notices to several banks asking for "information on suspicious accounts," to which the banks "had not responded". THE lack of progress in the Kashmir cases is of a piece with the CBI's marked lack of enthusiasm in pursuing the Jain hawala discoveries. In a political climate where aggressive investigation of corruption at the top has been labelled a "witch-hunt" by I.K. Gujral himself, CBI officials are evidently unwilling to engage with the possibility that their work may generate unwelcome discoveries. If hawala dealers are indeed behind the cash inflows that Hurriyat leaders have siphoned off, a possibility which, though not established, is certainly probable, their

arrest and prosecution could well lead to embarrassing revelations about politicians who have nothing to do with Kashmir or terrorism. In the short run, the exposure of Hurriyat politicians would also sabotage the electoral strategies of the Congress(I) under State party leader Mufti Mohammad Sayeed; the party has premised its future in Jammu and Kashmir on recruiting second-level secessionist politicians to its ranks. This opportunistic agenda is clearly an insult to the people of the State, who risked death to vote overwhelmingly for the secular-democratic National Conference in last year's elections. Many in Kashmir, at various locations in the political landscape, frequently argue that the real problem is not that Kashmiris do not consider themselves Indian, but that Indians have never treated Kashmir as a part of India. The apathy and political cynicism evident in the Hurriyat investigations suggest that they may just have a point.
CBI sure of hawala scam charges against Advani, Shukla

There is enough admissible evidence to frame charges against Bharatiya Janata Party President L K Advani and former federal minister V C Shukla in the Rs 650 million Jain hawala case and these chargesheets were not filed to launch ''malicious or frivolous'' prosecution, the Central Bureau of Investigation told the Delhi high court on Monday, March 3. Opening arguments on behalf of the investigating agency, senior counsel Gopal Subramaniam submitted before Justice Mohammad Shamim that the special hawala court of V B Gupta had not erred in framing charges of criminal conspiracy and corruption against the two leaders last year. At the stage of framing of charges, the trial court has to satisfy itself that there is enough material to form a prima facie case against the accused and to send the matter for trial. ''The principles of charge are not the same as the principles of conviction. At the stage of framing of charge, the court does not have to examine in detail whether the evidence of the prosecution would be enough to secure a conviction after trial,'' Subramaniam added. If there is ''strong suspicion'' of the accused having committed the offence, the trial court cannot discharge the accused at the stage of framing of charge and the matter should be sent up for trial, he quoted the Supreme Court as holding. In the cases against Advani and Shukla, the CBI had enough evidence to show that a prima facie case existed and this was not a case of ''innocent politicians'' being roped in a ''groundless, baseless'' prosecution, as alleged by their counsel, he added. Turning to the admissibility of the Jain diaries as evidence, Subramaniam averred that these were not just loose sheets of pages strung together. ''I will show to the court that there is internal consistency in the diaries, a method in making the entries and these are consistent with other pieces of evidence.''

In example, the counsel cited that the CBI had recovered Rs 5.8 million from a balance of Rs 6.8 million shown in the diaries. This money was recovered in raids on the premises of the Jain brothers and their employee following the interrogation of a ''certain gentleman'' who confessed to having dealt in hawala money at the behest of the Jains, he added. The senior counsel appearing for Advani, Shukla and the Jains had contended before Justice Shamim that the CBI had filed ''politically motivated'' cases. They also averred that the diaries in which the entries about the alleged payments to top politicians and bureaucrats were made by the Jains were not admissible as evidence. In light of this, the court should discharge the accused at the stage of framing of charges and not make them go through the process of trial, they submitted. According to the CBI chargesheets, Advani allegedly received Rs 3.5 million from the Jain brothers and Shukla Rs 3.8 million while they were serving as public servants. Subramaniam further submitted that under the 1988 Prevention of Corruption Act, members of Parliament were public servants and were thus liable to be prosecuted under it.