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  • Writer's pictureLAWGIC STRATUM

The Hawala Scam: Overview

Author: Ishita Bahuguna

Probably one of the rarest of the rare moment in the history of Indian Polity where almost all the demagogues of top-notch partiescame together, not because of some kind of coalition or for the well-being of the public (this is still a dream which is yet to come true), but for a cause. Social cause? Economic cause? Intellectual cause? Oh no, mates, we are talking about “Politics” here and these are the last causes that serve as an area of interest to our dear demagogues. The cause was quite paradoxical to the position they hold (as always). It was to hinder cunningly, the official proclamation of their names as offenders by the Supreme Court, to get a clean-chit and save their positions in one of the most scandalous scams that have ever happened in the history of the world, The Hawala Scam of 1991. The word Hawala's basic meaning is Trust. Hawala is an illegal and informal way of transferring physical money from country to country.

Suppose there is a person name Kabir who is illegally living and working in Canada. His family lives in Delhi, India and also, he was the only income source to his family. In normal cases, if Kabir would have been approved by the legal authorities for living and working in Canada then he simply would have transacted the money to his family through the bank. But since he is an illegal migrant, he can’t do so because of the fear of getting caught by the legal authorities. Now, the question arises how will he go to send or transfer money to his family? And that’s exactly where Kabir needed a channel called Hawala, which will help him in transferring the money to his family. Letus try to comprehend the entire process of unlawfully transferring physical money in steps.

Step 1. Kabir contacts a Hawala agent, which isalso known as Hawaladar, in Canada and hands him, let us assume 2 lakh rupees and give him a password.

Step 2. The hawala agentin Canada will then contact the hawala agent in Delhi and will ask him to pay Kabir’s family 2 lakh rupees.

Step 3. Kabir’s family would have already been informed by Kabir about the password.

Step 4.Now, the hawala agent in Canada owes money to the hawala agent in Delhi which they will settle, according to the rules of Hawala Channel, among themselves.

The money owes by the hawala agent in Canada got nothing to do with Kabir as in between the process Kabir had given the charges or commission they generally charge for the illegal transfer of physical money. The proportion of paying the commission may differ as Kabir might have paid half of the amount of commission in Step 1 andthe rest after the completion of the transaction.

One of the reasons why it was and still considered conveniently the best route is because the identities of the parties are completely safe, there isn’t a need forany kind of identity card, PAN card, etc.

Earlier it was said that the Hawala Scam of 1991 is considered one of the biggest scandals the world has ever witnessed. Why? Because the scammers were none other than our legislators, the one who the public have bestowed their trust to subside corruption and unlawfulness. More than 115 so-called “public servants” were involved in this illicit act.

The illicit act was disclosed and exposed in March 1991, when the two Kashmiri militants Shahbuddin Ghauri and Ashfaq Hussain were apprehended by the police. While probing the offenders it led to the disclosure of some other names as well, who were high-profile hawala agents Shambhu Dayal Sharma and Moolchand Shah but the main point is they aren’t the leaders. The leaders of this entire hawala channels or chain were yet to find and after thorough interrogation conducted by CBI from Sharma and Shah, theprominent names during the inquest were divulged: The Jain Brothers, N.K. Jain, S.K. Jain.The police did raid in each of the Jain Houses and there they found many unfolded aspects. They found that the scam was the US $18 Million (Rs 650 million). They found records of the sum of money given to those 115 politicians.

Since every movie has its hero, the same scenario applies here. Vineet Narain, a journalist by profession and the hero of the Hawala Scam 1991 who again in 1993 brought the scam in limelight by filing a PIL in the Supreme Court demanding a thorough investigation in the Hawala Scam. After persistently compelling Vineet Narain on taking the case back, Justice Venkatchelliah at last filed the case and ordered the CBI to take the Jain Brothers under custody. After a lot, many confessions didby the Jain Brothers, the Supreme Court Judges, Justice Verma, and Justice Sen bethought that the given evidence wasnot enough against those politicians and bestowed all those 115 a clean chit.

In between this time, Vineet Narain had produced a report in his monthly Hindi video magazine name Kalchakra which was about the Hawala Scam and how it worked. At first, the program got blocked by Indian Censor for almost 3 months because according to them the program was inappropriate for the public but then at last it was released in November 1993, all thanks to the then-new Justice of India B. Lentin.






Edited by Prawin Subash K, Senior editor, Lawgic Stratum.

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