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Hawala: A Parallel Economy

PostPosted: 10 Aug 2020
by ex-l
Back in the old days, at the times the BKs started, the Bhaibund merchants and their Amil administrators and accountants developed a secretive system of international trading and money laundering that I have argued in the past, became the model and backbone for BKism. Posts are elsewhere, so I'll not repeat the theory here.

On more than one occasion, we've discussed the historical lack of transparency in some of the BKs' financial dealings, e.g. how they transfer money around the network and how they finance their leaders' lifestyles (in all the accounts I have seen, they claim their leaders are unpaid and yet they are able to sustain a jet setting lifestyle, constantly travelling around the globe). In one specific case I remember, money relating to a property deal went into the system in one country and came out in another.

I recently found reference to the 'Hawala Alternative Remittance System and its Role in Money Laundering', although I appreciate to the Sindhis it may have another name. It's an informal value transfer system based not on the movement of cash, or on telegraph or computer network wire transfers between banks, but instead on the performance and honour of a huge network of money brokers. The system originated in India.
Hawaladar networks are often based on membership in the same family, village, clan, or ethnic group, and cheating is punished by effective ex-communication and "loss of honour"—leading to severe economic hardship.

Hawala supports illegal activities in India namely:

• Black Money: As Hawala is an unregulated transaction, it is the most widely used route black money earned in India offshore.
• Corruption: Hawala permits routing black money in and out of India and is widely used to pay bribes.
• Terror financing: Hawala is mainly used by terrorist organizations to remit money in and out of India

It is used;
    To facilitate tax evasion.
    For ease of transmission.
    As the time taken for transmission is comparatively less compared to the official route.
    And can transferred from a remote area where banking facilities are not available.
From: Hawala: A Parallel Economy

Hawala is an illegal foreign exchange market where trading of currency happens outside the parallel (black) controlled financial channels i.e. currency is purchased and sold by dealers who are not “authorized dealers” (“authorized person” means an authorized dealer, money changer, off-shore banking unit or any other person for the time being authorized under sub-section (1) of section 10 to deal in foreign exchange or foreign securities;) at rates different than the rate mandated by the Reserve Bank of India.

Hawala is used by a number of the Indian diaspora in African & Middle East countries to send money home. This is because it is cheaper than the formal remittance services, and many migrants (some of them illegal) do not have access to banks.

Let’s take an example, say if “Mr. A” a NRI working in UAE wants to send 1,000 AED to his family member in Mumbai. If he sent this money through Authorized dealer, he receives rupees at prevailing exchange rate (regulated b Reserve Bank of India) of INR 19/AED. The exchange rate for the same in uncontrolled (black) is INR 22/AED.

Mr. A contacts a Hawala operator in UAE and gives AED 1,000 to him. The UAE Hawala operator’s counterparty in India, pays INR 22/AED to the family members of NRI in Mumbai. The transaction between Hawala dealer in AED and his counterparty India are not done through authorized dealers and there is no official record of this transaction..

Re: Hawala: A Parallel Economy

PostPosted: 10 Aug 2020
by ex-l
I appreciate with recent changes to tax laws in India, and great public awareness, the BKs have had to clean up their act, but does anyone have any personal experiences with the inner economics of the Brahma Kumaris?
Professor R Vaidyanathan an expert on the subject who is with the Indian Institute of Management, Bangalore says that over the past 6 decades India could have lost 1.5 trillion dollars in the form of tax avoidance and 40% of this amount are all hawala transactions.

Re: Hawala: A Parallel Economy

PostPosted: 11 Aug 2020
by ex-l

Re: Hawala: A Parallel Economy

PostPosted: 12 Aug 2020
by Pink Panther
I remember many BKs taking cash to Madhuban. Often it was broken up and shared among a group of travellers i.e a number of people each taking smaller sums rather one person with a big lump sum, probably for legal reasons usually to do with how much someone can take out of a country rather than bring in. Nowadays international bank transfers can be made over the internet more quickly and cheaply than even 10 years ago.

Given the BKs are a registered charity in most places, they’d be exempt from many taxes.

Some groups like to flaunt their wealth & assets, while others try to hide them. Some, like the BKs, do both.

A black market system would still work for people within an organisation who’d want to ”not trouble'’ the account keepers or watch dogs inside or outside the organisation. Black markets within black markets! Nice little earners on the side, know wha’ i mean guvna?

Someone knowing something about such goings on or someone exploiting someone, is likely to have contributed to the infamous knifing incident in Pandav Bhavan, New Delhi, back in the late 1990s or early 2000s.

Re: Hawala: A Parallel Economy

PostPosted: 12 Aug 2020
by ex-l
What was the knifing incident?

Re: Hawala: A Parallel Economy

PostPosted: 13 Aug 2020
by Pink Panther
It’s reported here on this forum somewhere. Maybe I heard it from someone and shared it here? Not sure.

I remember it because it involved a guy whom I met and knew back in the early 1980s, his name was Gopal. I always distrusted him, always something sleazy and shifty about him. Like he ran some rackets on the side, a Delhi Arthur Daley!

He was a top BK Brother in Delhi (Pandav Bhavan, Rohtak Rd) after Brij Mohan, in charge of organising travel for foreigners going to and from Mt Abu. He had a manner that was cocksure, seemed to always be in a hurry, fast talking. So I wasn't surprised to learn about it, that he might have provoked someone enough to get knifed!

Apparently the culprit was another BK Brother resident there, whose name I don't remember, but can picture him, a small slightly built baby faced man who had an identical twin Brother in Mt Abu.