Khanani & Kalia International

• 1. Introduction

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  Khanani & Kalia International, usually shortened to KKI, was a Pakistani foreign exchange company, and over the course of its life more than 40 billion US dollars passed through it. That is a staggering sum for a business that most people outside the money-transfer trade never heard of. KKI began in 1992 and came to an abrupt end in 2008, when the government of Pakistan shut it down over money laundering. Between those two dates it built offices on several continents. It also drew the attention of American sanctions officers, Pakistani investigators and a court that later set its executives free. Who were the families behind the company? What did a currency exchange do that made regulators in several countries take notice? And why did a case that began with a seizure of cash in one Pakistani city end in a dispute between prosecutors and a court?

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• 2. Two Families, One Company

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  The Kalia Group began in July 1983 under the name Kalia and Sons, a firm that traded and dealt in prize bonds. Hanif S. Kalia founded it, and his younger brother Abdul later ran it. Over time the business expanded and took the name Kalia Group. On the 30th of April 1992, the Kalia brothers joined forces with another pair of brothers, Altaf Khanani and Javed Khanani. Together the four founded Khanani & Kalia International as a joint venture. The new company sold currency exchange, home remittance, outward remittance and business administration. Home remittance meant money sent into Pakistan, and outward remittance meant money sent abroad. The Kalia Group itself offered much more than exchange. It provided management consultancy, internal auditing, IT management, HR management, marketing and research and development on behalf of clients. KKI therefore sat inside a wider family of businesses, and that setting matters when investigators later asked where its money really went.

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• 3. Karachi to Mississauga

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  KKI kept its corporate head office in Karachi, in the province of Sindh. Its international marketing and commercial services office was in Mississauga, Ontario, in Canada. Inside Pakistan, the company ran branches in Karachi, Lahore and Islamabad, and it also had a network of franchises spread across the country. Abroad, the list of branches reads like a map of the Pakistani diaspora. There were offices in London and Glasgow, in Sydney, and in New York. Canada had several: Toronto, Montreal, Scarborough in Ontario, and Vancouver. In the Gulf, KKI operated in Kuwait City, Bahrain and Qatar. A company with outlets in so many places could move money between them quickly, and that reach is exactly what drew suspicion. One of those franchises, a money changer called Dunya International Moneychangers in Gujranwala, would eventually bring the whole company down.

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• 4. Accusations and Sanctions

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  The United States Department of the Treasury has an arm called the Office of Foreign Assets Control, known as OFAC, and it blocked KKI. The company was found to have been involved in illicit movement of money between Pakistan, the United Arab Emirates, the United States, the United Kingdom, Canada and Australia. The accusations went well beyond ordinary laundering. Accounts of the company say it funded Dawood Ibrahim's D-Company and had links with Dawood himself. It is also said to have funded militant organisations, including Lashkar-e-Taiba, Jaish-e-Mohammed and Kashmiri militants, as well as attacks such as the 2008 Mumbai attacks. Further links are described between the company and Pakistan's Inter-Services Intelligence. Individuals were named too. Danyaal Khan is accused of orchestrating the money operation, and Mohammed Ellahi is accused of conspiring in the laundering.

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• 5. The Gujranwala Seizure

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  On the 7th of November 2008, the Federal Investigation Agency opened its investigation into KKI. A tip about an illegal hawala transaction had reached investigators. Hawala is an informal way of moving value without a conventional bank transfer. Earlier, the agency had seized 786,000 US dollars and four hawala vouchers from the Dunya International Moneychangers franchise in Gujranwala. The agency then arrested two company executives, Javed Khanani and Munaf Kalia. The State Bank of Pakistan responded by revoking KKI's licence to run its foreign exchange business. Without that licence, the company had to close every one of its branches. The case became part of what Pakistan called the Forex scam. Money exchangers, KKI among them, had sent around 10 billion US dollars through illegal channels from 2003 to 2008. That works out to about 10 million dollars every single day.

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• 6. The Acquittal

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  On the 5th of March 2011, the directors of Khanani & Kalia International and four bankers walked out of court acquitted of all charges. The reason given was a lack of evidence. The Federal Investigation Agency did not accept that verdict. It complained that it had supplied enough evidence to prove its case. The Supreme Court of Pakistan then stepped in and had an independent judge investigate the acquittal itself. The source records no outcome from that review. The question of whether the acquittal was sound was still open when the account ends.

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