Saturday, September 22, 2007

Terror funds in Dalal Street?


NEW DELHI: When national security advisor MK Narayanan first spoke of terror syndicates investing in Indian stock markets at an international conference, it was dismissed as a paranoid policeman ringing alarm bells.

A few months down the line, sleuths from intelligence agencies like the Research & Analysis Wing (RAW) have alerted the government and the Securities & Exchange Board of India (Sebi) about investments by Khalid bin Mahfouz — a prominent Saudi businessman alleged to have links with Osama bin Laden — in Indian companies through the stock market.

Sebi is now being asked to probe if Khalid has been investing in Indian markets and possibly raising funds to finance terrorism.

The Saudi businessman has aggressively denied any links with Osama in the past. But, he has not been able to shake off the suspicion of intelligence agencies that he could be raising funds for Al Qaida and Taliban.

Khalid first came under the scanner following strong suspicion that he was siphoning off money from the National Commercial Bank, which was founded by his father, a money-changer, and transferring it to trusts engaged in funding terror outfits.

The Saudi tycoon of Yemeni origin got to control the National Commercial Bank and ran it till 1999. In 1997, he sold off his 20.7% stake. The entire clan had existed the bank by 2002, selling the remaining stake to a Saudi government investment fund.

The sudden severance of links triggered fresh suspicions. Khalid's website, however, said that he stepped down due to ill health.

Khalid has been dogged by suspicions of illegality throughout his career. He was also a director of BCCI International, a bank that acquired an unsavory reputation because of involvement in shady dealings before suddenly going bust. The circumstances leading to the shuttering of BCCI, which had allegedly become the conduit for Pakistan's ISI as well as crime syndicates, had raised suspicion of diversion of funds.

The adverse publicity he attracts has forced even members of the Mahfouz clan, well known in Saudi Arabia, to distance themselves from Khalid, who has an estimated wealth of around $3 billion.

Khalid's business interests, according to his website, include real estate, investment in Thuraya Satellite and a portfolio quoted on the Saudi stock market.

Intelligence agencies have often expressed fears of terror outfits investing in India through a web of transactions, using instruments like participatory notes, to conceal the identity of investors. The fears were also expressed in a note prepared by the National Security Council Secretariat which had proposed an umbrella legislation to check the credentials of foreign entities investing in India.

Though the finance ministry has sought to downplay the apprehensions, the assessment of intelligence agencies has been backed up by independent investigations by the US which has, post-9/11, moved aggressively to choke the flow of funds to terrorists. An international vigil is on against Saudi-based Islamic charities.

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