Pakistan is pumping in high quality fake Indian currency through the India-Nepal border

EXCLUSIVE: Top secret Nepalese documents in our possession prove that Pakistan is pumping in high quality fake Indian currency through the India-Nepal border

By Anupam Dasgupta/Kathmandu---the week

Flight PK 268 from Karachi was behind schedule. Mohammed Farooq stared out of the window of the Pakistan International Airlines carrier and shifted uneasily in his seat. At an altitude of 9,500ft, the splendid view of the Chure Hills south of Kathmandu could not have calmed the nerves of the physically challenged Pakistani. It was not the tricky approach to the Tribhuvan International Airport, surrounded by hills, that was the problem. The butterflies in his stomach fed off the precious cargo he had with him. It was always the same; seven times in the lastfive years, six in the past two years.

As the flight landed at 6.30 p.m. on August 9 and the other passengers disembarked, Farooq waited for the airline staff to assist him. He accepted his briefcase from the flight attendant but refused the wheelchair saying he wanted to be wheeled out in his personal wheelchair bundled with his check-in baggage. That was surprising since the norm is that the airlines provide wheelchairs to the needy. As intelligence sources told THE WEEK later, their Indian counterparts had tipped them off about the possible arrival of a consignment of fake Indian currency notes from Karachi, and Farooq’s demand sounded suspicious. His wheelchair was then scanned by the X-ray machine. Neatly tucked into its cushion were fake currency notes. A thorough search of his suitcase revealed a false bottom, which contained more notes. Altogether they recovered ‘super’ fake Indian currency worth 125 lakh (3,000 notes of 1500 denomination and 1,000 notes of 11,000 denomination).

Farooq was the sixth Pakistani carrier to be arrested from Kathmandu till August this year, one of them a woman, and super fake notes worth 12.13 crore were recovered from them (last year the count was 11.5 crore). They are part of a larger plot to target the Indian economy, which has been growing at a steady pace. Pakistan's proxy war has been going on for some time, but of late they have started producing super fake notes which are very difficult to differentiate from genuine notes. Sources told THE WEEK that such notes were being printed at government-run facilities in Pakistan, especially one close to its border with Afghanistan.

A top secret document with THE WEEK shows that two serving Inter-Services Intelligence officers, Ershad Khan and Major Tayyub Ali, are directly controlling the operations and are using the Nepali soil to funnel fake notes into India through the porous, 1,800-kilometre-long border via corridors in Nepalgunj, Janakpur and Birgunj. They have direct links with two of the biggest fake currency dealers in Pakistan, Haji Talaad Ali and Ali Mohammed, says a report prepared by the Kathmandu Metropolitan Police after Farooq's arrest, a copy of which is with THE WEEK. The fake dealers are getting substantial help from the Pakistan embassy in Kathmandu, say sources. “Activities of at least three embassy officials are being monitored in this regard,” says a Nepalese intelligence officer.

In the early part of this decade, Pakistan embassy's first secretary Mohammed Arshad Cheema was said to be actively involved in the fake currency racket. The Nepal Police arrested him on April 12, 2001, with 16kg RDX. Also picked up were his wife and their two Nepali associates. Cheema and his wife were expelled two days later. A year before that, two other embassy officials, Asam Saboor and Ahmed Siraj, were on the intelligence radar for their active involvement in the racket.

The amount of fake Indian currency seized is small when you consider the fact that Farooq alone had made six trips to Nepal and seven to Bangladesh before his game was up. According to an Intelligence Bureau report prepared two years ago, fake currency worth 11,70,000 crore is in circulation in India. New Delhi should certainly be worried. More so because of Pakistan's patronage of the racket.

“The imprint of Pakistani facilities is all too clear,” says Ajai Sahni of the Institute of Conflict Management, Delhi. “The entire fake Indian currency racket is being controlled by people who are deeply familiar with the business of faking international currencies. The phenomenal improvement in scanning and printing technologies is helping people with criminal intentions copy even tiny, ingrained features in the notes.”

So, how do the ISI and the fakers get around the security features in the Indian notes? Only 5 per cent of the India's currency paper is made in India and the rest is imported from any of the 11 firms in Europe producing security grade currency paper made of cotton and linen. While some of the security features are ingrained at the time of paper production (watermark, windowed security thread, magnetic properties, fibres and the like), some crucial ones (like the micro lettering, Mahatma Gandhi portrait) are incorporated at the printing stage. Most of the security features incorporated at the production stage (embedded security features) are common to countries dependent on the European firms for currency paper. Of course, there are country-specific requirements, which are meant to be kept secret by the foreign firms, though there are no ways to ensure that they are kept so. “We can't fully discount that possibility,” says a source in the Reserve Bank of India. If a violation happens, the only action that can be taken is cancelling the tender. There is no international law in this regard, which means you cannot take a firm to task if it plays foul.

UK-based firms, like De La Rue, cater to nearly 15 countries, and close to 40 per cent of India's requirement is met by UK-based firms. Sources told THE WEEK that inspection teams sent by the government to carry out quality checks at the production stage were often not allowed to go about their job. Rue's chief executive James Hussey had to step down in August 2001 after India stopped orders following the firm's failure to meet expected production standards. Though Hussey later clarified that the firm did not compromise on security features, his head rolled.

A source in the RBI says that while placing an order great care is taken to ensure that the exact amount required is specified to avoid excess currency paper reaching the wrong hands. But experts believe that it is entirely possible for a black sheep in a currency paper firm to make additional quantities of the secure paper.

From time to time the RBI issues communiques to public, private and foreign banks about fake notes. One such letter dated May 26, 2009, warned of counterfeit notes of 11,000 denomination belonging to the series 2 AQ and 8 AC and bearing the signature of Dr Y.V. Reddy. The letter followed the seizure of 345 fake 1,000-rupee notes by the Anti-Terrorism Squad, Mumbai. “This is the first time that counterfeiting of the higher denomination notes pertaining to the 2005-2006 series (with new/strengthened security features like optically variable ink, colour shift security thread, etc.) has been brought to our notice,” the letter said. “The counterfeiting has been by printing the notes and first visual impact is very much akin to the genuine note. The notes were checked on CVPS/note sorting machines and were treated as suspect/reject by both machines.”

The man on the street and small business establishments who have no access to the machines have no way of spotting the super fake notes. “Common man goes by the sheer look of the currency,” says former CBI director Joginder Singh. “This is to the advantage of the ISI and its agents who pump in the super fakes into India.”

Fake currency kingpins Talaad Ali and Ali Mohammed take direct orders from the ISI, says the Kathmandu Metropolitan Police report. The Nepalese intelligence had earlier provided detailed dossiers on ISI officers Tayyub Ali and Ershad Khan to their Indian counterparts after the arrest of a middle-aged Pakistani woman, Mariam Wali Mohammed, from the Kathmandu airport with fake currency worth 130 lakh in July.

Sources in the Indian intelligence say that the ISI's direct involvement is significant. “They seem to have shed their dependence on Dawood Ibrahim's network,” says an intelligence officer. “They are not seeking the help of Dawood's trusted men Aftab Batki and Tahir Taklia, who have been managing the fake currency business from their hideout in the Gulf countries.”

The ISI using their modules in Nepal and Bangladesh to push fake currency into India is nothing new. Nepali nationals Ateeq Ahmed and Rajesh Gupta, arrested by the Madhya Pradesh Police from Bhopal in 2009 with fake Indian notes, had told the interrogators of the alleged involvement of Nepal's former crown prince Paras Shah in the business. As many as 22 people were arrested with fake Indian currency in Nepal this year. Most of them were linked to Talaad Ali and Ali Mohammed and, through them, to the ISI officers Tayyub Ali and Ershad Khan. The others arrested belonged to India, Nepal and Bangladesh, mostly those employed to route the currency to India.

But the most important arrest was that of Younus Ansari, son of the former forest minister of Nepal Salim Ansari, on January 1, 2010. Also picked up were his bodyguards Prakash Bhandari and Kanshiram Adhikari and two Pakistanis, Sajjad Muhammad Khurram and Muhammad Iqbal. According to the chargesheet against Ansari, which is in THE WEEK's possession, fake Indian notes worth 125,000 were recovered from him. His direct involvement in the racket became clear when the police raided Hotel Bluestar in the Thapathali area of Kathmandu and recovered three suitcases and a diary from Ansari and his aides. During interrogation, Ansari confessed that he had direct links to an Ali (intelligence sources confirmed that it was indeed Ali Mohammed). Ansari, says the chargesheet, was in constant touch with his Pakistani minders and used to make calls to one number in particular (0092-3212344860).

The chargesheet further says that Ansari had been using Adhikari as a conduit between himself and Khurram. Khurram told investigators that he took direct orders from Talaad Ali, who promised him 115,000 for the successful delivery of two suitcases to Ansari. Talaad Ali had also promised him that he would take care of the incidental expenses. It was the second time Khurram was being used to deliver fake currency. He also told investigators about Talaad Ali's connection with top fake currency operator Mohammad Nadim.

Ansari, the chargesheet says, had been to Pakistan six times and on each occasion he met Talaad Ali. He had been using Bluestar for his operations for the last two years. Vinod Kharel, an employee of the Red Planet Guest House in Kathmandu, where Ansari had rented a room for over a month in December 2009, has told the police that he had seen suitcases stuffed with Indian currency in Ansari's room.

If greed undid Ansari, money was the lone motive for the handicapped Farooq (his left leg was amputated below the calf) and Mariam, whom he knew through her sister. Farooq, who hails from a low-income family in Karachi like Mariam, told his interrogators that he was given 110,000 by a Salman Mohammad Ali for his first assignment. As he grew in experience, his pay packet went up to 120,000 per trip. The Nepalese Embassy in Karachi first issued him visa on May 25, 2005. He made four trips in 2009, including two in the month of October alone. In 2010, he visited Kathmandu in July and August. In between he made the trips to Bangladesh, which also has a porous border with India. On his failed August mission, he was asked by his minders to meet a contact, a man called Jaipal, outside the Everest Hotel in New Baneshwar, Kathmandu. Farooq was given Jaipal's mobile number and also the code number 0786 to identify himself. “This was done to compartmentalise information flow and maintain secrecy,” says a top Nepalese intelligence officer. “That Farooq could successfully board the flight from Karachi with his wheelchair full of fake Indian currency notes points to the involvement of Pakistani authorities.”

Farooq is currently placed in judicial custody and has had no visitors so far. There have been discreet inquiries from the Pakistan embassy officials, as confirmed by the Nepalese sources. He could face up to 10 years in prison if convicted under the Nepalese law.

But Farooq is an expendable pawn in the larger game played out by the ISI to weaken the Indian economy. Many more Farooqs are willing to take his place, thanks to the promise of easy money. Realising the gravity of the situation, External Affairs Minister S.M. Krishna and Foreign Secretary Nirupama Rao raised the issue with the Nepal authorities during their trip to Kathmandu in January this year. Three years ago, at the Munich Conference on Security Policy, then national security adviser M.K. Narayanan had spoken about fake currency being routed to India via Nepal and Bangladesh. There is immense pressure on Nepalese agencies to stem the currency flow. Sources told THE WEEK that following Farooq's arrest, Nepal's intelligence establishment has handed over the mobile numbers of Talaad (0092-3212332366) and Ali Mohammad (0092-3333473288) to the Research and Analysis Wing. And, the National Technical Research Organisation has been given a list of Pakistani numbers under surveillance, a copy of which is with THE WEEK.

Nepal's newly-constituted Central Investigation Bureau has been entrusted with the task of carrying out the probe into fake currency cases. “We hardly get any cooperation from Pakistan for the probe,” says Deputy Inspector-General Rajendra Singh Bhandari, director of the CIB. He admitted that the volume of fake Indian notes brought to Kathmandu has significantly gone up. “Previously, a single currency smuggler had on him fakes worth 180-90 lakh,” he says. “Now they carry only around 110 lakh. It would pose less of a security risk.” The smugglers, he says, have become innovative and their numbers are growing.
Bhandari has a case and it is now up to the Indian authorities to act and restore the faith of the common man in the Indian currency.