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SHASHI THAROOR & HASSAN ALI
Barking Up The Wrong Tree

All good things, do come to an end some day. On Jan. 5, 2007, The Income Tax Deptt. (ITD) raided Ali’s residence in Koregaon, Pune, and for the first time seized details of his accounts from the computers found there. Simultaneously, his properties in Mumbai, Hyderabad and Bangalore were raided. There could be properties not recorded in the computer. Dealing in horses with foreigners and even locals could have involved huge payments in cash. The unaccounted cash only helped him to involve in hawala transactions. This hawala could help him get foreign exchange. In the raid, ITD found that he had some 10 Swiss bank accounts, with scores of unknown sources of income or receipts, so also he had not filed his income tax returns since 1999.

Recent weeks have witnessed an unprecedented imbroglio within the safe haven of BCCI, the premier cricket managers of the country. For a sensation hungry media, especially the 24x7 electronic media, it was heaven sent. It had all the ingredient for a ‘pot boiler’. Big money, powerful people politically networked, international exposure, Bollywood and glamour world connection, cheer girls, late night parties and of course the carnival like entertainment all added to make IPL, the Indian Premier League, one of a kind. There has never been, not likely there can be another, to compete, as unique a concept as IPL. Prima facie, it was a win-win situation for all. Besides, not knowing the complexities of organising such mega event, but apparently organised with such ease, it did attract lot of people with money power.
When we talk about money power, it includes all, some legal and some illegal. Where there is honey, bees shall surely hover around. This event IPL, when safety/security became an issue, for the last year’s IPL II, it was shifted to South Africa. And in matter of days, the commissioner Lalit Modi, ensured that there is no hick-up. It was a runaway success. It was then that IPL became a product with a brand image. No wonder, it attracted, huge bidding for new franchisees at Pune and Kochi, some 4 to 6 times the original IPL commitments. That was the exhibition of real big money. Whenever big money is on display, questions keep doing its rounds, some relevant and irrelevant. Income Tax Department (ITD) is normally on the look out for such displays, which provides suo moto foray into the arithmetics of such displays. But strangely, taxmen raised no questions. But the over confidence of the success of the IPL did in. Probably it had to come out someday in some form. It came out rather almost instantly. Pune franchise went to Sahara group and the Kochi went to Rendezvous Sports World group, where a Minister of State got involved rightly or wrongly. Unfortunately for the minister, the suave, handsome, urbane, articulate Shashi Tharoor, it turned out to be the end of the road. There was this feminine angle, his girl-friend, which added grist to the mill of the confusion.
In all earlier IPL auctions, there must have been combinations and permutations of different stake holders in varying degrees of ownership. But that was never publicly discussed or debated. May be the IPL commissioner Lalit Modi had a say in all the franchises, in some form or the other. But in Kochi because of the minister’s involvement he didn’t or couldn’t have. Did that cause the mild twitter tremor? Probably Modi, in his over confidence did not realise the avalanche that could trigger due to this innocuous twitter? What ever it is, the feminine angle and the sweat money equity of Rs. 70 crores, spilled over into a major controversy. Shashi Tharror became the daily staple of TV anchors almost round the clock, and a promising political carrier came to an abrupt halt. ‘This earth shattering issue’ that excited the television waves all over India was worth just Rs. 70 crores. It was made into a mega scam by all TV anchors. But where are these anchors, when thousands of crores of money owed to the government treasury, and people who are dodging both law and the authorities with impunity sadly does not become an issue of national importance.
Some time in early Sept. 2009, Minister of State for Finance SS Palanimanickam had revealed to the press, the list of tax defaulters. At the top of the list was the name of one Hassan Ali Khan. For some years now, his name has been cropping up in the press. All for reasons of alleged nexus and the huge money involved in his global wheeling-dealing. List of the minister indicated that this Hassan Ali Khan, a Pune based stud farm owner owed the government of India in tax arrears of over Rs. 50,000 crores. The print media report informs that behind this tax default is a tale of murky details of hawala, arms dealer commission paid into Swiss Bank A/Cs, connections with international terrorists etc. Yet in our media, he has succeeded in remaining relatively unknown and unheard. He has also succeeded in developing contacts within the power structure to remain elusive to the authorities. It could be that, there are far too many people in his private payrolls. What is at stake is a huge outstanding national dues, and the unexplained source of income, both of which are against the interest of the country. And our media is having a siesta, or chasing sensation!
Hassan Ali Khan, a son of an excise officer from Hyderabad, was a small time punter at Mahalaxmi Race Course in Mumbai. Street smart, he managed to learn the intricacies of horse racing. He knew, his contact in the world of horse racing can stand him in good stead, since he wanted to make money, and make big money at that. Began a small stud farm and soon grew into a high profile breeder of horse. That got him in touch with big money worldwide. He started exporting horses, and he was aware that exports do not have income tax obligation. He wanted to make money without having to pay the tax. So tax avoidance probably led to tax evasion, where he had to pay, if accounted. He became a friend of Adnan Khashoggi, the notorious international arms dealer. Ali got involved in arms dealing, legally and illegally.
All good things, do come to an end some day. On Jan. 5, 2007, The Income Tax Deptt. (ITD) raided Ali’s residence in Koregaon, Pune, and for the first time seized details of his accounts from the computers found there. Simultaneously, his properties in Mumbai, Hyderabad and Bangalore were raided. There could be properties not recorded in the computer. Dealing in horses with foreigners and even locals could have involved huge payments in cash. The unaccounted cash only helped him to involve in hawala transactions. This hawala could help him get foreign exchange. In the raid, ITD found that he had some 10 Swiss bank accounts, with scores of unknown sources of income or receipts, so also he had not filed his income tax returns since 1999.
ITD has reportedly briefed with all relevant particulars, Central Board of Direct Taxes and the Enforcement Directorate for economic offences. ITD also kept the Ministry of Finance updated with the development.
In coordination with Ministry of Finance, ED officers went to Switzerland and froze Ali’s 7 bank A/Cs. In one of the accounts, US $ 300 million was deposited by Adnan Khashoggi. According to informed sources, one of the Bank accounts in Zurich had US $ 8 billion. ET and ITD, are reportedly having evidences of this.
Officials from ED and ITD had reportedly informed the media that Hassan Ali’s alleged dealings could not have been possible without the help of top bureaucrats or politicians. In 2008 both ED & ITD have filed charge sheets for unaccounted funds of some Rs. 40,000 crores. Mumbai Police too have charge sheeted for money laundering. According to ED officials, report informs, that Hassan Ali was not an easy person to interrogate and that he had never co-operated. They also stated, ‘but for the bail, obtaining the leads would have been possible’. How did he manage the bail?
India is full of loopholes waiting to be exploited. Hassan Ali just did that. He had many passports, and traveled in and out of India at will. He could get the bail and the police failed to get his bail cancelled for similar reasons. Reportedly Hassan Ali was close to a Maharashtra minister. A key official in the Mahrashtra Home Deptt. had this to say “Its not just about lack of evidence, this case also reeks of a lack of will to touch him”. According to reports, Justice D G Karnik of Bombay High Court had remarked ‘The state government is not interested in serving notice, (to Hassan Ali, the accused) even after 6 months of filing an appeal. If the govt. was not keen on pursuing its own appeal, court had no reason to waste time on it.’
On Aug. 4, 2009, while disclosing the list of tax defaulters in the Rajya Sabha the government stated that Hassan Ali Khan topped the list with outstandings of over Rs. 50,000/- crores, with interest and penalty it exceeded Rs. 70,000 crores. Added to this, the amount due from his laundering associates, according to a source, can add upto a staggering Rs. 100,000 crores. Does the budget for 2010/11 reflects this outstanding? There does not appear to be convincing answers.
Mr. M.R. Venkatesh, (MRV), a distinguished Chartered Acctt. from Chennai, has raised some pertinent questions, after closely studying the 2010/11 budget. Among the revenues for the state, the budget normally gives details of the revenues raised/accrued but not realised. Thus 2010/11 budget mentions the aggregate amount of tax revenue raised but not realised at Rs. 117,065/- crores, as per MRVs analysis.
The question here is, if there is a due of Rs: 100,000/- claimed as outstanding, from Hassan Ali Khan, other defaulters could be only Rs: 17065/- crores in whole of India? Or was the list given to the Rajya Sabha was only for the information without any serious intent to be part of the budget? Or as claimed by the Finance Minister, could Hassan Ali Khan & Company have paid their outstanding taxes aggregating to 100,000 crores by 26th Feb 2010, when the budget was presented? Don’t you think, any such payment would have been a huge news? But there was not even a ripple.
In the issue of 14th March 2010, The Week had carried the details of an interview with the Finance Minister Pranab Mukherjee. Among different questions asked on Buget 2010/11, there were these two questions and FM answered, quoted verbatim here:
Quote: TW: Q) Last year, the ministry of state for finance told the Lok Sabha about the huge tax money that horse breeder Hassan Ali Khan owed the government. Any progress on that?
FM: A) We have done something, we have shared the information, with parliament. But certain information we cannot share because the German authorities gave it to us. On the basis of that you can realise the tax but you cannot share the information with anybody. Therefore we have got back the tax (from horse breeder Hassan Ali)
TW: Q) You’ve got back the tax?
FM: A) Yes, we have got back the tax. But the details we cannot share because that is the international commitment we have given. If we violate it, nobody else will give us any information.
According to media sources, if this money has been received, revised estimate for 2009/10 does not reflect this. Rs: 100,000 crores is too huge an amount to be lost in India’s yearly national budget. Did FM tell the truth, the whole truth, nothing but the truth?
According to MRV, budget 2010/11 had details which people probably wouldn’t see. Under the existing provisions of income tax Act no applications can be made to the settlement commission when a search has been initiated under the Act. Budget 2010 has proposed to waive this. Para124 of the budget states “Last year, amendment to the statute enabled government to enter into tax treaties with specified territories besides sovereign states. We have commenced bilateral discussions to enhance the exchange of bank related and other information to effectively track tax evasion and identify undisclosed assets of resident Indians lying abroad”
MRV thinks this amendment could help Hassan Ali, just in case he had not paid off as claimed by the FM. He can approach the ITD to settle the issue without any problem. Prima facie, there appear to be some kind of, an unwritten, consideration is being allowed to Hassan Ali Khan. Could he be a front man, a conduit for big politicians, just like Abdul Karim Telgi? Enforcement Directorate had claimed that Hassan Ali was very unco-operative, could such person just pay up when there are so many pending cases against him?
Rajender Puri, a senior journalist from Delhi asks
Q) Did the FM mislead the house by giving a false figure of the tax revenues raised but not realised, of Rs: 117,065 crores?
Q) Did the FM actually tell The Week, that Hassan Ali had paid his taxes or was he misquoted?
Q) What has impelled the FM to amend the I.T. Act relating to the Settlement Commission?
Mr. Pranab Mukherjee, the Union Finance Minister needs to answer these questions to dispel doubts, that a brazen cover up of a mega scam has not happened.
Electronic media, M/s Rajdeep Sardesais and Pranoy Roys, are you listening? Weren’t you barking up the wrong tree by hounding out poor Shashi Tharoor and his girl friend?!