Major forex dealers arrested: FIA to seek Interpol assistance in forex scam

[Naveed Yaseen]

Kalia, Khanani held in forex scandal
Confess to transferring billions of dollars abroad illegally; FIA arrests several others, seizes records in raids

By Salman Siddiqui

KARACHI: Munaf Kalia and Javed Khanani, two top officials of the Khanani and Kalia International (KKI), on Saturday confessed to having illegally transferred billions of dollars outside Pakistan for the last five years.

They were arrested on Friday night and were being interrogated by a team led by the Federal Investigation Agency.

Munaf Kalia surrendered late on Friday night after the FIA sent a message to him that if he did not surrender his family would be taken into custody.

Earlier, the agency conducted raids on places pointed out by his colleagues at the KKI. Javed Khanani was arrested in Lahore on Friday night.

The FIA, Lahore Crime Circle, had conducted raids for three days after it intercepted a telephonic conversation on Nov 5 about the illegal transfer of about 0.5 to one million dollars from Gujranwala.

The agency raided a KKI franchise called Dunya International Moneychangers in Gujranwala and seized $ 786,000 and four vouchers of Havala (an illegal way of transferring foreign currency), sources said.

The agency also detained franchise manager Rustam Ali Khan and accountant Tariq Mahmood and seized data about the illegal transfer of greenbacks.

During the interrogation, franchise officials told the FIA that they knew very little about the embezzlement of foreign currency and named Munaf Kalia and Javed Khanani as masterminds of the game.

The FIA-led interrogation team also seized computers and records from the KKI office located on the II Chundrigar Road, Karachi, the sources said.

Officials of the State Bank of Pakistan (SBP) and the government have been expressing apprehension for quite some time about involvement of some money changers in the smuggling of dollars.

Havala and Hundi are the two most popular channels of illegal transfer of foreign currency from one country to another.

The sources said Munaf Kalia and Javed Khanani had confessed that they were asked by various locals to transfer their foreign currency to their relatives and friends living abroad. This smuggling of foreign currency has resulted in a massive downward slide in the country’s forex reserves, which have depleted from over $ 16 billion in Oct 2007 and now stand at below $ 7 billion, the sources said.

As per reports, money exchangers have transferred around $ 10 billion for the last five years from the country. On an average, they were transferring about $ 10 million every day through the “Havala” and “Hundi” system.

They have also reportedly accepted that this smuggling had caused the slump in the shares business at local bourses. Since April 2008, the Karachi Stock Exchange has witnessed a 41 per cent fall in its chief 100-Index.

The sources said the interrogation team has also arrested eight officials of the Nadra, who are accused of issuing fake CNICs on which the illegal transfer of dollars was made. The officials were reportedly arrested from the Nadra offices in DHA, Awami Markaz, Lyari and Keamari in Karachi.

The investigators also detained Dawood, Abdul Wasay, Qasim Ibrahim and Walli Yar from the Yadgar Chowk, Peshawar on Saturday.

Moreover, the FIA also arrested four men at the Karachi Airport last evening, who were carrying dollars, pounds and travellers cheques of about one million dollars.

APP adds: Director Federal Investigation Agency (FIA) Mir Zubair Mehmood has assured the leaders of the Forex Association of Pakistan (FAP) that the agency will not harass innocent money changers.

He told a delegation of the FAP led by its Chairman Malik Bostan here at his office on Saturday that directors of the Khanani and Kalia International (KKI) were arrested after securing proper evidence of illegal transfer of foreign currency.

Other office-bearers of the FAP, including Haji Haroon and Mehboob Moti, were also present on the occasion.

Director FIA said action against the KKI was initiated when record of its franchise Duniya Exchange in Gujranwala showed illegal transactions of foreign currencies under “Hawala”.

“Investigations exposed several transactions of billions of rupees in the past by the Duniya Exchange through the KKI. This encouraged us to confiscate the IT record from the KKI head office in Karachi which provided evidences of all these transactions,” Mehmood said.

The FIA director told the FAP delegation that the State Bank had the authority to take action against illegal money changers as a license-issuing body and the FIA will hand over the arrested persons to the SBP for further legal action.

It may be noted that the SBP had warned money changers to refrain from illegal money transfers to avoid legal action.

Malik Bostan asked the FIA director to suggest his officials not to harass those money changers who were not involved in any illegal activity.

He said that the association will itself hand over such money changers to the FIA if any complaint was received against them.

Hoti said if the FIA harassed money changers they would close their businesses, depriving the country of remittances.

“FAP members collect $ 7 billion foreign exchange annually and give it to the government. If we are targeted and harassed, this money will not be received,” he added.

Talking to APP, Bostan said a similar crackdown was initiated in 1998 by the Nawaz Sharif government. But it was stopped on the request of the FAP and the dollar was brought down from Rs 67 to Rs 50.

He said an emergency meeting of the FAP had decided to hold a meeting with the director FIA to convince him to stop the crackdown against the money changers.

Zubair Azam adds from Lahore: The director FIA, Lahore has revealed that investigation of the case showed that Javed Khanani and Munaf Kalia shared equal responsibility in the illegal business.

Sources said that the FIA had found that accounts of illegal transactions were deleted on a daily basis from the computers and no record was kept. The FIA has dispatched the confiscated computers to the Special Investigation Group’s forensic lab to retrieve the deleted files.

The sources said Munaf Kalia would be brought to Lahore in two or three days for further questioning.

DG FIA Tariq Pervez, while talking to The News, confirmed the raids but declined to disclose any further details. He said it was the first day and investigations were under way. However, he said the Economic Crime Wing of the FIA had been tasked with the responsibility of collecting intelligence reports regarding activities of money changers.

http://www.thenews.com.pk/top_story_detail.asp?Id=18240