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Economy Apr 5, 2013

Dawood Ibrahim’s blood-money washes up in Nassau

By Praveen Swami

Twenty years after he paid for the bombs which tore through Mumbai in 1993, killing 257 people, organised crime kingpin Dawood Ibrahim Kaskar's cash has begun washing up on the shores of Nassau island - known for its perfect beaches, perfect weather, and zero-tax, high-secrecy banking. Ibrahim, a Firstpost investigation has found, has emerged as the principal provider of financial services to narcotics traffickers and jihadists across South Asia - a business pegged at over $3.5 billion a year, which uses front companies to access the global financial system.

Ibrahim, transnational crime expert Gretchen Peters says, has become the, "the Goldman Sachs of organised crime. They're highly transnational, they move billions of dollars annually, and service a wide range of clients from corrupt officials, to drug traffickers to terrorists".

Last year, highly-placed government sources told Firstpost, the Bank of Baroda's Nassau branch saw successive wire transfers of several hundred thousand dollars from Dubai-based currency exchanges suspected of laundering organised crime proceeds. The firms, sources have told Firstpost, included the al-Dirham Exchange named in an Indian government dossier on Dawood Ibrahim's operations.

Wikimedia Commons

Organised crime kingpin Dawood Ibrahim Kaksar's cash has begun washing up on the shores of Nassau island. Wikimedia Commons

"From the bank's point of view", the source said, "they're doing nothing illegal, or even wrong. From our point of view, there's a real concern: whose money is this, and where is it going"? The Bank of Baroda's Nassau branch did not respond to an e-mail from Firstpost seeking comment.

New Delhi had provided Islamabad with the dossier in 2011, naming at least 11 United Arab Emirates-based entities controlled by Ibrahim's crime cartel. The list, seen by Firstpost, includes Dolphin Management Services, a firm with multiple interests in real estate and trade. In 2006, Dolphin sought to invest in duty-free investments in the Maldives - an effort which was terminated after India's concerns were brought to the attention of local authorities. The dossier also names entities which include al-Dirham Currency Exchange, Almas Electronics, Yusuf Trading, Reem Yusuf Trading, Falaudi Trading Company, and Gulf Coast Real Estates.

In addition, the dossier says Ibrahim has interests in three hotels controlled by United Arab Emirates-based tycoon Vardaraj Manjappa Shetty. Shetty has often been named in media reports as an associate of D-company, but vehemently denies the allegations.

Peters, at the Terrorism, Transnational Crime and Corruption Centre at George Mason Univeristy, has been working to answer just that question. In a recent report, she showed how the al-Qaeda and Taliban-linked jihadist warlord Jalaluddin Haqqani funded his operations. The Haqqani network, she wrote, taxes "drug shipments that move across its control zones, and collects tax from other entities that smuggle narcotics through its territory". It also imports "the precursor chemicals used to process raw opium into morphine base and heroin, including lime, hydrochloric acid and acetic anhydride".

Even United States taxpayers have ended up funding the Haqqanis. "When USAID contracted the American firm Louis Berger Group in 2007 to build a highway between Gardez and Khost", she noted, "the contracting firm paid a staggering $1 million annually to a local strongman suspected of having links to the Haqqani network. The 64?mile highway, which is yet to be completed, has cost about $121 million so far, with the final price tag expected to reach $176 million - or $2.8 million per mile".

In 2011, the United Nations Office on Drugs and Crime estimated that the Afghan Taliban earned around US$155 million in 2009, mainly from levies on drug traffickers, and the Afghan druglords themselves some US$2.2 billion. The Taliban imposes a 10 percent ushr tax on the poppy harvest, and another 2.5 percent zakat on traders' earnings.

In a recent testimony to the United States senate, Peters said Ibrahim's networks launder these funds, enabling it to be funnelled into properties and new businesses. "He's the super-facilitator", she explains, "he is the man who has the connections and resources to make investments.

Pakistani defence analyst Ayesha Siddiqa believes these abilities derive from services Ibrahim has rendered to the Pakistani state over the years. "I think its because he is part of the jihadi network which is linked to the Pakistani defence establishment", she says. "He bankrolls a lot of things, and therefore he continues to have a value. Do not forget that many years ago, there was a smuggler called Seth Abid, who had helped construct the nuclear programme. He was given a lot of importance by [former military ruler] General Muhammad Zia-ul-Haq".

Sushant Sareen, at the Institute for Defence and Strategic Analyses in New Delhi, concurs. "Ibrahim is highly embedded in the system", Sareen says. "Say, there is a General's son who needs his studies at an lite American university paid for, or a politician who is in financial trouble, well, Bhai can help".

In 2001, journalist Ghulam Hasnain wrote that Dawood "lives like a king". "Home is a palatial house spread over 6,000 square yards, boasting a pool, tennis courts, snooker room and a private, hi-tech gym. He wears designer clothes, drives top-of-the-line Mercedes and luxurious four-wheel drives, sports a half-a-million rupee Patek Phillipe wristwatch, and showers money on starlets and prostitutes".

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by Praveen Swami

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