The Evolving Terror Funding Matrix: Pakistan, ISI And D Company and Its Global Criminal Web
23 Nov 2022 12:46:25
An intricate network of cooperation between terror outfits, local tribal lords, smugglers and corrupt politicians has emerged in South Asia to diversify and conceal the revenues produced through illicit trade. Instead of struggling to find donors to cater to their causes, most outfits have started operating in the form of a mafia infrastructure. These organizations or groups have resorted to innovative ways to conceal their illicit businesses and their financial profits through investment in various enterprises such as real estate, transportation, shipping or construction companies, to name a few.
The contribution of crime-terror hybrid organizations has led to further expansion of the terror funding trade. These organizations fund terror operations through their criminal activities. Pakistan-based D Company and the Haqqani network are the best examples of these organizations. Most of these crime syndicates thrive through extortions, violence, kidnappings and even assassinations while re-routing funds through formal channels like charities or legitimate business enterprises.
It is clear, most money laundering cases have their origins in the covert support provided to the Mujahideen in Afghanistan, especially in the eighties. The informal channels stem from the mutual understanding for support of the Mujahideen cause, which is not limited to a particular region now but extends to a global network for waging jihad.
As one traces some important timelines of Pakistan`s terror funding against India and the attendant deniability of its activities, it is important to mention the emergence of institutions like the Bank of Credit and Commerce International (BCCI). For several years, Pakistan's Inter-Services Intelligence (ISI) allegedly funnelled money to the Mujahideen with the aid of the BCCI.
The BCCI business model
BCCI was founded by Agha Hasan Abedi, a Pakistani businessman. The primary purpose of the organization was ostensibly to fund armed groups abroad. According to various reports, BCCI was also responsible for transferring funds and arms to the Iran-Contra arms deal. Registered in Luxembourg and operating out of Karachi and London, the organization built an enterprising network, encompassing all operations vital to its narcotic trafficking trade. This meant, shipping all the illicit goods through their own vessels, insuring the goods through their own banks and associated companies, providing security during the transportation of the goods and bribing the officials at all border points en route.
BCCI not only controlled Karachi port and its customs operations but supplied arms, funds and required essentials to the Mujahideen. It was understood that the BCCI had set up funding for the ISI to ship narcotics to the West and covertly aid the Mujahideen in their narcotics trafficking as well. By then, a money flow infrastructure had been built among the terrorist organizations, front companies and the financial industry to meet their self-serving cause.
According to the NARCO-Insecurity Inc. a book published by the Defence Education and Enhancement Programme (DEEP) of NATO "to analyse the growth of the narcotics industry stemming from Afghanistan as well as Pakistan and the nexus that has formed between narcotics trafficking and terrorism/extremism", from the 1970s to 1980s the BCCI had set up a quid pro quo approach with all their clients. It would provide unsecured loans to its wealthy clients in exchange for access to the global markets. Their clients included a Saudi financier who received a loan of USD 500 million from BCCI and in return was entrusted to buy a controlling interest on BCCI`s behalf in two American banks. This was a clear violation of international banking regulations.
Very soon, the organization became famous for providing unsecured loans to wealthy investors in the Middle East.
Late Iraqi strongman Saddam Hussein, another client of BCCI, was able to utilize their service to transfer most of his oil revenue to investments globally. This also included the clandestine funding of politically volatile projects such as Pakistan’s nuclear programme in the 80s, when the former president of Pakistan, Ghulam Ishaq Khan was serving as Pakistan`s finance minister.
The BCCI business model played a crucial role in paving way for other institutions which evolved and emulated similar approaches in regard to terror funding.
D Company operations
In the case of hybrid terror-crime organizations, D Company too followed mimicked a “mafia-style” model as seen in the case of BCCI. The D Company model was carried through sports match-fixing, extortions of businesses and even murders, utilizing criminal activities.
Son of a police constable, Dawood Ibrahim started his venture in Mumbai by smuggling gold and rising in ranks in the criminal world through his nefarious activities. His operations expanded to drug trafficking and his ownership of several shipping and transportation lines facilitated him in smuggling heroin from Pakistan to India via the Wagah-Attari border in the 1980s. The smuggled drugs were usually concealed in the fruit shipments, arriving in India or in jute gunny sacks arriving at maritime ports in Maharashtra and Gujarat.
With his operations coming to light, Dawood fled to Dubai. Dubai provided a lucrative opportunity to turn a street gang into a global crime syndicate due to its 'business-friendly' policies. Dawood was able to find a cover for his international smuggling activities as the UAE became the epicentre for D Company operations for some time, according to NARCO-Insecurity Inc.
D Company proved, it wasn’t just operating as a criminal syndicate but was also an organization supporting and committing terrorist acts. Under the leadership of Dawood, his brother Anees and his second-in-command Tiger Memon, D Company was responsible for the Mumbai bombings in 1993. Through the smuggling routes of the D Company, arms, ammunition and safe passage were provided to the operatives expected to carry out the terror attack. Javed Patel, another operative of the D Company, orchestrated a series of car bombings targeting the Bombay Stock Exchange, Air India Building, Plaza Cinema and other high-population density areas.
Post the terror attacks in Mumbai, Dawood sought protection from the Pakistani ISI, as per public NATO documents. ISI is known to support various entities, terror outfits or rackets which would benefit their well-articulated "Gazwa- i- Hind" (bleed India with thousand cuts) strategy against India and which will also allow them to exert their influence in the South Asian regions by all means possible.
This is also one of the reasons why Dawood proved to be effective for the agency. In order to be indispensable to ISI, he was expected to fund ISI-funded terror organizations while he received protection from the agency in exchange. This arrangement served two purposes, firstly it provided a front for ISI`s dealings with terror outfits and secondly, for moving the funds required to support the outfits covertly.
Anti-India operations
Since Dawood moved to Karachi, the D Company syndicate has expanded incredulously. He is said to have invested over USD $28 billion in assets in Karachi alone and has diversified his businesses in several countries such as India, Morocco, the UK, UAE, Switzerland, Hong Kong, Thailand, Sri Lanka, Italy and France. Much of his assets operate legitimately and serve as a cover for his illicit trade.
For years, ISI denied Dawood`s presence in Pakistan. However, Dawood`s presence in Karachi was confirmed through an official Pakistani government document (SRO), declaring the order of asset freeze, travel ban and arms embargo on Dawood`s ventures.
Since 2016, the ISI has been aggressively and covertly operating in activities for destabilizing India. There have been many Pakistani sleeper cells active in India, owing to the D Company's affiliations in India. Arms transportation and terror funding are becoming more evident through the hawala channels. According to the police authorities, several ISI-trained components are being tasked to carry out reconnaissance missions against India.
Recently, the D Company- ISI hand was exposed through various crackdowns conducted by Indian security authorities on terror modules discovered in Delhi and the adjoining National Capital Region.
On September 22, 2022, an alleged ISI agent Lal Mohammed was shot dead in Nepal. He delivered counterfeit Indian currency from Nepal, Pakistan and Bangladesh to India, Indian authorities said. Lal used to provide logistical support to ISI and had links to Dawood Ibrahim and his D Company.
Apart from D Company`s own terrorist activities, the organization has maintained relations with other terror outfits and even made donations to them through their front companies.
In 1991, Dawood made arrangements through the Taliban to meet with Al Qaeda for a narcotics partnership in East Africa. Al Qaeda paid Ibrahim to access their narcotics in East Africa. Anees Ibrahim on the other hand secured the Al Qaeda investments by purchasing large shares of shipping industries in East Africa and UAE. The Al Qaeda drug money was also laundered out of Afghanistan through the D company.
In 2002, links between D Company and Lashkar e-Taiba (LeT) emerged. It was established, and D Company had funded LeT for terror activities in Gujarat. Many donations in name of front companies for LeT were made in form of 'zakat' (charity). In collaboration with ISI, Dawood and Tiger Memon extended their support to a militant group, Jammu and Kashmir Islamic Front (JKIF).
D Company was also exposed for providing seed money to a Bangladeshi terror group called Shahdat-e-Al-Hikma, whose operative was arrested by NIA for a bombing in Khagragarh.
Global extortions
Like the Haqqani network, the D Company also relies on extortions for revenues. A system of control is established in the areas where these organizations operate. A certain portion of funds received by various infrastructure projects or ventures is expected to pay a portion of their funds to D Company. This serves as an equivalent to tax or toll, to operate in the areas dominated by the D Company syndicate. This has created a situation where various projects which try to reduce the influence of such crime-terror hybrid networks are also forced to fund them, authoritative documents have revealed. This strategy is used to profit from the narcotics trade as well. the smugglers are also expected to pay for protection to move their goods in the Dawood domain.
In one of the cases involving D Company`s extortion activities, Dawood`s brother Anees sent hired muscle to extort USD13,600 from a hotelier in Dubai. Having received the money, Anees fled to India to set up his own business. However, the same hotelier continued to be threatened by Anees`s men, who now demanded USD 68,000. Later in 2018, Jabir Moti, an important lieutenant of D Company was arrested for the very charge.
Recently, five of D Company`s operatives were arrested by the Mumbai Crime Branch Anti Extortion Cell in another extortion case. The incident came to light, months after Dawood’s close aide Salim Fruit was arrested. Salim was accused of extorting Rs 62 lakhs and he also maintained ties with Chota Shakeel, a known underworld figure, and another criminal Riyaz Bhati. Salim Fruit is the brother-in-law of Shakeel who was arrested by India's National Investigation Agency (NIA) in August 2022.
On 26 September 2022, Riyaz Bhati was also arrested in an extortion case. Besides the henchmen employed for extortion and other criminal activities, Dawood has several agents who make investments on his behalf globally. A known agent for the D Company is Rasheed Saeed who was reported to handle the revenues coming to the company under Chhota Shakeel. Saeed`s cover profile has been the the managing director of a Mumbai based events company that is known for hosting promotional events for Bollywood films. Tiger Memon continues to be a partner in a firm that deals in steel exports.
Umar Farooq Zahoor, the former chief executive of a large group, was also known to handle Dawood`s investments in various African countries. In order to distance his connection with the D Company, it is plausible that Zahoor invested Dawood`s money in the group. In such cases, due to the complexities of the informal and formal channels used, such transactions and activities remain unidentifiable, posing a challenge to be traced.
Terrorists and criminal organisations are often drawn to unregulated remittance systems due to which hawala and cryptocurrency make appealing choices for maintaining anonymity. If the channels for such systems are regulated or diminished, one can expect terror organizations to take greater risks, thereby exposing themselves to prosecution.
There is an urgent global requirement to cut terror funding to contain terror activities in the South Asian region, through mutual understanding and collective responsibility between nations. But that seems a tall order.
(The author “Aparna Rawal” is a research analyst, specializing in AF/Pak region and counter-terrorism. Views are personal)
(This article was earlier published in south Asia monitor and taken Special permissions taken from the Author)
The contribution of crime-terror hybrid organizations has led to further expansion of the terror funding trade. These organizations fund terror operations through their criminal activities. Pakistan-based D Company and the Haqqani network are the best examples of these organizations. Most of these crime syndicates thrive through extortions, violence, kidnappings and even assassinations while re-routing funds through formal channels like charities or legitimate business enterprises.
It is clear, most money laundering cases have their origins in the covert support provided to the Mujahideen in Afghanistan, especially in the eighties. The informal channels stem from the mutual understanding for support of the Mujahideen cause, which is not limited to a particular region now but extends to a global network for waging jihad.
As one traces some important timelines of Pakistan`s terror funding against India and the attendant deniability of its activities, it is important to mention the emergence of institutions like the Bank of Credit and Commerce International (BCCI). For several years, Pakistan's Inter-Services Intelligence (ISI) allegedly funnelled money to the Mujahideen with the aid of the BCCI.
The BCCI business model
BCCI was founded by Agha Hasan Abedi, a Pakistani businessman. The primary purpose of the organization was ostensibly to fund armed groups abroad. According to various reports, BCCI was also responsible for transferring funds and arms to the Iran-Contra arms deal. Registered in Luxembourg and operating out of Karachi and London, the organization built an enterprising network, encompassing all operations vital to its narcotic trafficking trade. This meant, shipping all the illicit goods through their own vessels, insuring the goods through their own banks and associated companies, providing security during the transportation of the goods and bribing the officials at all border points en route.
BCCI not only controlled Karachi port and its customs operations but supplied arms, funds and required essentials to the Mujahideen. It was understood that the BCCI had set up funding for the ISI to ship narcotics to the West and covertly aid the Mujahideen in their narcotics trafficking as well. By then, a money flow infrastructure had been built among the terrorist organizations, front companies and the financial industry to meet their self-serving cause.
According to the NARCO-Insecurity Inc. a book published by the Defence Education and Enhancement Programme (DEEP) of NATO "to analyse the growth of the narcotics industry stemming from Afghanistan as well as Pakistan and the nexus that has formed between narcotics trafficking and terrorism/extremism", from the 1970s to 1980s the BCCI had set up a quid pro quo approach with all their clients. It would provide unsecured loans to its wealthy clients in exchange for access to the global markets. Their clients included a Saudi financier who received a loan of USD 500 million from BCCI and in return was entrusted to buy a controlling interest on BCCI`s behalf in two American banks. This was a clear violation of international banking regulations.
Very soon, the organization became famous for providing unsecured loans to wealthy investors in the Middle East.
Late Iraqi strongman Saddam Hussein, another client of BCCI, was able to utilize their service to transfer most of his oil revenue to investments globally. This also included the clandestine funding of politically volatile projects such as Pakistan’s nuclear programme in the 80s, when the former president of Pakistan, Ghulam Ishaq Khan was serving as Pakistan`s finance minister.
The BCCI business model played a crucial role in paving way for other institutions which evolved and emulated similar approaches in regard to terror funding.
D Company operations
In the case of hybrid terror-crime organizations, D Company too followed mimicked a “mafia-style” model as seen in the case of BCCI. The D Company model was carried through sports match-fixing, extortions of businesses and even murders, utilizing criminal activities.
Son of a police constable, Dawood Ibrahim started his venture in Mumbai by smuggling gold and rising in ranks in the criminal world through his nefarious activities. His operations expanded to drug trafficking and his ownership of several shipping and transportation lines facilitated him in smuggling heroin from Pakistan to India via the Wagah-Attari border in the 1980s. The smuggled drugs were usually concealed in the fruit shipments, arriving in India or in jute gunny sacks arriving at maritime ports in Maharashtra and Gujarat.
With his operations coming to light, Dawood fled to Dubai. Dubai provided a lucrative opportunity to turn a street gang into a global crime syndicate due to its 'business-friendly' policies. Dawood was able to find a cover for his international smuggling activities as the UAE became the epicentre for D Company operations for some time, according to NARCO-Insecurity Inc.
D Company proved, it wasn’t just operating as a criminal syndicate but was also an organization supporting and committing terrorist acts. Under the leadership of Dawood, his brother Anees and his second-in-command Tiger Memon, D Company was responsible for the Mumbai bombings in 1993. Through the smuggling routes of the D Company, arms, ammunition and safe passage were provided to the operatives expected to carry out the terror attack. Javed Patel, another operative of the D Company, orchestrated a series of car bombings targeting the Bombay Stock Exchange, Air India Building, Plaza Cinema and other high-population density areas.
Post the terror attacks in Mumbai, Dawood sought protection from the Pakistani ISI, as per public NATO documents. ISI is known to support various entities, terror outfits or rackets which would benefit their well-articulated "Gazwa- i- Hind" (bleed India with thousand cuts) strategy against India and which will also allow them to exert their influence in the South Asian regions by all means possible.
This is also one of the reasons why Dawood proved to be effective for the agency. In order to be indispensable to ISI, he was expected to fund ISI-funded terror organizations while he received protection from the agency in exchange. This arrangement served two purposes, firstly it provided a front for ISI`s dealings with terror outfits and secondly, for moving the funds required to support the outfits covertly.
Anti-India operations
Since Dawood moved to Karachi, the D Company syndicate has expanded incredulously. He is said to have invested over USD $28 billion in assets in Karachi alone and has diversified his businesses in several countries such as India, Morocco, the UK, UAE, Switzerland, Hong Kong, Thailand, Sri Lanka, Italy and France. Much of his assets operate legitimately and serve as a cover for his illicit trade.
For years, ISI denied Dawood`s presence in Pakistan. However, Dawood`s presence in Karachi was confirmed through an official Pakistani government document (SRO), declaring the order of asset freeze, travel ban and arms embargo on Dawood`s ventures.
Since 2016, the ISI has been aggressively and covertly operating in activities for destabilizing India. There have been many Pakistani sleeper cells active in India, owing to the D Company's affiliations in India. Arms transportation and terror funding are becoming more evident through the hawala channels. According to the police authorities, several ISI-trained components are being tasked to carry out reconnaissance missions against India.
Recently, the D Company- ISI hand was exposed through various crackdowns conducted by Indian security authorities on terror modules discovered in Delhi and the adjoining National Capital Region.
On September 22, 2022, an alleged ISI agent Lal Mohammed was shot dead in Nepal. He delivered counterfeit Indian currency from Nepal, Pakistan and Bangladesh to India, Indian authorities said. Lal used to provide logistical support to ISI and had links to Dawood Ibrahim and his D Company.
Apart from D Company`s own terrorist activities, the organization has maintained relations with other terror outfits and even made donations to them through their front companies.
In 1991, Dawood made arrangements through the Taliban to meet with Al Qaeda for a narcotics partnership in East Africa. Al Qaeda paid Ibrahim to access their narcotics in East Africa. Anees Ibrahim on the other hand secured the Al Qaeda investments by purchasing large shares of shipping industries in East Africa and UAE. The Al Qaeda drug money was also laundered out of Afghanistan through the D company.
In 2002, links between D Company and Lashkar e-Taiba (LeT) emerged. It was established, and D Company had funded LeT for terror activities in Gujarat. Many donations in name of front companies for LeT were made in form of 'zakat' (charity). In collaboration with ISI, Dawood and Tiger Memon extended their support to a militant group, Jammu and Kashmir Islamic Front (JKIF).
D Company was also exposed for providing seed money to a Bangladeshi terror group called Shahdat-e-Al-Hikma, whose operative was arrested by NIA for a bombing in Khagragarh.
Global extortions
Like the Haqqani network, the D Company also relies on extortions for revenues. A system of control is established in the areas where these organizations operate. A certain portion of funds received by various infrastructure projects or ventures is expected to pay a portion of their funds to D Company. This serves as an equivalent to tax or toll, to operate in the areas dominated by the D Company syndicate. This has created a situation where various projects which try to reduce the influence of such crime-terror hybrid networks are also forced to fund them, authoritative documents have revealed. This strategy is used to profit from the narcotics trade as well. the smugglers are also expected to pay for protection to move their goods in the Dawood domain.
In one of the cases involving D Company`s extortion activities, Dawood`s brother Anees sent hired muscle to extort USD13,600 from a hotelier in Dubai. Having received the money, Anees fled to India to set up his own business. However, the same hotelier continued to be threatened by Anees`s men, who now demanded USD 68,000. Later in 2018, Jabir Moti, an important lieutenant of D Company was arrested for the very charge.
Recently, five of D Company`s operatives were arrested by the Mumbai Crime Branch Anti Extortion Cell in another extortion case. The incident came to light, months after Dawood’s close aide Salim Fruit was arrested. Salim was accused of extorting Rs 62 lakhs and he also maintained ties with Chota Shakeel, a known underworld figure, and another criminal Riyaz Bhati. Salim Fruit is the brother-in-law of Shakeel who was arrested by India's National Investigation Agency (NIA) in August 2022.
On 26 September 2022, Riyaz Bhati was also arrested in an extortion case. Besides the henchmen employed for extortion and other criminal activities, Dawood has several agents who make investments on his behalf globally. A known agent for the D Company is Rasheed Saeed who was reported to handle the revenues coming to the company under Chhota Shakeel. Saeed`s cover profile has been the the managing director of a Mumbai based events company that is known for hosting promotional events for Bollywood films. Tiger Memon continues to be a partner in a firm that deals in steel exports.
Umar Farooq Zahoor, the former chief executive of a large group, was also known to handle Dawood`s investments in various African countries. In order to distance his connection with the D Company, it is plausible that Zahoor invested Dawood`s money in the group. In such cases, due to the complexities of the informal and formal channels used, such transactions and activities remain unidentifiable, posing a challenge to be traced.
Terrorists and criminal organisations are often drawn to unregulated remittance systems due to which hawala and cryptocurrency make appealing choices for maintaining anonymity. If the channels for such systems are regulated or diminished, one can expect terror organizations to take greater risks, thereby exposing themselves to prosecution.
There is an urgent global requirement to cut terror funding to contain terror activities in the South Asian region, through mutual understanding and collective responsibility between nations. But that seems a tall order.
(The author “Aparna Rawal” is a research analyst, specializing in AF/Pak region and counter-terrorism. Views are personal)
(This article was earlier published in south Asia monitor and taken Special permissions taken from the Author)