‘Poor police resources, weak laws have allowed Dawood to funnel millions into Mumbai property'

Police officials are warning that new United States sanctions on two key lieutenants of gang-lord Dawood Ibrahim Kaskar, announced by the Treasury Department on Tuesday, are unlikely to have a significant impact on South Asia's largest organised crime cartel.

Shakeel Ahmad Sheikh, also known as Chhota [‘Little'] Shakeel, and Ibrahim “Tiger” Memon — have been sought by the police in India since 1993 for their role in over a hundred violent crimes, most notably the 1993 serial bombings in Mumbai.

The Treasury Department notification, interestingly, appears to bear out India's long-standing charges that Memon is in Pakistan — recording that he travels on a passport issued by that country, number AA762402.

The sanctions prescribe harsh penalties for U.S. entities dealing with the two men or organisations they control, and allow for their assets to be seized.

Though the U.S. had imposed sanctions on Kaskar himself in 2003, the Indian and international police forces have not succeeded in bringing a single prosecution against his cartel, known as the D-Company. India's police say they lack the investigative resources and appropriate legal frameworks to address the growing threat.

Narcotics operations

Meanwhile, the D-Company's narcotics operations, running heroin extracted from opium grown in Afghanistan and Pakistan's northwest, have expanded dramatically — and with it, multi-million dollar investments in property in India's commercial capital.

“Every second day,” a senior Mumbai Police official told The Hindu, “We listen in to the D-Company discussing investments in Mumbai real estate.” He said much of the syndicate's earnings from narcotics trafficking is ploughed into property in Mumbai's suburbs — using cash, brought in through hawala networks that link the city to Karachi and Dubai. Property deals in the suburbs, as elsewhere in India, are routinely under-valued. Frontmen for the cartel then use the cash to buy property, especially those whose value is down, because they are under litigation.

Funds laundered through the sale of these property, an Indian financial intelligence expert said, were then routed to the United Arab Emirates and the West as legitimate investments. “London has become the new Dubai for the D-Company,” the officer said. “Last year, we had fairly credible reports that Kaskar's brother had made a killing on gold arbitrage in London, but could never find hard evidence.”

Singapore-based financial expert Ryan Clarke has estimated Kaskar's own worth at $430 million. Indian intelligence sources claim that the D-Company's total assets could run close to twice as much, and it likely handles around $100 million a year of heroin — though there is no way of assessing the accuracy of these estimates.

Though the U.S. sanctions have been effective against South American drug cartels enmeshed in the banking system, India's weak financial regulatory apparatus means the D-Company has largely been able to evade these checks.

India has few systems in place to register hawala dealers and transactions, and organised crime cartels find it easy to conceal remittances in the midst of multi-million dollar flows generated by businesses and expatriates. And the country is yet to proscribe the domestic hawala system, known as angariya, which is used by traders across the country — making it easy to move money within the country once it arrives. This and the opaque nature of the property market have rendered policing ineffective.

Efforts to crack down on the alleged frontmen for the cartel have met with little success. In 2008, the Mumbai Police initiated a rare criminal prosecution involving a cartel-controlled property in Malad neighbourhood. Property dealer Ibrahim Atharwala and Shaikh's brother-in-law, Mohammad “Bhaijan” Arif, were among eight men accused of seeking to buy an apartment using the D-Company funds. But the police had little hard financial evidence to back their claims — and witnesses, with just one significant exception, turned hostile.

Low-level operatives of the D-Company are still targeted by the police. In January, for example, the Uttar Pradesh police arrested Rua'ab Ali, a Basti resident, alleged to have supplied weapons to the D-Company hit-men who attempted to assassinate Mumbai property magnate Manish Dholakia last year, allegedly after a deal went sour.

Not in a single case, though, have the police been able to seize assets purchased by the D-Company or its frontmen after 1993.

Mounting frustration

Experts say the mounting pressure from the U.S. against the D-Company comes from the realisation that its narcotics operations are funding terrorist operations across the region. In an October 2010 paper, analyst Gretchen Peters said: “Organized crime — and specifically the opium trade —has dramatically aggravated, prolonged and reshaped the conflict in Afghanistan.” She noted that the Pakistan-based jihadist groups, too, significantly profited from the business.

In a May 2009 operation in Helmand, for example, NATO and Afghan troops seized 92 tonnes of heroin, opium, hashish and poppy seeds, the second largest drug-haul of all time.

Evidence of the D-Company's role in these operations surfaced in 2003, when the Treasury Department sanctioned Kaskar, declaring that his “syndicate's smuggling routes from South Asia, the Middle East and Africa are shared with Osama bin Laden and his terrorist network.” “A financial arrangement was reportedly brokered to facilitate the latter's usage of these routes,” it said adding that the gang-lord travelled in Afghanistan in the 1990s “under the protection of the Taliban.”

However, the sanctions have done little to stem Kaskar's activities — much like the Afghan and Pakistani jihadists who operate outside the banking system, and use fake passports to evade travel restrictions.

Pakistan's stand

Pakistan has doggedly refused to crack down on the D-Company, and insists that neither Kaksar nor his lieutenants live on its soil.

In a 2001 report, though, eminent journalist Ghulam Hasnain reported on the gang-lord's ostentatious lifestyle in Karachi, saying he lived like a king.

“Home,” Mr. Hasnian wrote of Kaskar, “is a palatial house spread over 6,000 square yards, boasting of a pool, tennis courts, a snooker room and a private, hi-tech gym. He wears designer clothes, drives top of the line Mercedes' and luxurious four-wheel drives, sports a half-a-million rupee Patek Philippe wristwatch, and showers money on starlets and prostitutes.”

In a recent interview to New Delhi-based NDTV, Pakistan's former military ruler Pervez Musharraf said the gang-lord enjoyed mass support in Pakistan.

“They think that he did a very good job,” General Musharraf said. “In Gujarat, they killed 3,000 Muslims. Therefore, Dawood Ibrahim reacted. So he is held in high esteem.”

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