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How the ISI funnelled money to Fai

December 09, 2011 12:50 IST

Before coming under the scanner of the investigative agencies, Pakistan's ISI had developed a closely-knit network of middlemen or straw donors through whom it illegally funnelled its propaganda money to Kashmiri separatist Syed Ghulam Nabi Fai and his Kashmiri American Council.

Fai, 62, who was arrested by the FBI in July and subsequently put under house arrest, pleaded guilty before a US court to charges of spying for ISI and illegally lobbying to influence American policy on Kashmir.

The documents submitted to the court during the guilty plea gives an inkling of the network of the straw donors, who paid to the KAC in cheque and then received the money apparently in cash or through other clandestine means from the ISI either directly or through a middleman named Zaheer Ahmed.

Notably Ahmed was also a co-conspirator in the FBI affidavit filed in July. He is reported to have died in Pakistan.

The 26-page 'Statement of Fact' signed by Fai and US Attorney specifically mentions at least a dozen such donors, which the ISI had developed over the years. Except for Zaheer Ahmad none of the straw donors have been identified.

While one of the so-called fund contributors is identified as "Conspirator AA" which donated to KAC USD 595,193 since 1993, another called "Medical Group" donated $168,000, the court documents say.

Straw donors is a term used for persons who illegally use another's money to make political contributions in their own name. In the US, making a political contribution in another person's name is illegal, as is agreeing to be the named donor with someone else's money.

According to the court documents, KAC received $240,500 in donation from Straw Donor E, USD 259,639 from Straw Donor H and $267,000 from Straw Donor K.

All these donations were made after 1993.

"While the KAC did receive some legitimate donations, the majority of its receipts each year came from a small network of individuals who were closely associated with Ahmad," said the Statement of Facts.

According to it, from approximately 1990, and continuing thereafter until approximately July 18, 2011, Fai corruptly endeavoured to obstruct and impede the due administration of the internal revenue laws by arranging the transfer of at least $3.5 million to the KAC from employees of the ISI and the Government of Pakistan.

He accepted the transfer of such money to the KAC from the ISI and the Government of Pakistan through Zaheer Ahmad ("Ahmad") and middlemen ("the Straw Donors") who received reimbursement from Ahmad for their transfers to the KAC.

After donations from straw donors were made Fai provided letters from the KAC to them documenting that the transfers to the KAC were tax deductible to the extent provided by law, it said.

Fai concealed from the Internal Revenue Service that the money received from the straw donors actually was indirectly given to the KAC by the officials employed by ISI and the Government of Pakistan.

The parties agree that the amount of the tax loss as a result of this conduct for purposes of calculating the Sentencing Guidelines is at least $200,000 but not more than $400,000, it said.

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