Hawala Scandal

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1. HAWALA SCAM Submitted By: Abhishek Soni AMITY BUSINESS SCHOOL BACHELOR OF COMMERCE (HONS .)

2. What is HAWALA? Hawala is a form of banking wherein money transferring is based on owner system and human interaction. The funds transfer are quick, safe, and secure. There are no paper trails and taxation is avoided. Hawala generally used by criminals to avoid tracking of money. Hawaldars are the agents who conduct the transactions.

3. PERSON A PERSON B BROKER B PERSON C PERSON D BROKER A $10000 $10150 $ 10000 $ 10105 1. Person A wants to sent $10000 to his friend in Tehran Person B . 2. Person A makes the payment with commission to his local agent. 9. Broker A pays Person D wiping his liability to Broker B . Informal contacts Movement of funds 5. Funds are transferred upon receipt of the code. Broker A now owes Broker B $10000. 6. Later Person C , pays Broker B $10000 with commission to make a transfer to his Person D . 7. Broker B gives C a code to pass on to Person D . 3. Broker A gives Person A an code to pass on to Person B . 4. Broker A asks Broker B to pay Person B $10000. 8. Broker B asks Broker A to pay Person D $10000.

4. The case broke out on March 1991, with the arrest of K ashmiri militants, Shahbuddin Ghauri and Ashfaq Hussain Lone, in March 1991. They has in turn, led the CBI to high-profile Hawala operators Shambhu Dayal Sharma and Moolchand Shah. It was the testimony of the Hawala operators that kept to the unfolding of the case. HOW IT CAME OUT

5. POLITICIANS INVOLVED LK Advani (68.5 lakh) Arif Mohd Khan (7.5 Cr.) Madhavrao Scindia (75 lakh) Harmohan Dhavan (1.1 Cr.) VC Shukla (65.8 lakh) Balram Jhakhar (61 L)

6. WHO GOT WHAT AS PER JAIN DIARY Yashwant Sinha Rs. 21 lakh BJP Kalpnath Roy Rs. 54.7 lakh Congress Devi Lal Rs. 50 lakh SJP Pradeep Kumar Rs. 14.6 lakh SJP RK Dhawan Rs. 50 lakh Congress Sharad Yadav Rs. 5 lakh Janata dal Jafar Shareef Rs. 15 lakh Congress Kamal Nath Rs. 22 lakh Congress AK Sen Rs. 20 lakh Congress Natwar Singh Rs. 23 lakh Congress ND Tiwari Rs. 26 lakh Congress Madan Lal Khurana Rs. 3 lakh BJP Kailash Joshi Rs. 10 lakh BJP

7. Hawala is the biggest ever scandal in the world which involved over 115 top politicians and bureaucrats of the country. The Hawala scandal was an Indian political scandal involving payments allegedly received by politicians through four Hawala brokers, the Jain brothers. It was a US$18 million bribery that implicated some of the country’s leading politicians. ABOUT

8. The Hawala scandal likewise said without verification that the payments being coordinated towards Hizbul Mujahideen militants in Kashmir . The Indian political atmosphere was completely harmed where the then three significant political parties of the nation including the administering Congress Party, whose seven ministers needed to leave due to the cover . The council that followed against the charge sheet on the political leaders was moderately set off by Vineet Narain (journalist).

9. The Hawala operators, Sharma & Shaw, told the agency during interrogation that they had been working for the Jain brothers, N.K. Jain and S.K Jain. This led to the immediate arrest of the Jain brothers. In his 1995 confession, S.K. Jain alleged that he had paid a number of politicians, including the Prime Minister, P.V. Narasimha Rao . Vineet Narain , a Journalist and an anti-corruption activist, was responsible for bringing the scam to light.

10. THE FAILURE OF THE PROSECUTION BY THE CBI All the records collected on basis of the Hawala scam was assessed by the jury to be in sufficient as primary proof. However the failure of the prosecution by the Central Bureau of Investigation was extensively condemned far and wide . With the closing of Vineet Narain situation, the Supreme Court instructed that the Central Vigilance Commission should have given the regulatory part over CBI.

11. SEVEN MINISTERS OF THE RULING PARTY CONGRESS As a result of the Hawala scam seven ministers of the then ruling party Congress and also the President of the opposition, the Bharatiya Janata Party (BJP) L.K. Advani had to find their way out or resign from their membership of the Lok Sabha Assembly . S.R. Bomai the president of Janta Dal has also had a role in the scam and so he has to resign his posting and was replaced by Laloo Prasad Yadav , the Chief Minister of Bihar . The jury ordered for the arrest of 11 politicians who were charged for taking bribe in the Hawala scam.

12. OPPOSITION PARTY CHARGED ON THE PRIME MINISTER The opposition party charged on the then Prime Minister saying that he had received a bribe of Rs.3, 000,000 . During the investigation of the scam it is said that the Jain brothers used to carry these Hawala money by themselves or they used to transfer it to the concerned person through their trusted employees. Amir Bhai an Indian who ran currency exchange counters in various countries played a major role in being paid with a huge sum as bribe and accepted money for the Indian politicians and bureaucrats .

13. CBI REPORT S.K. Jain was arrested based on the complaint made by Vineet Narayan and it was he who revealed the whole story and a formal report of nearly 120 pages. Vineet Narayan also filed a complaint against the Prime Minister for influencing the enquiry . So the court ordered the CBI not reveal any information regarding the investigations to any higher authorities or political personalities. The court has to be appreciated for this for they passed a strict order to the CBI though they were directly under the control of the Government .

14. THE ISSUE IN THE RAJYA SABHA Somnath Chatterjee who along with his party noted for not having lost its shine and in spite of knowing that they can make the Government resign in any way but still tabled the issue in the Rajya Sabha thinking that this would at least carry some moral weight and stain the reputable high status of the ruling party . The Government was in a literal mess run by many parties instead of one strong genuine party. No political party had the way to get into deep and honest investigation of the Hawala scam, in spite of serious outcome of the Jain Hawala scam.