India’s financial A.Q. Khan network

India’s financial A.Q. Khan network

By M.D. Nalapat | 25 February, 2018
Our ‘A.Q. Khan of Indian Finance’ has moles everywhere.

General Pervez Musharraf—whose record in conning his masters (whether these be in Islamabad or Washington) is unparalleled—made out that all Pakistan-related proliferation was caused by A.Q. Khan, who was retired and therefore “no longer a government official”. Living up (or down) to its reputation of being irrationally credulous where its own favourites were concerned, the CIA apparently bought Musharraf’s story, as did the US administration. So whatever took place was the consequence of the independent activities of a single scientist gone rogue, and not part of a GHQ program to make some extra money through nuclear commerce, adding to its profits from staples such as the South Asian narcotics and hawala networks. A.Q. Khan was complicit in the nuclear proliferation emanating from Pakistan, but as part of a network that comprised hundreds of retired and serving scientists, military personnel and civil servants. In India, an “A.Q. Khan network” has been operating since 2004, again with multiple players, but this time in the financial markets and not the nuclear technology field. As yet, however, the Government of India has shown no indication that it is aware of this network and the systemic risk it poses. 

The CBI, ED, DRI and RBI claim to have finally realised that the deliberate defaulting of bank loans through collusion between businesspersons, politicians and officials has reached levels that threaten to sharply slow down the Indian growth story. Such malpractices have coexisted with RBI policies that ensure a lucrative and risk-free margin to multiple foreign financial institutions, even while the central bank has been draining large tranches of manufacturing and service industries of affordable finance. Arbitrage is the name of the game in India, and North Block has long specialised in incentivising such activities by those holding foreign currency, while adopting measures limiting the spread of the bond market. There is indeed a trillion dollar need for infrastructure, but to rely on middle class savers to fund such expenses is unrealistic. What is needed is to replicate what the US did over a century ago while developing its railroad system, which was to attract large flows of funds from wealthy overseas investors through the bond market. The clerk or junior manager in India, who parks his or her meagre savings in LIC, should not be expected to shoulder the financial burden of ensuring that infrastructure in India reaches minimally acceptable global standards. Rather, wealthy pension funds in the EU or in North America should be incentivised to invest in bonds created for the purpose, rather than continue to pour money into the equities market and make huge returns through rigging of prices, in the process cheating the small investor of his savings. Gitanjali Jewellery is not the only private company in which the LIC bought shares at peak value, only to suffer losses once prices inevitably came down to levels better matching fundamentals. India’s financial “A.Q. Khan network” first drove equity prices higher and higher through using its influence in the FII community and over government policy (sometimes simply by official statements of intent of policy) and thereafter “persuaded” public institutions to purchase such shares, much of which were held by India’s “Khan” and his cronies. Profits were assured through insider knowledge, and such moneys were raised through looting of middle class investors. Given price fixing and rigging in several of the stock prices in India, a citizen may ask as to why so much discretion has gone the way of SEBI, an institution where our own “A.Q. Khan” is said to have got appointed those who did his bidding. Our “A.Q. Khan of Indian Finance” has moles everywhere, including in the present dispensation, who give his syndicate real time information collected by the banking system, by exchanges and by other agencies, not to mention prior knowledge of impending monetary and fiscal measures. And yet, it seems that no investigative agency has connected the dots to unmask India’s own counterpart to A.Q. Khan and his network, such as by checking on his continuing contacts and past history with officials manning sensitive agencies. Real time information still being made available to him by accomplices include data which can be used to so manipulate equity markets enough to generate close to Rs 75 crore a day of pure profit for him alone, parked abroad through payment highways created by monetary authorities “so as to meet the needs of global commerce”. The same authorities who sent the informal economy into the ICU by choking them of liquidity from 8 November 2016 onwards. 

Just as Pakistan’s A.Q. Khan operated through a network of serving and retired officers, so does his financial sector counterpart in India. Otherwise it would not have been possible for him to, inter alia (a) get selected helpful CMDs and EDs of banks, (b) make government banks sell loans at low rates to private banks, which almost immediately resold them at a profit, (c) engineer Corporate Debt Restructuring deals where the money saved by the borrower would be split with “Khan”, (d) get so-called “watchdogs” to ignore or compound cases of favourites, while going after those deemed as a threat to the network’s underground business empire, (e) creating dossiers, including manufactured data, on target individuals and ensuring that agencies go after them on the basis of dodgy evidence, and even (f) postpone the introduction of enhanced security features in India’s currency by many years, while ensuring that companies blacklisted by the Home Ministry continued to supply vital items involving currency printing in the country. Depressingly, this list goes on and on and on. 

Prime Minister Narendra Modi needs to be informed about the activities of the financial “A.Q. Khan network” operating in India at speed since 2004, and which seems not at all to have been inconvenienced by the 2014 Lok Sabha election results. India’s “A.Q. Khan” has damaged the economy severely since 2004, by subverting critical financial infrastructure so as to ensure that his global and local moneybag associates increase the zeroes in their offshore holdings of undeclared money at the expense of a country where 300 million people go to bed hungry every night. Just as the Pakistan state had “no knowledge” of the A.Q. Khan network, neither it seems is the Government of India aware of the domestic financial A.Q. Khan network, comprised of high roller operators busily sabotaging the future of India.

There are 12 Comments


Sir Thanks for precise article. One point is missing here is the role of judiciary, which is also part of this network. Thanks

It is a pity that no substantial action has been taken even by the BJP government against these crooks who are sabotaging our national interests.It is the common man who bears the burden of financial frauds.The middle class people are forced to pay higher taxes & the poor people are affected by the increased prices of essential commodities.

Go and dig deep may Pvt banks will declare bankruptcy......

It's hard to imagine that as shrewd and savvy a man as PM Modi is unaware of our very own A Q Khan and his network. It is equally hard to imagine that the PM cannot see through the FM. Given this, one is perplexed by PM Modi's inaction in the matter. What or who is it that is staying his hand?

Modi is no shrewd.He's mass leader. He can't think beyond local issues. Economics is something which Modi is trying to learn from his beloved Fin. minister but it is not Modi's cup of tea. Modi simply projects himself as shrewd and savvy. Modi deliberately doesn't want talented individuals in government positions rather he only wants "Yes man".

Very good article indeed by M.D.Nalapat. Analogy drawn is striking. However, in Pak, AQK network worked to earn for their nation whereas India's Financial AQK network is working for itself.

This is quite an old propaganda to malign the image of Pakistan as a nuclear power state. International community must realize the fact that every state must have gone through the process of proliferation in order to breakout the very stone of being a nuclear power. Secondly it would be quite intrusive to recall the very proliferation activities of India. The very episode of Candu reactors is no more an hidden mystery. Pakistan is a nuclear weapon and thats too a responsible one. Every time hammering the same story and maligning the image of Pakistan would not serve the interests of your country.

Author seems to be hallucinating day and night about A. Q. Khan, now he is connecting everything to A. Q. Khan. May be A. Q. Khan was his father or … Anyways, there is no connection between two stories, it is a biased write up, just to malign the image of Pakistan.

This is not the first time that the A Q Khan episode is highlighted at international level and more specifically by the Indian side. Pakistan is being blamed for the network which was established internationally but unfortunately Pakistan being the sole Islamic nuclear power is being more profoundly attached to this network and till now is paying the price. How conveniently international community specially the US community turn their eyes blind on the very India's proliferation episode of Candu reactors. Before that history would give more clear stance if we turn its pages back where the very vicious cycle of proliferation was started by US with the very Manhattan project then why to highlight Pakistan every time. Pakistan is a responsible nuclear state and is very much caretaker of its national credentials if any thing happened is past was an individual act and the chapter has been closed now.

Pakistan is a responsible nuclear weapon state and the world should accept as it’s a real world fact. At the same time, this is always a disturbing reality for India. The nuclear capability of Pakistan has always been a key ingredient in executing the malicious plans of India. Despite of having so many accords and treaties, the world is still going for nuclear and many countries are involved in proliferation activities. So why to always blame Pakistan in this regard? Pakistan is well aware of its threats and challenges and maintained a credible nuclear command and security mechanism. Carrying out anti-Pakistan propaganda with nuclear is nothing new to the world as it possesses no sound ground. It is just to defame Pakistan nothing else.

How and why the year 2004 was chosen as the starting point of A.Q. Khan network starting to be operating in India?

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