THE SENSATIONAL case of Hasan Ali Khan, the man believed to have stashed away Rs 36,000 crore in offshore accounts, has gripped the nation’s imagination. Over the past few months, the media has been awash with stories on Khan’s stupendous wealth. That he is the country’s biggest tax evader. That he and his associates owe the government Rs 80,000 crore in taxes. That most of this money belongs to top Indian politicians and bureaucrats. That he is the frontman for three ex-CMs of Maharashtra. That he has links with international terror networks. That some of his money was earned through international arms deals involving the notorious Adnan Khashoggi. That he is a grave threat to national security. That the agencies have an open and shut case against him for cross-border money laundering but are still hesitating to take action against Khan. That Khan is protected by powers-that-be in Delhi.

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“What the hell is going on in this country?” a Supreme Court bench remarked on 3 March, while hearing a PIL filed by celebrated lawyer Ram Jethmalani on the issue of black money and Khan’s illegal wealth.

In March this year, a Mumbai Sessions court refused to give the Enforcement Directorate (ED) custody of Khan saying the agency had failed to provide any evidence of money laundering against him. But the Supreme Court intervened and cancelled Khan’s bail. The apex court even rapped the Mumbai court saying it had to intervene because of the extraordinary situation surrounding Khan’s case.

Over half a dozen government agencies are currently investigating Khan. But despite a four-year-long investigation, the government has failed to recover a single dollar from Khan’s supposed billions lying abroad.

Despite the huge public pressure, why is Khan not being nailed? Why did the sessions’ court feel there was not enough evidence against him?

Seeking answers to these puzzling questions, over a month-long investigation, TEHELKA unearthed over a thousand classified documents related to the ongoing multiagency investigation into this extremely curious case. These documents include the investigation papers of the ED, Intelligence Bureau, Multi-Disciplinary Team (comprising officials of five government agencies), the Letters of Rogatory sent to USA, UK, UAE, Hong Kong, Switzerland and Singapore, the interrogation reports of Khan and his associates and hundreds of bank documents belonging to Khan and his associate Kashinath Tapuriah. Most crucially, TEHELKA also scooped the classified correspondence between Swiss Bank UBS and ED and a secret audit report of Khan’s accounts prepared by international audit firm Deloitte AG. After sifting through these documents for weeks, these are the startling facts we found.

They are worthy of a Bollywood blockbuster. The Hasan Ali story is still an evolving one; investigations are still underway and sinister skeletons may yet fall out of new cupboards. But going by the evidence available so far, this could also well be the biggest con job of all time. Rather than the big black money don he is made out to be, it seems Hasan Ali Khan could well be India’s biggest and shadiest bluffmaster. The scale of his dupes is jaw-dropping. The Swiss bank correspondence and the secret Deloitte report — accessed by TEHELKA — attest that most of Khan’s documents were forged. Of the five known Swiss accounts held by him, two never existed, two were closed without a single transaction, and the fifth had a single transaction worth only about Rs 25 lakh. There is one account in another Swiss bank through which he transacted a transfer worth approximately Rs 3 crore. Though he issued instructions to transfer funds involving millions of dollars from these accounts, none of them were actually executed. Here is a man the nation believes is responsible for a black money and hawala racket worth a whopping Rs 36,000 crore. But a massive international inquiry has turned up nothing substantial on him except transactions totalling Rs 3.25 crore. A key UBS official says Swiss bankers have a phrase for Hasan Ali Khan type operations: they call it “hot air business”.

TEHELKA met and spoke to dozens of officials who have investigated Hasan Ali at some point or the other. Like the rest of the country they too are perplexed. But there are a few facts on which every officer we spoke to concurred. They all agree that Khan is a conman. That he has duped people both in India and abroad. That he pretended to have immense wealth so he could raise more money against that notion. That when creditors showed up at his door, he allayed them by producing forged bank statements that showed billions of dollars stuck for some reason, which explained why he was unable to pay his dues temporarily.

“The Deloitte audit report makes it clear that Khan’s accounts never had billions of dollars which most people in this country believe,’ said a senior ED official.

Indian investigating agencies are tentative about asserting that the paranoia around Khan may be overblown because they are still waiting for responses from several countries, from where they have sought details about the beneficiary accounts to which Khan supposedly transferred billions. But if there was no money in Khan’s accounts to begin with, all these instructions mean nothing. “The whole case revolves around the premise that Khan has Rs 36,000 crore in his accounts. Once that is proved to be false, all the other papers lose their relevance,” said the ED official.

Even then, there are many disturbing questions around Khan. Even though the sum deposited in his Swiss accounts may not have been substantial, the investigators should still find out the source of the few lakh dollars that were indeed transacted through these accounts. Where did Khan get this money from? He certainly had no legitimate business from where he could have earned this money. Also what need did he have to open accounts in Switzerland in the first place? And even if he was faking his beneficiaries, who are all the people he pretended to issue funds to?

But those questions come later. First read the Hasan Ali Khan story, told with painstaking factual details, in a way it has never been told before. What do the investigative agencies really know about Khan? What is the evidence available on him? What were his transactions? How did he come into the radar of Indian authorities?

Read and draw your own conclusions about Khan. This is how the story began.

December 2006 — The beginnings of a scam

In December 2006, the Mumbai IT department’s investigation wing received what seemed credible intelligence about a suspected money-laundering racket and web of secret offshore accounts and companies owned by two individuals — Hasan Ali Khan from Pune and Kashinath Tapuriah of Kolkata, with business interests across several cities including Mumbai. Contrary to the popular notion that Khan was the main player while Tapuriah was just his aide, the intelligence received by the IT department initially showed both Tapuriah and Khan to be equals.

Target man ED claims that arms dealer Adnan Khashoggi had links with Hasan Ali

The source of this intelligence was not any government agency or a foreign government communiqué (like in the case of the 18 offshore accounts held by Indians at the LTG Bank in Liechtenstein whose details were officially shared by the German government with India). Instead it had come from an aggrieved individual who had been allegedly duped by the Khan-Tapuriah duo. His name was Mohammed Hussein, a Dubai-based businessman.

Hussein was the owner of an exclusive showroom for the international designer jewellery brand Bvlgari at Al Maktoum Street in Dubai. According to Hussein, the Tapuriah- Khan duo had bought jewellery worth about Rs 2 crore from his shop on credit. But they never paid him and instead kept assuring him that a vast amount of their money was stuck in deposits with a Swiss bank and as soon as it was released they would clear his dues.

In pursuit of his money, Hussein travelled to Zurich, London and Mumbai, trying to track down the Tapuriah- Khan duo. In the process he met others associated with the duo and collected some vital information.

Sometime in July 2006, Hussein travelled to London and met Mahesh Tapuriah, the step-grandson of Kashinath Tapuriah, who owned a sports goods shop. This meeting would prove crucial for the protracted multi-agency investigation against Khan that would begin in January 2007.

Mahesh had a long-running family property feud with Kashinath. The genesis of the dispute lay in the extended nature of the Tapuriah family.

The nation believes Hasan Ali Khan is worth a whopping Rs 36,000 crore. But a massive inquiry has turned up offshore transactions worth just Rs 3.25 crore

The history of the Tapuriah family is like this.

There were four Tapuriah brothers — Mangtulal, Gokul Chand, Gajanand and Baijnath. In the 1930s, the four brothers had a substantial stake in Kamla Mills, Lower Parel, one of the biggest jute mills in Mumbai. Mangtulal, the eldest, had two marriages. From the first marriage he had a son named Motilal. From the second he had a son named Kashinath and a daughter named Priyamvada.

Motilal was actively involved in the administration of Kamla Mills and was also given a stake. So now along with the four brothers, Motilal was also included in the mill ownership. Motilal had a son named Devi Prasad. Devi Prasad’s son is Mahesh Tapuriah.

According to Mahesh, after his grandfather death, Motilal’s stake in Kamla Mills was inherited by Devi Prasad, Mahesh’s father. When Prasad died in 1975, his stake was inherited by Mahesh. Mangtulal’s own stake in Kamla Mills was inherited by his second son Kashinath.

“When my father, Devi Prasad, passed away, Kashinath took over the mill administration. I was too young at the time, I was just 18. Kashinath told me I could take over the mill work after I completed my studies,” says Mahesh.

But according to Mahesh, Kashinath appropriated his stake. “In the early 90s, Kashinath sold the mill land but didn’t give me my share,” says Mahesh. The families of the other two brothers, Gajanand and Baijnath told TEHELKA that Kashinath usurped their stakes as well.

“According to market sources, Kashinath sold the Kamla Mill land for over Rs 32 crore in 1991. The mill was mortgaged and about Rs 26 crore was due to the bank against loans. After deducting this loan amount and the share of other family members, my due came to about Rs 80 lakh. Additionally, he had sold other ancestral properties in Rajasthan, Kolkata and Mumbai. My total dues came to about Rs 5 crore. But Kashinath never paid the money,” says Mahesh.

Even as this property dispute remained unresolved Mahesh migrated to London. “Kashinath would occasionally visit me in London and I would bring up the unresolved property issue but he never gave the money,” says Mahesh.

But in early 2006, Kashinath made a mistake that would prove to be his undoing.

Sometime in January 2006, Mahesh Tapuriah had gone to see off Kashinath at Heathrow Airport. Kashinath gave him a suitcase to keep in his custody till his next visit to London. “Kashinath told me the suitcase had ‘pooja ke samigri’. I knew Kashinath was very religious and had a rigorous pooja schedule every morning. At the airport, Kashinath was joined by a man. I later got to know he was Hasan Ali Khan,” said Mahesh.

Mahesh brought the suitcase home and opened it. He found it had hundreds of documents related to secret offshore accounts and companies incorporated at a few tax havens. “There were 480 documents. I was flabbergasted by the content and nature of these documents. I read some of them then put it away,” says Mahesh.

According to him, for the next four months Kashinath made no attempt to take back the suitcase. Then in May 2006 Kashinath rang Mahesh and told him he would be sending a man to collect his ‘pooja samagri’. But Mahesh had other plans. He told Kashinath he would return the suitcase only after Kashinath gave him the money owed to him from the family properties.

According to Mahesh, over the next several months Kashinath tried every possible method to retrieve the suitcase — threats, intimidation, emotional pressure and intervention from family members. He also got several anonymous calls threatening him with dire consequences. “Kashinath told me the suitcase belonged to the man who had accompanied him at the airport. He told me his name was Hasan Ali Khan. I also got a call from Khan but I told him this was between me and Kashinath. A few months later Kashinath called saying he and his wife were being held captive in Switzerland because of his failure to retrieve Khan’s suitcase,” said Mahesh. But Kashinath never disclosed who his captors were.

Mahesh was deluged with calls from the extended Tapuriah family urging him to return Kashinath’s suitcase as his life was in danger. But Mahesh refused to budge.

When nothing worked Kashinath finally sent an emissary — Mohammed Hussein, the Dubai-based jewellery shop owner. “Hussein told me how Kashinath and Khan owned him more than Rs 2 crore. He said Kashinath had told him that if I returned the suitcase everybody’s outstanding dues would be settled. Kashinath had told Hussein it was because of me that he was unable to pay people their dues,” said Mahesh. But Mahesh refused to oblige. The threat calls resumed. Finally, Mahesh registered a police complaint with the London Metropolitan Police (crime no 2017057/06) and another with Karaya police station in Kolkata, while he was visiting a relative in the city, about the threats he was receiving from Kashinath.

In the last week of November 2006, shortly after the Kolkata police complaint, Mahesh got another visitor in his Breach Candy home in Mumbai. His name was Syed Abbas Naqvi, a Mumbai-based interior designer. Naqvi too asked Mahesh to return Kashinath’s suitcase. Mahesh told him not until his inheritance was settled. They agreed to have a meeting at the Taj Mahal hotel in Mumbai. At the last minute, the venue was changed to Hasan Ali Khan’s Pedder Road residence. “Initially I was scared to go to Khan’s house. But I knew they wouldn’t harm me till I had the suitcase. Khan, his wife Rheema, Kashi – nath, Naqvi and another man named Philip Anandraj were present. I was told Anandraj was an Indian based in Switzerland and he was in India to recover money Khan owed him. They all said the suitcase was urgently required to settle everybody’s account. Finally, it was agreed Kashinath would pay me Rs 2 crore in advance after which I’d return the suitcase. The remaining Rs 3 crore was to be paid after the delivery of the bag. The agreement was drafted on plain paper, four copies were prepared. Everybody present signed the agreement. Days passed, nothing happened,” says Mahesh.

Sometime in mid-December, fed up of the repeated assurances given to him by Khan and Tapuriah, Hussein tipped off the IT department about the Tapuriah family feud and the suitcase of secret documents.

With this tip off, the IT department started an enquiry into Khan’s business. They found he owned two expensive apartments. One in the posh area of Koregaon Park in Pune (Ground Floor, Tulip Valentine Society, Koregaon Park, Pune) and the other in the equally posh locality of Pedder Road in Mumbai (Flat No 39, C wing, 4th Floor, Anand Darshan, Pedder Road, Mumbai). They also found out he was originally a resident of Hyderabad and had shifted to Pune a few years earlier. In Pune, he took an active interest in horse racing and claimed he owned a stud farm. The IT department also found that Khan had not filed income tax returns since 2001.

Inquiry also revealed there were at least six old cases of bank fraud and cheating against Khan in Hyderabad. Out of these six cases, two were for defrauding the State Bank of Hyderabad and AZN Grindlays Bank. Both these cases were registered during 1990-91. He was convicted by a lower court in one case but was later acquitted by the High Court. The other four cases were for cheating and forgery, registered by different individuals in 1994. According to them, Khan had collected about Rs 1 crore from them and promised them foreign bank securities under, what he told them, was a foreign exchange immunity scheme. But subsequently he had given them fake foreign bank cheques.

A background check run by IT on Kashinath Tapuriah led to even more interesting findings. The department found the charge of appropriating his family’s stake was just one of the many controversies surrounding Kashinath.

In the early 50s, Kashinath had got married to Chandrika Mundhra, the daughter of one of the biggest industrialists of the time, Haridas Mundhra. Mundhra had interests in shipbuilding, chemicals, pharmaceuticals, engineering and textiles. After the marriage, Kashinath was involved in the management of many Mundhra companies.

However, by the mid-50s, Mundhra’s gigantic business empire started unraveling. In 1958, Feroze Gandhi, Jawaharlal Nehru’s son-in-law, exposed how Mundhra had defrauded the Life Insurance Corporation of India (LIC).

The Nehru government was left with no choice but to order a commission of inquiry into the scam. Soon Mundhra was also indicted by the Bombay Stock Exchange for selling forged shares. The then finance minister TT Krishnamachari was forced to resign. Mundhra was arrested and sent to jail. Several of his companies were nationalised. With the Mundhra conglomerate decimated, Kashinath had to start from scratch.

In the early 1960s then, Kashinath became a broker for multinational companies looking for lucrative government contracts in India. He worked as an agent for top international companies in the field of oil exploration, construction of deep water rigs and the aviation sector. One such company which Kashinath represented was US aircraft manufacturer Boeing. Kashinath earned commissions worth crores of rupees for brokering multi-million dollar contracts between these companies and the Indian government.

In 1972, a scam involving siphoning off company funds of Turner Morrison and Company Ltd (an old Mundhra Group company in which Kashinath was a director) surfaced and Kashinath was chargesheeted.

Family matters Hasan Ali and his wife Rheema Abbas both had accounts in UBS

In the 1980s, Kashinath bought majority stakes in a few companies, mainly Ipco Paper Mills and Incab Industries (which manufactured high voltage electric cables). By the early 1990s, both companies ran into huge losses and Kashinath was removed from the management. Around the same time Boeing also dismissed Kashinath as its agent. Kashinath has told the Indian agencies that in 1986-87 he had brokered a deal between Air India and Boeing in which Air India had bought two 747-300 aircrafts for $230 million. But Boeing refused to pay Kashinath his commission of $11,509,000. The matter went to court and the Supreme Court ordered settlement through arbitration in the US. But the issue remained unresolved.

In 1993, Kashinath was sentenced to two years and fined Rs 75 lakh in the Turner Morrison scam. In 1994, he was arrested for defaulting on provident funds for IPCO employees.

Thus, the authorities found that both Kashinath and Khan had a checkered past marred by scams and court cases. But that’s where the similarities ended. While at any given point of time Tapuriah was always running companies worth hundreds of crores of rupees, Khan was a fly-by-night operator who had dabbled in sundry small-time businesses before settling down as the owner of a dozen-odd stud horses in Pune.

The IT finally drew up a plan to raid their residences.

January 2007 — The unearthing of a scam

In the wee hours of 5 January 2007, the IT department raided the properties of Kashinath Tapuriah, Hasan Ali Khan and Syed Abbas Naqvi simultaneously.

In the raid the IT department seized Rs 88.5 lakh cash from Khan’s Pedder Road house and Rs 1.5 lakh cash and jewellery worth Rs 10 lakh from his Pune residence. Khan also owned a Porsche worth Rs 60 lakh and a fleet of other luxury cars — a Skoda, Hyundai Sonata, Opel Astra, Toyota Innova and two Mercedes. He also had 15 horses.

The raids on Naqvi didn’t yield anything substantial. The search at Kashinath Tapuriah’s residence at 6C, 3rd Floor, Short Street, Kolkata, yielded cash worth Rs 4.5 lakh and jewellery worth Rs 53.58 lakh. But it was the discovery of a laptop from Khan’s residence and two pen drives from under Kashinath’s bed that came as the big breakthrough for the IT officials. However, the laptop did not belong to Khan but to Philip Anandraj.

From all accounts, it appears Anandraj was one of Khan’s many dupes. At the time of the raid, he was staying at Khan’s flat. The Secunderabad-born Anandraj told officials he had studied in Mumbai until 1977, worked with Oberoi Hotel as a steward, then moved to Switzerland in 1980 to study. There he married a Norwegian woman, settled down and ran a chain of pubs called Nelson. In 2004, he was declared bankrupt. After some time, he set up a restaurant named ‘Kormasutra’ in Zurich which he was still running. He told the officials he had come to India to recover $500,000 from Khan — he had loaned $400,000 to Khan in Swiss francs in Switzerland in 2002. The remaining $100,000 he had spent on Khan and his wife during their stay there. He said Khan had shown an interest in buying his restaurant and expressed a desire to invest in other hotel properties in Switzerland. He also told the officials that he had been introduced to Khan by Kashinath Tapuriah.

The operating system of Anandraj’s laptop was in German but, after much effort, the IT officials recovered several sensational bank statements and correspondence from United Bank of Switzerland (UBS). All the documents were in Hasan Ali Khan’s name but were curiously stored on Anandraj’s laptop. Anandraj told the raiding officials that the scanned bank documents recovered from his laptop had been given to him by Khan as proof of his wealth.

It was on the basis of these documents recovered from Anandraj’s laptop, Tapuriah’s pen drives, two compact discs found at Khan’s Pune residence and later on the documents provided by Mahesh Tapuriah (Mahesh handed over the suitcase to the ED in July 2007) that the IT and ED built their mind-boggling case of Rs 74,000 crore of income tax dues against Khan and Kashinath Tapuriah.

The billion-dollar question is: what is there in these documents? What is their authenticity and verifiability?

As always, we found that the truth lies in the details.

Documents seized from Anandraj’s laptop

One of the documents found in Anandraj’s laptop was a communication from UBS to Hasan Ali Khan, dated 8 December 2006, and sent to his purported residential address in Hyderabad — Akbar Manzil, Musheerabad, Hyderabad.

The communication said: ‘UBS Ltd, hereby confirms, that as per telephonic discussions between our client Mr Khan and the Chairman’s office today, UBS Ltd has agreed to the following: The client can withdraw a part of his assets deposited with UBS Ltd, to the tune of $6 billion of the total deposited $8,000,453,000. The client is free to invest this amount as and when he chooses to do so. The balance of $2,000,453,000 will remain bound with the UBS Ltd until 15 January 2007, after which the client may again freely pursue any mode of investment or deposit…’

The document was purportedly signed by two bank officials: M Rohner and M Wuthrich. But no account number was mentioned. Instead it said ‘Account number withheld’ at the top. Another document found on the laptop was a UBS bank statement which showed the account balance as $6,620,575,431 as on 31 August 2006. The statement mentioned the following transaction reference number— TRX5328071ZT1524848X YS/P10F.

A third document found was a UBS bank statement that showed the account balance as $7,780,330,548 as on 2 November 2006. The statement mentioned transaction reference number TRX5736453BG1 855376XYS/P10H.

Both these statements were also signed by M Wuthrich; but in both the account number was withheld.

Khan’s assumed status as a man worth of $8 billion and the ensuing tax demand of over Rs 70,000 crore by Indian authorities is primarily based on these three documents recovered from Anandraj’s laptop. The address mentioned on these documents was Akbar Manzil, Mushirabad, Hyderabad. IT investigations revealed that though Khan did have an ancestral house at Akbar Manzil, he had taken his share in the said house in cash in 1993 and moved out.

Documents seized from Khan

Two CDs were recovered from Khan’s Pune residence. The authorities found 29 documents on one and 44 on the other. Following were the crucial ones:

1. Minutes of an agreement dated 07 August 2001 executed at Dubai. This document is titled as ‘Minutes and Agreement.’ The agreement is between Khan and Tapuriah. Khan’s address is mentioned as Ema House, Zurich and Tapuriah’s as 27-B, Camac Street, Kolkata.

From all accounts, it appears Anandraj was one of Khan’s many dupes. He ran a restaurant called Kormasutra in Switzerland. Khan wanted to buy it

The agreement states that Khan owned two companies namely, Autumn Holdings and Payson, and through them he had a business relationship with the following three companies — Roberts, McLean and Co; RM Investment and Trading Co; and Roberts, McLean Services.

The agreement then says that these companies of Khan and Tapuriah were involved in diverse business operations (on a 50:50 profit and loss sharing basis) mainly in India and had earned profits amounting to $280.54 million between 1983 and 1990. As per the understanding, these earnings were held in an account managed by Khan.

The agreement further said: ‘The fact that the funds did not remain idle and did earn some returns was discussed. After due deliberations it was mutually agreed that a lumpsum of $200 million shall be paid to KT (Kashinath Tapuriah) by HAK (Hasan Ali Khan) and the same shall be considered as the final settlement. The said amount of $200 million shall be split into three parts as follows:

• $100 million relating to Roberts, Mclean and Co

• $65 million relating to RM Investment and Trading Company

• $35 million relating to Roberts, McLean Services HAK assured that these payments would be effected latest by December 2001.’

IT and ED officials found that the three companies mentioned above were owned by Kashinath Tapuriah. But their accounts in India had never received the high-value money transfers mentioned above.

2. A document titled as ‘Statement of Expenses incurred and advance given to Mr. Hasan Ali Khan.’ The statement was prepared by Anandraj and he had given it to Khan for confirmation. These were the particulars of the statement:

• Loan to HAK via Mr. Tapuriah CHF (Swiss francs) 177,000

• Commission promised by Mr. Tapuriah CHF 79,650

• Mobile telephone bill Mr. Tapuriah CHF 5,278

• Courier medicine for Mr. Tapuriah CHF 180

3. This document partially confirmed Anandraj’s assertion that he had lent some money to Khan on Tapuriah’s recommendation and was in India to collect the same. But while Anandraj had mentioned the outstanding as $500,000, this document showed the loan amount as 177,000 Swiss francs (approximately $180,000).

An agreement between Anandraj and Tapuriah in which the former was hired as a consultant by the latter to facilitate real estate and other business ventures. This agreement stipulates a payment of 2 percent commission on every deal and a fixed monthly remuneration package of $20,000 to Anandraj. The agreement was dated 5 April 2001.

Kashinath told ED officials that such an agreement was discussed with Anandraj but was never brought into effect.

4. Another agreement dated 5 April 2001 in which Tapuriah had agreed to pay Anandraj a sum of $500,000 for negotiating a hotel deal. The agreement says Anandraj had located a hotel named Hotel Chateau Gutsch, Luzern, Switzerland, which Tapuriah was interested in buying.

5. Two fax messages from Sarasin Bank in Basel, Switzerland. These messages had fax numbers of both the sender (Sarasin Bank) and the recipient (Khan’s Pune residence). One fax to Khan was dated 21 November 2006 and it asked Khan to confirm a transfer instruction and fax it back to the bank. The second message, dated 22 November 2006 confirmed the transfer of $7 lakh (approx. Rs 3 crore) to the account of SK Financial Services in Barclays Bank, London. The messages showed this money was transferred through correspondence banking with Citibank in New York.

Documents seized from Kashinath Tapuriah

The following two important documents were recovered from Tapuriah’s residence in Kolkata.

A communication from UBS to Khan dated 4 March 1999. This is the first document that mentions Khan’s purported bank account with UBS to be account number ZA1-A1A. This communication says, ‘The balance in your account as on 02.28.99 is $976 million.’ The document was signed by a UBS official named Dr P Wiely, Chief Manager, UBS AG.

Tapuriah met Khan through the late Congress CM VB Reddy. Reddy told him Khan was related to the Hyderabad Diwan and would help him find funds

The second document is also a communication from UBS to Khan, dated 12 April 1999. This mentions three pay orders of $ 2 million each, drawn in favour of i) Pan Asian Distribution, payable at Singapore ii) Hasan Ali Khan, payable at India and iii) Roberts, McCelan Co, payable at India. The communication says all three pay orders had expired and fresh pay orders were in the process of being issued. This document is also signed by the same Dr P Wiely.

Roberts, McClean Co Ltd was owned by Kashinath Tapuriah. When questioned by ED, Tapuriah denied having received this payment.

From the pen drives seized from Kashinath, the authorities also recovered over a dozen bank fund transfer instructions that Hasan Ali had issued to UBS AG, Zurich on various dates, in favour of different beneficiaries in different parts of the globe. These fund transfer instructions are part of the big alarm and mystery around Khan. In all these transfer instructions, Khan has mentioned his account number as 206-794.786. This was the second specific UBS bank account number of Khan that had come to light. The first was ZA1-A1A as mentioned above. Some major transfer instructions were as following:

• UBS bonds worth $1.695 billion to Chandrika Tapuriah, account No 0835-357902-3 with Credit Suisse Private Banking, Zurich (dated 6 January 2006).

• UBS Bonds worth $1.7 billion to Jafar Hamid, account No 397236 with UBS AG, 1, Curzon Street, London.

• UBS Bonds worth $1 billion on 15 December 2005. Beneficiary details not mentioned.

• UBS Bonds worth $4 billion on 15 December 2005. Beneficiary details again not mentioned.

• UBS Bonds worth $1.7 billion on 14 December 2005. Beneficiary mentioned as Black Prince, A/c No 0835899786-7, Credit Suisse Private Banking, Zurich.

• $0.5 million on 10 January 2006. Beneficiary mentioned as Dicker International Ltd, Singapore, A/c No 3304150101 with Bank of India, Singapore.

• $3.5 million on 4 January 2006. Beneficiary mentioned is Meghna General Trading Co, Dubai, A/c No 020- 105847001 with HSBC main branch, Dubai.

• $3 million on 6 January 2006. Beneficiary mentioned is Volge International Ltd, Hongkong, A/c No 181- 7-822572 with HSBC, Hongkong.

• $3.5 million on 4 January 2006. Beneficiary named is Navy Impex, Dubai. But the instruction stated that the money was to be routed through the account of Al Fardan Exchange, Dubai.

Other bank correspondence retrieved showed that Khan had two other bank accounts with UBS — 206789758 and 206790786. The total number of Khan’s known accounts with UBS now stood at four.

Some other documents recovered from pen drives showed that Kashinath had three offshore accounts:

a) A/c no 713.169 with Union Baneire Privee Zurich,

b) A/c no 0806702.7 with Credit Lyonnais Bahnhofstrasse, Zurich and

c) A/c no ZK 111 AS1 with UBS.

ED registers a case of money laundering

The IT raids continued for two days. On 7 January 2007, the IT handed a copy of all seized documents to the ED. A day later the ED registered an Enforcement Case Information Report (ECIR) against Khan and others. The Income Tax can only investigate the tax liability part of any dubious money transaction. It’s the mandate of the ED to investigate charges of money-laundering and violation of foreign exchange related rules.

After registering this case, the ED recorded statements of all the accused. Khan refused to cooperate. Shown different bank statements and transfer instructions, Khan gave a one sentence answer: ‘I don’t know anything about these documents; these bank accounts do not belong to me.’

Tapuriah, on the other hand, told the ED that in 1994 he was looking for finances to revive one of his sick industrial units named Incab. He said he came in contact with Khan in the late 1980s when the former chief minister of Andhra Pradesh Vijay Bhaskar Reddy and a former Rajya Sabha MP AS Chowdhary had introduced him to Khan. (Reddy was the chief minister of Congress governments in Andhra Pradesh on two occasions, in 1983 and then from 1992 to 1994. He was also elected to the Lok Sabha six times between 1977 and 1998. He was a Union cabinet minister as well as member of several parliamentary committees. He lost the 1999 elections and subsequently retired from active politics. He died in 2001).

Tapuriah told the officials that Reddy had told him that Khan was the great grandson of the Diwan to the Nizam of Hyderabad and could arrange money through his sources for Tapuriah’s cash-crunched units. Tapuriah and Khan became friends and Tapuriah later helped Khan in his scrap trading business, getting him contracts from SAIL and Tata Steel. Tapuriah also admitted knowing Philip Anandraj and admitted entering into some agreements with him but said those agreement never fructified into any real business projects. But Tapuriah feigned ignorance about the bank documents retrieved from his pen drives. He made a ludicrous claim that somebody had manipulated his pen drives and stored these documents without his knowledge. He also claimed that despite repeated promises of funds made by Khan, the latter never gave him any money.

The ED obtained a Letter Rogatory (LR) in the name of Swiss Authorities under the Prevention of Money Laundering Act from a Mumbai Sessions Court and sent a team of officers to Switzerland on 11 January 2007 to personally serve the LR to the Swiss Government. (LRs are orders issued by a local court seeking judicial assistance from foreign authorities in a criminal investigation.) This LR requested the Swiss government to provide details of the four accounts purportedly held by Khan at UBS:

King con Kashinath Tapuriah, Khan’s partner, has a long history of frauds

• ZA1A1A
• 206794-786
• 206789-758
• 206790-786

The Swiss authorities were provided with all the documents related to Khan and the UBS, including the fund transfer instructions issued by him.

Surprisingly though, the ED didn’t ask for details of Khan’s alleged account at Sarasin Bank or details of the four accounts supposedly held by Kashinath and his wife in different banks in Switzerland, including the UBS (as enumerated above). An ED source told TEHELKA that since Kashinath and his wife had supposedly received funds from Khan in these accounts, they thought it prudent to only seek details about Khan and not the Tapuriahs. “he Swiss banks don’t entertain phishing expeditions by foreign governments and this may be why ED officers in charge of the case at that time opted to keep their request limited to Khan’s accounts,” says an ED officer who took over the investigation in 2009 and is currently part of the probe team. (However, it seems very important that this gap in enquiry should now be rectified if all the pieces of the Hasan Ali Khan puzzle are to fall into place.)

Khan is linked with notorious arms dealer Adnan Khashoggi. But it appears even this is a false claim. UBS says Khan had forged a letter claiming this link

Shockingly, on 15 January 2007, the Swiss authorities told the Indian Embassy in Berne that its domestic inquiries had revealed that the Hasan Ali Khan documents presented to them appeared to be forged and thus the billions of dollars supposedly in his accounts and their alleged transfer to other accounts seemed to have no basis in reality. But before providing further information about Khan’s four accounts, the Swiss authorities demanded from their Indian counterparts a better description of the predicate offence (i.e., the offence that may have led to these alleged funds). Over the next six months there was a series of letters between the ED and Swiss authorities, where the latter demanded some evidence that Khan’s accounts and the alleged money in them were proceeds of a crime. The Indian authorities failed to give a convincing reply. The Swiss authorities, in turn, didn’t share the details of Khan’s four UBS accounts.

July 2007. ED gets the infamous suitcase

In July 2007, Mahesh finally handed over the infamous suitcase of documents to the ED. These were the crucial documents found in it:

1. The most intriguing document was a letter written by Khan to Prabhu Guptara, Director, Wolfsburg Executive Development Centre, Switzerland. Khan had even got this letter notarized from a notary in London. The letter narrates an incredible chain of events:
• That in 1982, Khan had opened a bank account at the UBS branch in Singapore by depositing $1.5 million. The recommendation for opening the account came from Adnan Khashoggi (the notorious arms dealer) and it was organized by Dr Peter Weilly, a senior UBS official, who used to manage Khashoggi’s portfolio.
• Sometime later Khan deposited another $240 million in the account. At this stage Dr Weilly offered to move the account to Switzerland. Kashinath Tapuriah also recommended the move.
• In 1993, Weilly asked Khan to finance a project of Khashoggi’s to the tune of $300 million. Khan financed Khashoggi. But as he was not happy about Weilly’s insistence on his financing Khashoggi, he decided to move his money to another bank. For this purpose he opened an account with Singapore Banking Corporation (a bank which had later merged with UBS).
• He asked Weilly to transfer $75 million from his UBS account to his SBC account but because of some confusion the transfer could not take place.
• By December 1997, Khashoggi returned the $300 million. The balance in Khan’s UBS account reached $560 million. But now Weilly insisted that Khan should finance Khashoggi with $500 million. Weilly also asked Khan to extend a sum of $20 million to a Mrs Santosh Golecha in London. But Khan refused to fund both Khashoggi and Golecha.
• In February 2001, Khan travelled to Zurich and met Weilly but the latter told him he would be able to operate his account only after April 2001. Khan went back to UBS in April but found that Weilly was no longer employed by UBS and his new portfolio manager was Markus Grossman.
• Khan then held a meeting with Franz Glanzmann, the owner of a hotel named Chateu Gutsch, Lucerne, at the UBS office in the presence of UBS officers to discuss the modalities for buying the hotel and finalising a payment schedule.
• But a few days later he was informed by UBS that Weilly had made the following comment in his account — ‘Funds from weapons sale’. UBS officials make demands of kickbacks to ‘clean up the records.’ Khan refused to pay. His money got stuck and he failed to honour his commitments to his creditors.

However, this four page letter, did not mention the account number around which the whole staggering story was spun.

2. Apart from this letter, the second crucial document in the suitcase was an incorporation certificate and directors’ resolutions of Autumn Holdings, a company incorporated at Virgin Islands. Tapuriah and Khan were the directors and the company had an account in the Sharjah branch of Standard Chartered Bank (account no. 02-5749883-01). This is the same company that had figured in the agreement where Khan had agreed to pay Kashinath $200 million.

3. Other documents found included fund transfer instructions by Khan in favour of different beneficiaries, including Tapuriah and his wife. At least 10 of these involved money to be routed through different banks in the US, all of them based in New York. However, in all these instructions, the source of the money to be transferred was Khan’s accounts with UBS. Besides the four UBS accounts already enumerated above, two new accounts emerged in these instructions — Ac no. 6667663 with UBS Zurich and Ac no. 0835-844346-61 with Credit Suisse Bank, Zurich.

4. The other important documents retrieved from the suitcase were two lists prepared by Kashinath Tapuriah detailing the offshore account numbers of different individuals and companies. The individuals mentioned in this list were Bjorn Anderson, Shakil Khan, Salma Khan, Fatma Said, Ulf Reese, Abbas Abbas, Chandrika Tapuriah and Kashinath Tapuriah and Rheema Abbas (Hasan Ali’s wife).

The account numbers of Rheema Abbas mentioned in this list were 18-5749905-01 with Standard Chartered Bank, Sharjah and 2190399548 with Mashreq Bank (branch and city not mentioned). The account number of Chandrika Tapuriah in the list was 18-2203316-01 with SCB, Sharjah.

The account numbers of Kashinath Tapuriah were 76001 with UBS, Zurich, 18-5748968-01 with SCB, Sharjah and 2905 with Maerki Bauman (a Swiss Bank).

Then there were offshore accounts of the following companies: Payson Company Ltd and Autumn Holdings Ltd (owned by Khan), Middle East Drilling Equipment, Roberts McClean & Co Ltd, RM services Pvt Ltd and RM Investment and Trading Co Pvt Ltd (owned by Tapuriah).

November 2007: UBS exposes bluff master Khan

In November 2007, UBS AG contacted the ED and furnished two documents:

1. A letter from UBS to Swiss National Bank dated 30 October 2007 setting out the results of an ‘extensive internal investigation’ by UBS AG

2. A report by Deloitte AG dated 29 October 2007 which provided an external audit review of all of Khan’s supposed accounts with UBS AG, where he was either account holder or beneficial owner or holder of a power of attorney.

Lost out Mahesh Tapuriah gave the IT officials a suitcase full of documents

The Deloitte AG report identified three accounts that Khan had with the UBS AG: 206-794-786; 206-789-758 and 206-790-786. The last two were in the name of Khan, while the first was in the name of his wife Rheema, with Khan having the power of attorney.

All these three accounts were opened on the same date — 30 July 2001 — and the supervisor was a UBS official named Mathias Wuthrich (the man whose signature was allegedly on the bank correspondence recovered from Anandraj’s laptop, stating Khan had a balance of $8 billion).

Fascinatingly, the two accounts in Khan’s name were closed in October 2001 without any transactions in them. Oddly, the third account held by his wife was used for only one transaction — a credit of $61,031 and debit of $60,700 on the same day, 15 August 2001. The account was funded by a cash deposit and transferred out by wire following a handwritten notification to transfer the amount out of the account to a third party in the United Arab Emirates.

The UBS claims this was a fraud transaction. In its letter to Swiss National Bank, UBS says: ‘We believe Khan had been in negotiations to purchase a property in Switzerland and had obtained approximately $60,000 from the vendors — though we now assume this to have been a kind of advance fee fraud transaction. As mentioned above, the money was deposited into the account and immediately wired out so that the owners of the property could not recover the sums. The owners subsequently contacted UBS in an attempt to recover the funds and only at this point did UBS become aware of the suspect nature of this transaction.’

UBS further wrote that besides this one transaction, there were no other transactions on this account. Curiously too, the dozen odd transfer instructions Khan had issued to different beneficiaries, which were recovered from Kashinath’s pen drives, had mentioned this particular account as the one from which money running into billions of dollars was to be transferred. But according to the UBS, none of these transactions ever really took place.

Deloiite AG also confirmed that in the two accounts held in Khan’s name there was not even a single transaction. Both these accounts, and the one in Rheema’s name, were closed on 17 October 2001. UBS wrote that ‘the accounts were closed at the instance of UBS, because it became clear to the account officers even during this short period that this client should not maintain accounts with UBS as his credibility could not be fully established.’

Besides this, Deloitte identified a fourth account (no 718.085) not in Khan’s name, but indirectly connected to him because there was a fax from Khan, dated 5 April 1997, requesting a transfer of $52 million from this account to the requestor’s account 760.001. The fax was sent to a UBS official named Peter Wiely (the same official mentioned extensively in Khan’s notarised letter to Prabhu Guptara).

Astoundingly, Deloitte says that according to UBS this account does not exist and had never existed in Zurich. Instead the account number is allocated to another region of Switzerland and the parties operating the account are not connected to Hasan Ali Khan or India. However, account 760.0001 which was the supposed recipient of Khan’s transfer instruction did exist. UBS said this belonged to an Indian and was opened in December 1994 and closed in January 1998! The transactions conducted on this account during its lifetime were very small — both in number of transactions conducted and their size. The account balance never exceeded 10,000 swiss francs. In 1997, the account holder had informed the bank that it was expecting a money transfer from Khan. But the supposed transfer did not take place.

Quiz time ED officials bring Hasan Ali to their Mumbai office for questioning

As for Khan’s fourth account — ZA1A1A — UBS made the following observation: ‘The account number quoted is not recognisable as a configuration we use for client accounts at UBS. Accounts at UBS are always configured as either 6 digits followed by a full stop, followed by a letter digit and a letter for sub-accounts or 6 digits followed by a full stop, followed by two digits and a letter for sub-accounts.’

UBS concluded that all the documents related to Khan’s UBS accounts were forged. It said: ‘We remain convinced that Hasan Ali Khan targeted UBS for the purpose of practicing fraudulent activities on unsuspecting persons. Our investigations show that UBS wanted to do nothing with Mr. Khan and on many occasions rejected his requests to open accounts. Whilst he was ultimately able to open some accounts, we did identify this and the accounts were quickly closed.’

Besides this, Deloitte made the following finding: UBS official Wuthrich said UBS was first contacted by Khan in 1987. Subsequently, he contacted Dr Weilly at UBS many times. Wuthrich said Khan would call Weilly and talk about the millions of dollars in his UBS accounts without mentioning details of the account numbers. Wuthrich told Deloitte that he believed Khan may have had people sitting in his office while he made these calls as a ruse to impress the listener that he had a business running into millions of dollars with UBS. Wuthrich said the UBS referred to such calls as ‘hot air business’.

December 2007, ED seeks more info from UBS

In December 2007, the ED wrote to UBS for specific information based on the notarized letter Khan had written to Prabhu Guptara. It got a reply on 28 December 2007. The UBS stated that the serious allegation that Khan had laundered billions of dollars through UBS and had lent his alleged money in UBS accounts to Khashoggi were baseless as there had never been any money to begin with. Though UBS confirmed that Guptara was working with the bank’s Executive Development Centre at Wolfsburg, the contents of the notarized letter were false. In February 2008, the UBS again wrote to ED saying that the bank had not undertaken any transaction for Khan except the one transaction mentioned in the Deloitte audit report. UBS also denied having any other account with Khan except the ones detailed in Deloitte’s audit report, as mentioned above.

The ED now faced a dead end. Out of Khan’s five purported bank accounts at the UBS, two did not exist. In the three accounts which did exist, there had never been any substantial money. Therefore, all of Khan’s fund transfer instructions issued to different banks across USA, UK, Hong Kong, Singapore and UAE amounted to nothing — if there was no money to begin with, where was the question of it being transferred to other beneficiaries?

Mumbai police comes into the fray

As detailed above, Hasan Ali Khan’s claims to be a big Swiss bank player seemed a big con. But he was certainly a highly shady character. The ED discovered that Khan had multiple Indian passports. Two of these were issued at fictitious addresses: one at an address in Sitamarhi, Bihar; the other in Chembur, Mumbai.

In January 2008, an FIRwas lodged on this ground with the Worli Police Station in Mumbai. But before he could be arrested, Khan went absconding.

December 2008: Khan is arrested

After remaining underground for over a year, Khan surrendered before a local Mumbai court on 15.12.2008. The court remanded him to police custody. The ED interrogated him thrice during this time.

DCP Ashok Deshbhratar of the Mumbai police secretly video recorded these interrogation sessions. In one such video, Khan can be heard telling the DCP that he was friends with Egyptian billionaire Dodi Fayed and had met Princess Diana a few times and that Fayed had introduced him to Khashoggi. He also told the DCP that he had got Hassan Gafoor posted as Mumbai police commissioner and that he had stayed at the bungalow of Mumbai real-estate tycoon Yusuf Lakdawala, while he was on the run. He claimed it was at Lakdawala’s daughter’s wedding that he and senior Congress leader Ahmed Patel had decided to appoint Gafoor to the post of Mumbai CP. However, Khan refused to say anything about his offshore accounts or alleged moneylaundering business.

In 2010, a portion of this video interrogation was leaked to opposition parties in Maharahstra. A BJP MLA from Nasik produced the video on the floor of the house and accused the government of sheltering Khan at the behest of senior Congress leaders in Delhi. After conducting an enquiry into the contents of the CD, the state government claimed Khan’s assertions were empty boast. But the opposition refused to buy this position. In turn, the Maharashtra government suspended DCP Deshbhratar in March this year, on charges of leaking the CD.

While his claims on this tape raised a political storm, no substantial breakthrough could be made on the ground. Khan had been given bail on 02.01.2009. He was interrogated 12 times more by ED officials between 05.01.2009 and 26.08.2009. They still drew a blank.

Back in December 2008, the IT department had raised a tax demand of Rs 71,845 crore on Khan, his wife Rheema, Tapuriah and his wife Chandrika. Under income-tax law, if the IT authorities find any incriminating document against a taxpayer, the onus lies with the taxpayer to prove his innocence. Until then the documents are deemed authentic. Despite the UBS correspondence, therefore, showing Khan to be a gas-bag, the IT department went ahead and issued a show-cause notice to him and his associates.

In March 2011, the IT added a 24 percent penalty to this original demand and raised the amount to Rs 89,000 crore.

August 2009: ED sends LR to several countries

As citizens and companies of different countries were mentioned as beneficiaries in fund transfer instructions issued by Khan, the ED sent LRs to all those countries.

The USA was the most prompt. As mentioned earlier, Khan had issued about a dozen banking instructions to different banks in the US. The ED sought details of all these purported transactions. The US wrote back that none of these transactions could be tracked or verified, save one. This transaction was of $7,00,000, which had originated from Khan’s Sarasain bank account and transferred to the account of one SK Financial Services in London, with the money being routed through Citibank, New York.

However, the governments of UK, UAE, Singapore and Hong Kong have not provided the information sought in the LRs till date.

May 2010: MDT is constituted

In May 2010, Secretary (revenue) passed an order constituting a multi-disciplinary team consisting of officers from ED, IT, IB, Mumbai police and the RBI. This team found that Khan was first married to a woman named Mahboobanissa in 1990 and had a son named Samin Khan. In 1998, Khan divorced Mahboobanissa and married Rheema Abbas of Pune. He wound up his car rental business around this time and, according to people who knew him, dabbled in various businesses like supply of metal scrap and import-export of precious jewels. But the MDT has not found any documents related to these business ventures so far.

After passing several severe strictures against the Union Government for their failure in tracking down Khan’s alleged ill-gotten wealth, the apex court finally cancelled Khan’s bail and remanded him to ED custody.

In March, the ED also submitted two status reports to the Supreme Court — one before Khan’s arrest and one after his police interrogation. The ED stated that so far they had got confirmation of just two international banking transactions carried out by Khan:

1. The transfer of $7,00,000 (about Rs 3 crore) from his Sarasin Bank account to SK Financial Services in London.

2. The transfer of $60,700 (about Rs 25 lakh) from his wife’s UBS account to an account in UAE.

3. In his interrogation, Khan has admitted to having money worth a few lakh dollars in his accounts in Singapore. But there’s no confirmation from the banks concerned.

The truth and lies of Hasan Ali Khan

What then is the truth about Hasan Ali Khan? Is he just a scamster? Why did he have Swiss accounts? At least Kashinath Tapuriah had always been an industrialist and broker for multinational companies, wielding thousands of crores. He may have opened accounts to evade taxes. But in the case of Khan, his accounts in Switzerland are a matter of deep concern.

By UBS bank’s own admission, Khan and Tapuriah seem to have colluded with a few UBS officials. Investigating officials in India told TEHELKA about several plausible theories of what their designs might have been. The suspicion is that a few UBS officials wanted to siphon off funds from a few dormant UBS accounts which had no heirs and thus incorporated Khan and Tapuriah in their plan. Somewhere along the line, differences arose between the plotters and thus the entry that “funds were received from weapons sale” was made by an infuriated official to block the transfer of money. The plotters tried to revive their plan. Khan probably prepared the notarized letter in the name of a senior UBS official to facilitate this. But all this is mere conjecture.

It may turn out that Khan is a victim of his own lies and forgeries. It may turn out that the apex court and public interest litigators have misread this particular case without going into its merits. It may turn out that the media has exaggerated the scale of Khan’s operations based on insufficient or piecemeal information. But still it’s important that this investigation is taken to its logical conclusion and answers to every question is fiercely sought and achieved. If Khan is just a bluffmaster and not a grave national security threat, the nation has a right to know. It can be no one’s case that there isn’t huge tax evasion and hawala operations going on in the country. But it is imperative to get to the bottom of the real Hasan Ali Khan story so that our collective time is better spent barking up the correct tree.

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