Funding Terror Home
The following is taken from The Lost Rebellion: Kashmir in the Nineties by Manoj Joshi, Penguin Books India, 1999. The book describes in quite a detail the relationships built by the ISI of Pakistan with the various terrorist outfits in Kashmir Valley -- their funding, organization, training etc. Some prominent politicians in the Valley, at one time or other, received funds from ISI. Some still do.
Abdul Gani Lone was one of them. Just prior to his assassination by terrorists, he had become the darling of those Indian liberals who were desperately trying to seek a semblance of a progressive content in the Islamic terrorism in Jammu & Kashmir. Lone was an important recipient of funds from Pakistan and other Islamists abroad during the earlier years of turmoil in Kashmir. Politically, he represented the interests of the orchardists of Kashmir valley in the Sopore region which had become a powerful economic force but were denied a commensurate representation by the Srinagar urban elite dominating the National Conference.
The narrative below begins with Lone's developing relationship with ISI.
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Lone decided to play ball with the ISI. Soon, the Pakistanis found a way to provide him some 'incentives'. In May, according to Mohammed Anis, a former Congress-I functionary who was arrested in July 1992, the first of several 'hawala' payments was delivered to him through his daughter Shabnam, a lawyer in the Supreme Court. The money came through a hawala operator, Sasi Kumar Agarwal of Chandni Chowk in Delhi. In fact, the police was tipped off about Anis by the IB which had Shabnam Lone under surveillance. On 27 July 1992, they arrested him just as he was entering Shabnam Lone's house. He had Rs 57,000 given to him by Agarwal for delivery. He told the police he was supposed to have delivered Rs 2 lakhs more later.
The infusion of cash, as part of the ISI's strategy of 'politicizing' the tanzeems, saw Lone interceding aggressively in the affairs of the outfit, making appointments, approving expenditure and when inter-group problems became difficult, talking directly to other -patrons' like Syed Ali Shah Geelani on matters relating to his tanzeem, the Hizb.
In September 1992, Lone went abroad to the US, UK and Iran, apparently for medical treatment. In Teheran, according to intelligence reports, the Azad Kashmir representatives of the Al Barq, an ISI official and Hafiz Mohammed Saeed chief of the Markaz-dawa-ul-Irshad, met Lone, and a new strategy for supporting the organization and providing it with more fire-power was worked out. Among the important decisions taken was that the Al Barq would get an infusion of 'guest militants' from Afghanistan through the Markaz's military wing, the Lashkar-e-Taiba. On his return to Srinagar, Lone replaced Wasim Bedar the acting chief of Al Barq, with Abdul Majid Mir alias Khalid Jibran.
Mushtaq Ahmed Shah, the captured chief commander of the Al Barq, later told Indian intelligence agencies that thereafter Lone received Rs 5-6 lakhs per month through a courier named Zahoor Watali, who was involved in some export-import business m Delhi. Linked to this channel was Sajjad Ahmed Lone, the son of Abdul Ghani Lone. In addition to this, the units of the Al Barq collected money from local businessmen.
A lot of this money went into the pockets of the leaders. Shah alleges that Lone siphoned off a lot of money. It is known that when he was arrested in a Srinagar locality, he had electronic goods worth some Rs 50,000 in his house.
Information from captured militants, couriers and others revealed that in 1992 alone, the Jamiat-ul-Mujahideen received some Rs 8.5 lakhs for its activities through Ghulam Rasool Shah who at the time represented the outfit in the TEHK. In September 1993, when Shah aka Gen. Abdullah was arrested, he disclosed that he had channelled some Rs 33 lakhs to the Jamiat-ul-Mujahideen in the three-year period beginning in 1991 when the outfit had been founded.
Another major conduit of funds was reportedly Prof Abdul Ghani Bhat of the Muslim Conference. Ghulam Nabi War an activist of the party, told the authorities that the professor had received Rs 9.8 lakhs from the Pakistan High Commission in Delhi, and had worked out a deal to receive even larger sums of money to be channelled to various tanzeems.
Other organizations supplemented the funds they received by extortion. The Ikhwan, according to arrested militants obtained a lot of its funding from local businessmen. The Khyber Cement Co. in Srinagar donated Rs 5 lakhs to start with, and gave a regular stipend to it. Kashmiri carpet dealers in Delhi bought peace by regular levies. Many of them were paying in support of the cause, but some were doing it for protection.
A key source of money for the Ikhwan was the Jhelum Valley Medical College in the Bemina locality of Srinagar. The story its administrator, Ghulam Mohammed Sheikh, gave out was that they needed protection. He told the Ikhwan that some people affiliated with the Jamiat-ul-Mujahideen wanted seats in the medical college for their proteges and were harassing the staff. He gave Yasin Bhat, the Ikhwan commander, a one-time payment of Rs 5 lakhs and promised him regular monthly as well. The college, apparently, needed big protection since it transpired that it had also paid the Al Umar Mujahideen a one-time payment of Rs 10 lakhs. Later, the police discovered that Sheikh had been an active top-level Pakistani agent since 1962 and had played some role in the 1965 Operation. He had been in touch with ISI officials through the Pakistan High Commission in New Delhi through most of the 1980s, and in March 1990, he crossed the LoC to meet Col. Assad in Rawalpindi to chalk out plans for aiding insurgency. Among his accomplices were Mufti Merajuddin Farooqi, a former additional advocate general of the state government and a trustee of the Jhelum Valley College.
From 1991, when vigilance on the border was tightened, Sheikh's ISI controls began meeting him in Kathmandu, for which they were given Rs 4 lakhs. Brig. Farooq Numan, the head of Kashmir operations, flew down specially to met Farooqi there. They were paid an additional sum of Rs. 6.5 lakhs to hire a shop in the Nepalese capital to use as a safe house.
On their way back, they were handed over Rs. 14 lakhs in Delhi for disbursal to militant groups in the valley, but on 13 February 1992 they were arrested.
On 25 March 1991, Ashfaq Hussain Lone, a former engineer and now the deputy intelligence chief of the Hizbul Mujahideen, was arrested in the Chitli Kabar Mohalla of Old Delhi with a number of high denomination bank drafts. The police did not know that they had stumbled upon a complex money-laundering operation of the Hizb, and that they had just lit the slow fuse of a 'bomb' that would rip across the Indian political establishment in New Delhi in the form of the now infamous 'hawala scandal' of 1996. Following Lone's arrest, the police also picked up Shahbuddin Gori, an Uttar Pradesh Muslim belonging to Rampur district, who was an ISI agent posing as a student at the Jawaharlal Nehru University. Gori had organized visas for twelve Kashmiris to go to Pakistan for guerrilla training in October-November 1989. In February 1991, he had gone to Pakistan where he had met Salahuddin who gave him a letter for the Hizb chief in the valley, Master Ahsan Dar, as well as $10,000 to give to Ashfaq Hussain Lone, the deputy chief of intelligence of the outfit. While there, Gori also learnt that Dr Ayub Thukar of the World Kashmir Freedom Movement had earlier sent Rs 16.3 lakhs through another courier to Lone.
However, when Gori returned, intelligence agencies had got wind of his activities. They kept an eye on him, and when Lone came down from Srinagar to take the money and the letters, they arrested both of them. From Lone, the police recovered bank drafts worth Rs 15.5 lakhs, payable to twenty-two people in Kashmir in addition to Rs 50,000 in cash and a draft of Rs 1 lakh he had in his own name.
From Gori and Lone, the trail led to two hawala agents -- Shambhu Dayal Sharma alias Guptaji and Moolchand Shah of Bombay. Sharma's interrogation led to the arrest of S.P. Jain and his now infamous diaries listing payments made by him to a cross-section of top Indian politicians and bureaucrats.
The hawala transaction remained the most durable means of funding militancy. Despite the Central Bureau of Investigation's (CBI) efforts, till 1997 hawala operators were able to ensure that large sums of money reached the Kashmiri rebels from sources abroad. This took increasingly sophisticated turns, aided by the climate of corruption and laxity in the country. In one instance, detailed by the Kashmir police in late 1997, money from Dubai, ISI-controlled outfits like the Kashmiri American Council, and Syed Salahuddin in Pakistan, was channelled to major wholesale dealers in Mumbai and Delhi who, in turn, supplied goods to wholesalers in Srinagar. These goods were sold and their proceeds passed on to Abdul Gaffar Sofi and Assadullah Ganai of Pattan who handed it over to Mohammed Khan, the Hizb's divisional commander in north Kashmir.
Sofi, a long-time Jamaat activist, was the head of the Kashmir Medical Trust as well as the Muslim Welfare Society and had also set up a shawl export company to justify his visits to the Gulf region. In another case, Ahmeduallah Nahami of Lal Bazar, Srinagar, who was the finance chief of Tehrik-ul-Mujahideen (TuM), revealed that he had collected a total of Rs. 24.5 lakhs from Pakistan through 'hawala' transactions in Delhi of which Rs. 4.5 lakhs was for the Al Jehad Force, then receiving money through the TuM.
In Tandem with this traditional, if illegal, financial instrument militant funding also came through its modern counterpart -- the bank. A Frontline magazine expose by Praveen Swami in September 1997 showed how 'proxies and dummy bank accounts [were used] to harbour illegally obtained funds'. On 4 May, according to Swami, a 20 Grenadiers search party found Abdul Ahad, a Srinagar shopkeeper, with 12 bank drafts worth Rs. 5,95,000 issued in favour of a Sopur company, Riyaz & Co. This account was held by Riyaz Ahmed Lone who was actually an employee of Kamraz Rural Bank. Further investigations revealed more drafts, together totalling Rs. 11 lakhs. All had been purchased against cash on 24 April, and were valued at Rs. 40-50,000, though one was for Rs. 3 lakhs. Abdul Ahad told the Army that the drafts were handed over to him by the Jamaat's office chief, Qazi Ahadullah, and Ghulam Mohammed Bhatt, elected Jamaat's amir in late 1997. He said that this transaction was a routine means of giving money to Jamaat sympathizers.
Both the police and the Army handled the situation in a curious fashion. While Bhatt was arrested, there was no reference to the seizure of the drafts of Riyaz Lone. Indeed, the Army claimed he was absconding while Swamy found him working at his appointed desk in the bank. He told Frontline that he had indeed received the drafts on behalf of the Hizbul Mujahideen unit.
Another instance of the use of regular banking channels by the secessionist leadership was the proxy account held by Majid Dar for his neighbour Hurriyat leader Abdul Ghani Lone. Swami's investigation showed that large sums of money began to be deposited or withdrawn from the account from October 1994 onwards, peaking in the summer of the following year. Dar claimed that all his admissions were made under duress and that the money deposited, specially large sums of Rs 8.5 lakhs, Rs 13 lakhs and Rs 14 lakhs, were collected from the middle-class Rawalpora residents for reconstructing the Charar-e-Sharif. However, as Swami points out, he was stumped when asked to explain how the public collections came to neat round figures! Neither was he able to show that all the money he got was paid thereafter to the Charar-e-Sharif Alamdar Fund set up by the Muslim Auqaf Trust. The Central Bureau of Investigation has charged that vast sums of money were received by the Hurriyat leadership. In a formal case registered in April 1997, the agency said that Syed Ali Shah Geelani, Abdul Ghani Lone and Maulvi Abbas Ansari had accepted money from abroad in contravention of the Foreign Contributions Registration Act. The first information report against Geelani says that he received some Saudi Rial 2 million (Rs 19.2 crores) in addition to Rs 10 crores from the Kashmiri-American Council (KAC), both through hawala channels in Delhi, for the Charar-e-Sharif reconstruction fund, through his son-in-law Altaf Shah aka Fantosh.
The same charge-sheet also listed complaints against Lone for receiving money from Ghulam Nabi Fai, the exiled valley Kashmiri who runs the KAC, and against Ansari for collecting money from the Kashmiri and Pakistani expatriate communities in Kuwait and Saudi Arabia, allegedly for rehabilitating Kashmiri Muslims affected by militancy.
The CBI charged that these leaders not only received money in violation of rules, but also siphoned it off for their personal use. However, as Swami points out, the investigations have been indifferent and in some cases, downright incompetent. So far, there has been little to prove this charge, which is obviously a spin provided by the authorities to discredit militancy and its leaders, based in some instances, on the interrogation reports of captured militants. But there can be little doubt that the flow of money from abroad has been a key factor in sustaining militancy in the state.
