THE recent sentencing of Altaf Khanani, one of the principal players of the Khanani and Kalia International money exchange company, in a US court must be causing some trepidation in powerful quarters in Pakistan. He was charged with 14 counts of money laundering, and eventually pleaded guilty to one, receiving a very lenient sentence of 68 months in prison and a $250,000 fine, where the maximum penalty was 20 years for each count. It is intriguing how such a light sentence was managed given he was caught red-handed in a sting operation. All signs point toward the fact that he has volunteered some very important and detailed information in order to escape the prospect of spending the rest of his life in jail.

Even though the investigation through which he was ensnared was a wide-ranging one, it took very little effort for US law enforcement to actually catch him and bring him to a point where he confessed before a court and volunteered all the information that was asked from him. The sting operation took less than six months to lead to a sealed indictment, and less than three months after that he was arrested. This is in sharp contrast to his experience here in Pakistan, where not just Khanani but the entire management and owners of KKI were arrested in 2008, and the full record of all their servers was seized. Yet despite being in custody for three years, and despite the enormous volume of evidence gathered from their servers by the FIA, they were ultimately released due to a series of mysterious errors and omissions in the material presented before the court. This clearly pointed towards the intervention of higher powers that had mobilised to protect the accused.

It is those higher powers who should now be worrying about what, and how much, information has been volunteered by Khanani in his plea bargain, and what consequences might follow. Given the prevalence of corruption in Pakistan, and the long list of clients served by KKI, there are likely to be some interesting disclosures in the times ahead as law-enforcement agencies from various countries begin acting on the tips and clues provided by him. Eventually the enterprise of money laundering will have to close down, or at best will be able to continue only in a severely restricted form, since the global regulatory regime is tightening with each passing year. If it does not end, then the consequences for Pakistan’s banking system, and its wider economy as a consequence, could be severe. The KKI episode is a vivid example of how the crimes of the rich and powerful exact a terrible cost from us all, by tarnishing the country’s image, robbing its economy of its vitality, and weakening its institutions to the point of helplessness. It is time to wrap this business up.

Published in Dawn, April 5th, 2017