FAKE CURRENCY MEANCE GRIPPING INDIA

By M H Ahssan

A country’s currency is one of its cornerstones. Its value against other currencies reflects the strength of its economy and is also a matter of national pride. What it buys is of great importance to its citizens. Consequently, its effective management is a great concern for any government.

Today this pillar of our country is under attack from an insidious and invisible enemy. A proliferation of fake currency over the last three years has grown to dangerous proportions.

According to the National Crime Records Bureau, 2,204 cases of counterfeiting were reported in 2007. Small states like Sikkim, Uttarakhand and Himachal Pradesh witnessed an average increase of 185 per cent in counterfeiting cases between 2006 and 2007.

Today this pillar of our country is under attack from an insidious and invisible enemyThere have been seizures of fake Indian currency in Colombo, Bangkok and Nepal. There are reports of fake currency notes now being dispensed by banks and ATM machines.

As India grapples with a financial downturn, the spread of counterfeit notes leads to greater uncertainty, undermining a country’s confidence in its financial system and the strength of its currency. Counterfeit currency has always been used to fund criminal activity, be it drugs or arms smuggling. Today it is being used by India’s enemies, namely by Pakistan’s ISI, to carry out what can only be called economic terrorism against our country.

Indian intelligence agencies have traced the routes used by counterfeiters, all of which lead back to Pakistan. The money is printed across the border, stocked in Dubai and then shipped out to our neighbours, from where it is moved into the Indian market through our porous borders. These fake notes spread through the economy and are also used to fund the operations of terrorist groups. Today it is estimated that eight or nine notes of every thousand in circulation in India are counterfeit.

HNN story on fake currency was put together by Senior Editor Malini Bhupta along with our correspondents from all across the country who spoke to officials at the Reserve Bank, private and public sector banks as well as intelligence sources. Bhupta found that the impact of the fake currency racket was being felt at all levels. Staff at a bank told her that they get about a dozen dud notes in a day. The owners of very small shops were investing in currency detection machines, tired of having their earnings destroyed by banks because the notes had turned out to be counterfeit. Our story tells you how to recognise a fake note from a real one and what to do if you happen to be given a counterfeit currency note.

Everyone in the Government understands just where this problem can lead. In the course of our investigation, we found that just like in our response to conventional terror, there was no co-ordination between various agencies involved in this case. It is an appalling state of affairs.

Our economy, the foundation of India’s strength and confidence, is under attack and this situation requires an intelligent and swift response. The currency notes may be fake but their consequences are very real.

Fake Currency: Terror’s Tool
When a thief enters a house the watchdog barks. If the inmates do not wake up, it barks again, and then again. If the inmates still do not awaken, should the watchdog stop barking? This scribe is facing a similar dilemma. According to official sources the threat of terror has reached new heights. The amount of fake Indian currency in existence today is huge. According to one national daily, in UP alone over Rs 40 crore is estimated to be in circulation.

The CBI has confirmed that two sets of currency notes with the same serial numbers have been seized in branches of nationalized banks. It has claimed that the fake notes were brought into India through Nepal by Pakistan's ISI. The CBI has also confirmed that the fake currency notes are of such fine quality that they are indistinguishable from genuine notes. That is why branches of the State Bank of India can pass off fake notes as genuine currency. But, all said, can this happen if some bank officials are not complicit with anti-national elements? Elements that use the fake currency for crime and terrorism?

Every single element of this information has been written about explicitly and repeatedly by this scribe: he wrote these facts in March 2000, in June 2000, in March 2002, in July 2004 and in August 2006. All this time, the fake currency racket was expanding, but had not reached its present dimension. It was pointed out that fake currency greatly facilitated terrorism – that it was masterminded by foreign powers. Indeed, it was pointed out that the sheer volume of fake currency, indistinguishable from genuine notes, could destroy India's economy without terrorism! It was pointed out, too, that the Reserve Bank's admission that it could not authenticate currency notes in a particular fake currency police case meant that, for all practical purposes, there was no legal tender in the country. Finally, it was pointed out that using the same machines to print currency notes and stamp paper was a procedure followed for both fake currency notes and fake stamp paper. The money thus generated in both scams was of course exploited by terrorists.

This scribe's involvement in the subject originated in 1995. A section of the bureaucracy made available to him information regarding the government's decision to purchase inferior and unreliable printing machines for manufacture of currency notes, thereby replacing machines of a tried and tested firm which had served the country well for over a hundred years. He filed public interest litigation against the RBI in the High Court of Judicature in Mumbai to prevent use of the new machines for printing currency notes. His plea was that the proven record of the new machines, Komori of Japan, endangered national security because fake notes not distinguishable from genuine notes could be easily manufactured for deployment by terrorists. To cut a long story short, the RBI accepted every single argument of the petitioner. It conceded that Komori machines presented "a risk factor" and "teething troubles". It admitted that the earlier machines, Giori of Switzerland, which printed currency for ninety per cent of the nations in the world, were markedly superior. It confirmed that the use of Komori machines in Russia had ended in disaster. The machines had to be abandoned for printing currency.

Despite these admissions, all on record, the court rejected the petition. RBI's main argument was that the monopoly of Giori needed to be ended! Without a thought for national security, and the facts marshaled by the petitioner's counsel, the court rejected the petition.

An eminent lawyer argued for RBI. This scribe was acquainted with him. The lawyer impertinently suggested that this scribe's petition was in some way linked to those who were contesting the award to Komori on behalf of its Swiss rival, Giori. When the national security angle was drummed into his ears he said: "Why did you not approach me earlier?" Had that been done would he have changed his view of the case? Was that all that the case meant to him – a clash of sordid commercial interests? My respect for him fell many notches. The judiciary and the legal fraternity failed miserably in this case.

The politicians fared no better. Even before the public interest litigation was filed, Parliament had discussed the government's proposal to buy these new untried machines for printing currency. Among the several MPs who criticized the government's move was Somnath Chatterjee. But once Komori got the award the MPs lost interest. It seemed that they were interested mainly in the commercial aspects of the case. A Kolkata based industrialist was rooting for Giori to get the award. Dr Manmohan Singh was the Finance Minister when Komori got the contract to print currency notes. He maintained silence throughout the controversy. When a few years later it transpired that fake notes with the same serial numbers as genuine notes could not be differentiated even by the RBI, rendering the notion of legal tender defunct, Yashwant Sinha was the Finance Minister. He too remained silent on this affair. So, regardless of party affiliation, the politicians as a class failed miserably in this case.

During the decade or so when this scribe fought the case in court and wrote about the danger of fake currency in the media, not one newspaper highlighted the scandalous manner of awarding the contract to Komori for printing currency notes, and how this endangered national security. This scribe personally phoned and requested colleagues better placed than him, and occupying key positions in the media, to take up the matter. Not one obliged. So, in this case the media also failed miserably in this case.

The National Security Adviser has revealed that there are over 800 terrorist cells operating in the country. With the kind of easy money floating around, should that cause any surprise? And with the easy attitude evident in the establishment to matters related to national security, as revealed by the fake currency scam, was not escalation of terrorism inevitable? The government took security steps to prevent exact replication of currency notes. These steps became effective after 2005. The fake currency notes therefore are dated before 2005.

Politicians, experts, retired bureaucrats and media pundits favor the enactment of tougher new laws to fight terrorism. They sound pathetic. Considering the approach to fighting terror revealed by the fake currency racket, do they seriously believe that new laws would help solve the problem of terrorism?

Fake currency notes, new mode of terrorism?
Barely weeks have passed since we lost hundreds of innocent lives in Ahmedabad and Bangalore terror blasts. In the recent days, several live bombs have been found in the ’diamond city of India’, Surat. Terrorism is changing its face; sometime, it’s in a radio, sometime it’s in a pressure cooker and sometime it’s on a bicycle.

Indians are being terrorised by such acts. People are killed and probes are done. Our economy is hoped to reach the eight to nine per cent growth. But, what will happen to an economy, which is being flooded by fake currencies? Somebody has termed as ‘economic subversion’ while others call it as ’economic terrorism’. When ‘legal tender’, the ‘fiat money’ of a country is quietly being replaced by good quality ‘paper’ but sometimes have the same numbers and series (as real one), who can question the ‘legality’ of those ‘papers’, which are in huge circulation in this country?

An estimate suggests that stupendous more than Rs 1,69,000 crores of fake currencies are in wide circulation in our country and out of which more than Rs 40 crores may be in Uttar Pradesh itself.

Recent acts of economic terror has been found in Abid, in Doomariaganj of UP where from a bank’s currency chest fake notes have been seized. Though quantum of currency note is officially seized is not more than Rs 5 lakh, the deadliest part of this seizure is the modus operandi of this conspiracy, which is having enough potential to derail our bugging economy.

Look, the serial numbers on the fake money lying in the currency chest of the bank were the same as that of genuine notes. This establishes the two facts, the gang members would have known the number of currency notes lying in the currency chest of the bank and at their ‘printing press’ these numbers would have been informed. Second fact is more dangerous that there must be collusion between these gang members and the bank officials handling cash of that branch. If the hands of terrorists are spread to an institution which is nerve of economy, the catastrophe may not be far away.

Apart from that it has been told that the quality of papers, the quality of printing are of such a fine quality that it is not possible to differentiate between a genuine and a fake one. It also highlights the facts that advanced technology is being used to print such fake notes.

The fake currency notes are certainly posing grave threat to the Indian economy and the government is also aware of these facts.

Fake Currency: A Threat
More than a quarter of the currency in the hands of the public in India currently may be counter-feit. Intelligence Bureau (IB) estimated that fake currency amounting to a mind-boggling Rs 1, 69,000 crore is floating in India. It appears that this fake currency is being pumped in through the official banking system. In Uttar Pradesh in the first week of August, fake currency amounting to nearly Rs 3 Crore was found stashed in chests of the SBI and ICICI Bank.

The banking system is now being used by insiders to circulate fake currency. This was corroborated by what the suspects held in Uttar Pradesh had told police. The central bank has been largely ineffective in monitoring the banking system to check the circulation of counterfeit currency. They have not been able to put in place any comprehensive mechanism to check the entry and spread of fake currency.

Intelligence inputs that Pakistan’s Infer Services Intelligence (ISI) pumps in over Rs. 13 crore annually to fund terrorist activities in Mumbai alone has startled the city police. The fact that this funding is being carried out by dumping fake India currency has put both the anti-terrorism squad (ATS) and the crime branch on alert. Obviously the ISI is cleverly fighting a proxy war in India, that too with Indian money, bleeding our financial system while spilling blood on the streets. The counterfeit currency smuggled in by air and land is handed over to local agents for distribution.

This money is used to finance terror-related activities and make payments to cadres of terrorist organizations and underworld outfits close to the ISI. According to the crime branch, small amounts of fake currency are smuggled in by Bangladeshi nationals through India’s porous eastern borders from places like Murshidabad and Bashirhat. The larger quantities arrive from Dubai, Kathmandu, Bangkok, Karachi and Kolkata.

The entire terrorist network is sustained using genuine currency acquired from within India. A key sector where intelligence and security officials believe that large amounts of fake currency have entered the system is the property market. Unless the property market is regulated it is very easy for an individual to pump a few lakh rupees into the official economy every few days. Many of the officials are now calling for immediate measures to flush out fake currency from the system. Random checks across India in currency chests and bank branches should be the first step. Simultaneously state governments have to put in place a system to curtail the movement of large amounts of cash into the system and from the system in the form of, say, property deals.

The amount of fake currency being pumped in overland has come down over the years. But the state is still to take strict action at sea. The Jhakhau and Mendhi stretches near Kutch are considered the most vulnerable sea routes. These counterfeit notes are hard to identify and come in handy for terrorists while arranging logistic like rented accommodation and vehicles for travel. The money is being pumped in from almost all over the country which is a big threat to the country and need to be checked.