Enforcement Directorate probes Rs.20,000 crore hawala link in India-Iran trade, UCO Bank under scanner 

The Enforcement Directorate (ED) has begun an open enquiry under FEMA Act, in perhaps – one of the biggest hawala scam – against all those export-import (exim) companies that deals with Central Asian nations, specifically Iran and Azerbaijan.

The Mumbai team of ED has unearthed a suspected Rs.20,000 crore hawala scam – against export houses and corporate companies, owned by entities based in Iran and adjacent regions.

“Around 6-7 foreign nationals (mostly Iranians and one from Azerbaijan) visited India on student visas, took over few Chandigarh-based companies, became the directors of these companies, colluded with a nationalised bank and its officials (which is under investigation) and diverted crores of money from India to Dubai and may be to Iran,” a senior ED official told Indiatoday.in.

The ED has found out around Rs.2,000 crore parked in bank accounts of five-seven export houses of north India. These bank accounts are with a nationalised bank – UCO Bank (headquarter in Kolkata). At present, only UCO Bank facilitates transactions with Iran, mostly oil related.

The source said, “As of now, we have found evidences and linkages of around Rs.2,000 crores – which have been transacted outside the country, via UCO Bank.”

Some days back, a special team of ED officials, both from Mumbai and Indore had conducted a survey at a regional branch office of UCO Bank in Mumbai. Till now, the agency has recorded statements of at least 3-4 officials in UCO Bank.

“Prima facia, there is a clear negligence act done by these bank officials, while dealing with suspicious companies, but we suspect collusion as well. Once we get strong evidences against these bank officials who may have been colluded with those companies involved in hawala activities, case details would be handed over to the Central Bureau of Investigation (CBI) for further action”, the source said.

It is too early, but the agency suspects a system failure within UCO Bank.

In this case, the modus operandi has been very interesting. Almost a year or two back, 6-7 foreign nationals from Iran and Azerbaijan visited India on student visas. They convinced few north Indian companies to deal in Indo-Iran export and import trade.

“These Iranians created its first layer by becoming the directors of few Chandigarh-based companies. Later, spreading their wings, these Iranians with local support brought almost 70-80 companies under their network. At least 3-4 layers were created to divert the entire export remittances money from one layer to another and with the help of UCO Bank – the large chunk of money was diverted to Dubai and may be to Iran,” the ED official said.

The agency denied revealing the names of these companies. According to them, out of all those companies, many do not exist today, and some of them are quite known and efficiently operating.

“Money trail upto 3-4 layers have been found. Further beneficiaries are being identified. But the main accused are all absconding”, source said. Names of two Iranians are: Mirtagi Hadiyev and Nizami Azimov.

To increase bilateral trade, the government in April had also waived the value addition norms for exporters shipping imported items like food and pharmaceuticals to Iran.

Besides food products, India mainly exports to Iran pharmaceuticals, machinery, transport equipment, chemicals, man-made yarns and fabrics and steel. The bilateral trade between the two countries stood at $15.25 billion in 2013-14.

India is one of the biggest oil importers from Iran. Since February 2013, when the US blocked payment channels to Iran for its nuclear programme, India has been paying 45 per cent of its Iran oil bill in rupees through a UCO Bank branch in Kolkata.

In fact, fe exports benefits/ incentives under the Foreign Trade Policy, 2009-14, at par with export proceeds realised in freely convertible currw months back, the Director General of Foreign Trade (DGFT) has said in a notification that “Exports proceeds against exports to Iran realised in Indian rupees are permitted to availency”.

Interestingly, there are about 8,000 Iranian students studying in India. Moreover, India provides 67 scholarships every year to Iranian students under ITEC, ICCR, Colombo Plan and IOR-ARC schemes.