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By John Helmer, Moscow

Suleiman Kerimov has applied to the Prosecutor-General in Moscow with a request for an investigation of allegations that he was at one time involved in money-moving operations of Hassan Ali Khan, an Indian hawaladar. Breaking the silence of his spokesmen at the Federation Council, where Kerimov is a senator representing his native Dagestan, and at the Moscow office of his Nafta Moskva holding, Kerimov’s New York spokesman, Eliot Lauer, has announced:

“Mr. Kerimov is outraged by the reports that appeared in the Indian media last month regarding alleged connections between Hasan Ali Khan and Mr. Kerimov. In fact, he has filed a complaint to the Russian Prosecutor’s Office asking the Office to investigate the accusations made in those media reports with the Indian authorities. The reports that appeared in the Indian media last month contained unverified and untrue statements regarding Mr. Kerimov.”

Hasan Ali Khan was arrested at midnight on March 7 by agents of the Enforcement Directorate (ED) of the Indian Ministry of Finance. He was then arraigned before a Mumbai court on March 9, when the judge M L Tahalivani was critical of the ED for its lack of preparation of the indictment against Khan. Subsequent court proceedings in Mumbai have allowed Khan’s release on bail.

On May 6, the Mumbai court received from government prosecutors and made public the 900-page charge sheet prepared by the ED. In these documents, the Indian government is charging Khan and his associates with massive tax evasion and money laundering. Several billions of dollars are allegedly involved through Khan’s hawalla money-broking network.

What exactly hawalla is as a system for money-laundering, and how Kerimov allegedly got involved in it, we will come to in a moment.

On May 9, a 3-judge panel of the Indian Supreme Court issued an opinion again criticizing the ED and government prosecutors for appearing to keep secret the charge-sheet from other officials in the government and in the courts, who are required to monitor big money-laundering cases, before it was lodged in court.

Indian sources, the Indian press, and now Lauer confirm that Kerimov’s name is identified in the charge-sheet and in the proceedings against Khan. Indian press reports preceding the filing of the charge-sheet and Russian media which repeated and commented on the allegations, have mentioned at least one private airplane ride the two took to London for business discussions; $3 billion in cash Khan allegedly moved into Russia; and a falling-out between Khan and Kerimov over an $8 million debt Kerimov still claims from Khan, and Khan apparently claims as payment for services rendered to Kerimov.

Lauer was asked to clarify Kerimov’s response to the charge-sheet, but for the time being he is refusing to do that. Lauer won’t say if Khan was ever aboard Kerimov’s jet, but he does acknowledge that Kerimov and Khan knew and did business with each other, and that the latter owes Kerimov money. According to Lauer’s statement this week, “my client’s limited experience with Hasan Ali Khan, more than 7 years ago, resulted in the awareness that Ali Khan was not the person he had represented himself to be, a prominent Indian businessman with an interest to invest into projects in Russia. We deny ever having strong ties to Hasan Ali Khan. Indeed, we have had no dealings with him since that introductory period over 7 years ago.”

If Kerimov had ties to Khan, but not “strong ties”, sometime before 2004, Lauer is reported to have to have told an Indian newspaper that they “left us with an unpaid claim and the awareness that he [Khan] was not the person he had represented to be.” Does Kerimov’s claim amount to $8 million? Lauer was asked. He has not responded.

So what sort of a person was Khan and why did Kerimov do business with him? What jurisdiction does Kerimov think Russian law enforcers have over the courts of India, and the charges linking Kerimov to Khan? Attorney Lauer remains silent.

Indian investigators have left a record of their enquiries into Kerimov’s businesses in many parts of the world, including Moscow. It is likely they have reached Kerimov or his US lawyer, and the Russian Prosecutor-General as well. But asked if he or Kerimov have responded to questions from the Indian authorities, including the Enforcement Directorate, Lauer won’t say – except to threaten reporters for investigating the case.

Indian sources claim the ED investigation isn’t over yet, and that Khan’s questioning will continue, as will the investigation of his hawalla network. That system, operated for hundreds of years through brokers bound together by their word of honour, generates no credit or debt papers, as these obligations are formalized in conventional money-transfer and western banking. Without papers and inter-bank or foreign exchange receipts, the transfers avoid money-laundering checks and other forms of government regulation.

The advantages are obvious for Khan, if, as Kerimov is alleging against him, a large sum of money was pocketed when it shouldn’t have been. Khan’s value as a hawaladar to those who were aiming to move large sums of money internationally for transactions they wished to keep secret, is also obvious. Whether Kerimov took advantage remains to be proven in the Indian courts.

An investigative source claims that Khan moved white and black funds from an account he operated in UBS bank from Switerland into Russia. Where this money came from is up to Khan to testify, and the ED to prove. Reportedly also according to an investigator, Khan also moved more money out of Russia than he had put in. One line of enquiry, according to an investigative source, is “Project Leo”. That is alleged to be a plan for the Indian government-owned Oil and Natural Gas Corporation (ONGC) to ally themselves with Kerimov in a bid to buy oil assets and reserves belonging to Russia’s second largest producer and exporter, LUKoil controlled by Vagit Alekperov. That commercial target would have required $2 billion, if the takeover had materialized. Noone is admitting at this point that the scheme was anything but a gleam in Khan’s eye. But there is no stain on Kerimov’s reputation if he had tried to buy Alekperov out on commercial terms.

Nothing untoward either for ONGC to try to build Russian support for acquiring Russian oil assets. In 2001, ONGC had paid about $1.7 billion for a 20% shareholding in the Sakhalin-1 oilfield concession, currently controlled by ExxonMobil (30%) and Rosneft (20%). There have been commercial discussions between ONGC, Rosneft, and Gazprom to swap this stake for deliveries of liquefied natural gas to India. In 2008, as reported here, ONGC paid ₤1.3 billion for full takeover of Imperial Energy, which owns oilfield prospects in the Tomsk region. In December of 2010, ONGC signed a fresh agreement with Sistema, owned by Vladimir Yevtushenkov, for oil exploration and joint ventures. Sistema controls mid-size western oil producer Bashneft, and has a 49% stake in the conflict-prone Russneft.

ONGC and the Indian Petroleum and Natural Gas Ministry claim they own participations in 35 projects with 50 blocks in 17 countries, with the long-term target of acquiring 60 million metric tonnes per annum of oil and gas overseas, calculated on a shareholding basis, by 2025. Why Kerimov, who isn’t so well-endowed in oil assets, should be so reticent about confirming the help he too may have been ready to render Russia’s strategic Indian ally, when Yevtushenkov has made a public affirmation of it, isn’t understood. According to a source in Mumbai close to the investigation, “if there was an oil deal, or something to do with ONGC, they [ED] want to know.”

The Indian reports, to which attorney Lauer objects, as well as the ED charges, refer to a $3 billion sum in the alleged relationship between Kerimov and Khan. The Indian sources are not disclosing where this money came from before it landed in Khan’s hands, if it landed there at all. Kerimov’s position appears to be that if Khan offered to lend him the money inside Russia, the transaction never went through, and Khan welshed on his undertakings.

“We have had no dealings with him since the introductory period,” Lauer says of Khan. – “What dealings occurred between the two during what you call the ‘introductory period’, and when was that?” Lauer was asked. He isn’t saying.

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