Khanani and Kalia International (Private) Limited (KKI)

Introduction:
The company was founded in 1983, by Hanif Kalia, a well known businessman, educationalist and social welfare. KKI was part of the Kalia Group of companies founded by Hanif Kalia and run by Hanif's younger brother Abdul Munaf Kalia.

Mr. Javed Khanani is the other partner of KKI.

Its corporate office was in Karachi and international marketing and commercial services head office in Canada.

It had a franchise of branches all over Pakistan plus a number of branches overseas.

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, Kuwait City, Bahrain, and Qatar.

KKI offered a number of service including the following. Currency Exchange Home Remittances

Outward Remittances and Business Administration 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

Export.

Kal Point
Kalia Group was established as s socio-commercial organization KalPoint.com. It is a 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 Pakistans best website by the leading IT magazines in 2009.

Khanani and Kalia International (Private) Limited (KKI) was one of the biggest foreign exchange companies in Pakistan until November 2008 KKI, as per its web site, claims to be Pakistans first ISO 9001 and 27001 certified Exchange Company.

It is quite alarming if, in spite of all certifications and operating procedures in place, KKI was unable to trace and stop the illegal transaction by its franchise.

Also, what the State Bank of Pakistan was doing of few weeks. when the Dollar was elevated in open market from 70 rupees to 90 rupees within a span

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 from Interpol 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.

The directors of the KKI were accused of violating the Foreign Exchange Regulations Act, the Prevention of Electronic Crimes Ordinance and the Pakistan Penal Code by operating a money transfer system based on personal contacts, known as hawala.

Munaf Kalia and Javed Khanani, directors of Khanani and Kalia International (KKI), the largest Foreign Exchange company of Pakistan, were arrested by FIA on the charges of money laundering. The main charge against them is that they were involved in physical transfer of foreign currency from Pakistan and ran the illegal Hawala or Hundi business.

Investigation by FIA:
Special Investigation Group (SIG) of FIA Lahore prepare a report in April 2008 about the flight of dollars from the country, fearing that a forex crisis would hit the country in the near future. The report also recommended strong and instant action against persons involved in the Hundi and Hawala business.

According to FIA officials, Lahore, Gujranwala, Karachi and Peshawar are the main cities where a majority of money changers were running the Hundi and Hawala business and anyone could send any amount anywhere in the world without any check.

FIA officials said during initial interrogation Javed Khanani has disclosed the names of some very influential people whose money he had sent abroad.

November 10, 2008

On November 10, 2008, the State Bank of Pakistan suspended the licence of Khanani and Kalia for 30 days and debarred KKIs head office, branches, franchises payment booths and currency exchange booths from undertaking any kind of business for

violating its rules and regulations

December 10, 2008

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.

The Federal Investigation Agency arrested Hanif Kalia, chairman of the Kalia Group, which runs nearly a dozen businesses across the country, for his group`s alleged involvement in moneylaundering.
THE FIA HAS ARRESTED MORE THAN A DOZEN OFFICIALS OF THE COMPANY SINCE NOVEMBER 7. THE AGENCY HAS BEEN INTERROGATING THEM IN TWO CASES REGISTERED IN KARACHI AND LAHORE.

Money Transferring Method

Money transfers taking place anonymously through a series of connected brokers who accept money at one end and then ask one of their agents to deliver money at another location. The brokers keep track only of what they owe each other.

KKI has transferred the dollars of worth Rs 38 bollions through Hawala and Hundi
The case of Khanani and Kalia is still in progress. We have to see if real culprits behind flight of dollar are taken to justice or this turns out to be another facade. The government and media have to be very cautious in handling of this case as any false move will further derogate the image of Pakistan abroad and amplify the ongoing financial crisis.

Thank you all

Question and Answer Session