MUMBAI, June 2: The Directorate of Revenue Intelligence (DRI) busted a major racket of remitting foreign exchange worth several crore through hawala route following the interception of a country craft carrying onions to the Gulf.

Four persons were arrested, including the owner of Time Travels, a Reserve Bank of India approved company dealing in foreign exchange.

Sources said on May 25 the Directorate (Mumbai zonal unit) was tipped off about a country craft, Ya Hajipir, carrying onions to Dubai via Sharjah, smuggling out a large amount of forex. This craft was registered in Mandavi, Gujarat.

By the time the investigators reached Darukhana, where the craft was laden with the cargo, it had already set sail. The DRI immediately alerted the Coast Guard who intercepted the craft outside the Mumbai coast.

It took almost three days to offload over 470 metric tonnes of onions. Underneath, the investigators found a handbag with five packages of assorted foreign currency and travellers cheques worth over Rs 1.43 crore.

The skipper of the craft, Suleman Esmail Karnani and a sailor Harun Esmail Karnani were arrested and seized the forex along with the cargo and the craft.

The sailors stated that for good money they accepted the job to smuggle the forex delivered by an unidentified person at Darukhana. Their statements led the DRI officers to Time Travels, whose owner, Riyaz Retiwala was the brain behind the racket.

Retiwala had adopted a novel modus operandi to smuggle out foreign exchange. Around 877 Indian passports, used for withdrawing foreign currencies through legal channel, were recovered from his office. Time Travels is a full-fledged-money-changer (FFMC) licenced by the RBI to deal in foreign exchange.

According to the central bank's norms an FFMC can release specific quota of forex to Indians travelling abroad if they produce valid documents like passport and travelling tickets.

Retiwala had used this route to withdraw huge amounts of forex either in cash or as travellers cheques. For this purpose he had collected large number of passports, xerox copies of which were used to withdraw forex.

Persons approaching his office for tickets to travel abroad were asked to deposit their passports. Thus he collected 877 passports. While withdrawing forex, the FFMCs are required to endorse the withdrawal on the respective passports but Retiwala escaped this clause by using xerox copies of the passports with bogus ticket numbers.

Retiwala had arrangements for endorsement on travellers cheques with other FFMCs like Wall Street Finance, Pheroz Framrose and Thomas Cook. Between February and March this year alone, he had deposited over Rs 48 lakh with these dealers. Investigations revealed that he has already purchased and smuggled out forex worth over Rs 7 crore.

Although RBI has issued FFMC licenses to over 200 parties in Mumbai alone, it has allegedly not created any monitoring mechanism to check on the authenticity of the withdrawals of forex through this route. Retiwala has also sold travellers cheques to the tune of Rs 10 crore in the illegal market. He used to receive Indian currency to purchase the forex from one Mohammed Iqbal Mohammed Hussein Kapadia, who admitted that he was working on behalf of Gulf-based syndicates. Sources said, most of the FFMCs are using these two routes for smuggling out forex which is being remitted against the contraband consignments of gold coming in through carriers, or to reimburse differential amounts of under or over-invoiced import-exports through the Gulf.

Retiwala, Kapadia, Suleman and Harun have been remanded to judicial custody till June 9.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.