Pakistan Forex Scam Case:
In November 2008 Munaf Kalia (Chief Executive Officer of Khanani and Kalia International (Pvt.) Ltd.), Yusuf Kalia, and associates, were charged for illegally transferring funds from Pakistan to Afghanistan.In light of the charges, theState Bank of Pakistan revoked the license for Khanani and Kalia International to operate its foreign exchange business and forced it to shut its offices.
On March 5, 2011, the directors of Khanani and Kailia International and four bankers were acquitted of all charges due to lack of evidence. The judge said that the prosecution failed to present evidence that directly implicated the defendants.
Background:
Since the depreciation of the rupee from July 2007, the Federal Investigation Agency was investigating the unexpected depreciation by the orders of the Pakistani government. In November 2008, the government sought support fromInterpol with whose help the FIA cracked down all over Pakistan searching for persons involved in illegal smuggling of US dollars outside Pakistan. The FIA conducted raids in various parts of Karachi detained more than 12 people including Munaf Kalia, and ten officials of the National Database Registration Authority suspected of providing counterfeit identity cards. Manaf Kalia appeared in the court of Omar Awan, judicial magistrate South Karachi on November 9, 2008. The FIA sought and obtained a remand to Lahore to face another charge.
Exit Control List:
The Special Civil Court of Lahore, ordered that more than 14 names of different people involved in the forex scam case be included in the Exit Control List (ECL) of Pakistan.
Time Line:
On November 10, 2008, the State Bank of Pakistan suspended the licence of Khanani and Kalia for 30 days and debarred KKI’s head office, branches, franchises payment booths and currency exchange booths from undertaking any kind of business for violating its rules and regulations.
On December 10, 2008, the State Bank of Pakistan suspended the licence of Khanani and Kalia for an indefinite period of time. The suspension order further stated that the company’s headquarter, branch offices and/or franchise cannot carry any business dealings.
In August 2009, a second foreign exchange company in Pakistan Zarco Exchange was accused of similar allegations and also had its license revoked and forced to shut down.
In Dec 2010, the Special Court (offences in banking) Lahore said that due to lack of evidence it saw no reason that Zarco Exchange should not request a revival of its license from the State Bank of Pakistan and in Feb 2011 its CEO was released by the Pakistan Federal Investigation Agency (FIA) after it said it decided to no longer pursue the case.In April 2011 Zarco Exchange’s license was restored and the business started operating again.
On March 5, 2011, the directors of Khanani and Kailia International and four bankers were acquitted of all charges due to lack of evidence. However the FIA complained about the acquittal and said it had provided enough evidence. In response the Supreme Court of Pakistan had an independent judge investigate the acquittal. Following the acquittal a separate action by the FIA appeared to have failed due to mistakes that meant evidence provided to the court was missing important information.
Hawala business:
The government’s action against Hawala trade, which involves international network of currency dealers for making unrecorded payments in each other’s countries, was one step in the series of the forex scam case. These steps were taken at a time when the rupee depreciated by 30 percent against the dollar since the beginning of 2008.
Khanani and Kalia International (Private) Limited:
Khanani and Kalia International (Private) Limited (KKI) was one of the biggest foreign exchange companies in Pakistan until November 2008 when it was closed down by the Pakistan government as part of the Pakistan Forex Scam Case. The company was investigated by the Federal Investigation Agency and the State Bank of Pakistanrevoked its license.
KKI was part of the Kalia Group of companies founded by Hanif Kalia and run by Hanif’s younger brother Abdul Kalia. Its corporate head office was in Karachi and it had a franchise of branches all over Pakistan plus a number of branches overseas.
History
The company was founded in 1983, by Hanif Kalia, a well known businessman, educationalist and social welfarer. Its corporate office was in Karachi and its international marketing and commercial services head office in Mississauga, Canada.
Pakistan Forex Scam Case
In November 2008, KKI became part of the Pakistan Forex Scam Case when the Pakistan government started investigations into the company and arrested its management team. In response the State Bank of Pakistan revoked KKI’s license to operate its forex business forcing then company to shut down all its branches.
On March 5, 2011, the directors of Khanani and Kalia International and four bankers were acquitted of all charges due to lack of evidence. However the FIA complained about the acquittal and said it had provided enough evidence. In response the Supreme Court of Pakistan had an independent judge investigate the acquittal.
Operations
KKI offered a number of services including currency exchange, home remittance, outward remittance and business administration. The company had branches in Karachi, Lahore and Islamabad, and a franchises networked all over Pakistan. The company also had foreign branches in London, Glasgow, Sydney, New York, Toronto, Montreal, Scarborough, Vancouver, Kuwait City, Bahrain, and Qatar.
KKI was part of the Kalia Group which also provided services including management consultancy, internal auditing, IT management, HR management, business administration, marketing, and R&D on behalf of clients. In addition the group had a number of related companies which included;
Kalia Security Vault Corporation
In 1999 Kalia Group launched security vaults (Lockers) services with the establishment of Kalia Security Vault (Pvt) Ltd.
Kalsoft
KalSoft (Pvt.) Ltd was incorporated in 1999 while it started its commercial operations in the year 2000. The basic aim of this project was to explore the international software market and thus the emphasis was laid on Software Exports. KalSoft specializes in B2B, B2C and C2C software development.
KalPoint.com
Kalia Group was established as s socio-commercial organization KalPoint.com. It is a C2C e-commerce portal with over 35 categories and over 60,000 web pages. It has claimed to be the largest interactive portal in Pakistan and was declared as Pakistan’s best website by the leading IT magazines in 2009.
FX BUSINESS 