April 3, 2002


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T V R Shenoy

Financing terror

Five years ago, under intense American pressure, Switzerland's banks paid up US $1.25 billion by way of restitution. The charge was that they had collectively profited from Nazi war crimes. Since then, a commission of inquiry has turned up further proof that the fabled Swiss doctrine of neutrality had more holes than a slice of Swiss cheese. Switzerland's businessmen, it seems, eagerly sought out Nazi war contracts even if it meant endangering their own nation.

I cannot help wondering if, 50 or 60 years from today, there will be a similar process of heart-searching in India too. Napoleon famously opined that money is the sinews of war; that is true whether it is the mighty United States pounding the hills and valleys of Afghanistan and Pakistan or if it is a small band sneaking across an international border.

I am sure you must have read all about Jammu & Kashmir Liberation Front chairman Yasin Malik in Kashmir, and of how he is now cooling his heels because about US $100,000 was found in his possession. But this is only part of the story; let us turn to the other end of India, and see how the deep South fares.

As I understand it, the two chief centres for money-laundering in south India are Guruvayur and Coimbatore. The amount found with Malik sinks into insignificance given the sums being distributed from these two centres. My friends in the intelligence community insist that nothing less than hundreds of crores are being pumped into terrorist arteries through the two towns. (Some say that this is too conservative a figure, and say it should be numbered in thousands of crores!)

Of course, it is impossible to leave Mumbai out of the picture when mapping the money trail. I believe that certain people use scheduled banks -- privately managed and, relatively, little supervised -- for the transfer of funds. It seems that certain people deposit huge amounts into certain accounts in branches in Mumbai and then withdraw them safely from Guruvayur and Coimbatore. Most of these institutions, I understand, have their headquarters in Kerala.

The facts began to come to light when Indian authorities began to take part in the global hunt to track the sources of terrorism (a legacy of the World Trade Centre attacks). What they unearthed was quite astonishing. For instance, they found that a single bank draft for US $2,000,000 (Rs 10 crore or so) could be traced to a single individual in Mumbai. However, the boundaries between politics, the underworld, and terrorism have become so blurred that nobody is quite sure why this money was being sent to India. As one resigned sleuth pointed out, the transaction took place just three days prior to local-body elections!

It is not just some banks that are acting, possibly unwittingly, as conduits for terrorist money. Investigators are all but sure that at least some cooperatives are also being used for the purpose -- and this too is taking place in parts of India that one does not normally associate with militant activity.

The point is that it does not really matter where the money comes in from. Once it enters India, it is child's play to transport it to another part of the country, if need be even in the form of cold, hard cash. And when you think about it, using Kerala and Tamil Nadu as centres to collect and distribute money makes perfect sense; while the authorities are generally vigilant in, say the Northeast, they let their guard slip just a bit in South India.

There is a parallel with other terrorist equipment. After the Bombay blasts, investigators discovered that only a small amount of the explosives had been smuggled directly into the city. Much of it had been brought in via the traditional smuggling routes. But while bringing in gold does little harm, RDX is another matter!

Let me advert to my original point: money is as much a tool for terrorism as arms and ammunition. If nothing else, it is required to pay mercenaries. (As a rule, they tend to be men who prefer cash in the hand to promises of deposits in bank accounts abroad!)

I am afraid India has been just a bit lackadaisical about tackling this inflow of money. The general attitude has been to throw up one's hands and mumble something about the impossibility of damming the 'havala' flood. However, the point is that we are not talking about 'havala' money any longer, but about standard banking transactions. Isn't it time to crack the whip at least on these?

It will, admittedly, not be possible to act forcefully without the cooperation of the various state governments -- Maharashtra, Tamil Nadu, Kerala and Gujarat, to begin with. The tools are there, and a new one has been added to the war chest in the form of the Prevention of Terrorism Act.

Terrorism is, of course, as much of a menace for the various state governments as for Delhi. May one hope that the local authorities co-operate rather than take Sonia Gandhi's lead and oppose for the sake of opposing? If not, then those centres for distributing money may soon expand into distributing munitions as well.

T V R Shenoy

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