Loan Scam

Fraud Committed in Connivance With Registrar and Deputy Registrar Cooperative Societies

 If crime thrillers were to be based on stories of corruption, Mohd Shafi Dar, former Chairman of J&K State Cooperative Bank would be credited with the creation of a top thriller. Dar, in association with his cronies, siphoned off Rs 223 crore from J&K State Cooperative Bank for the creation of an imaginary township in Shivpora, Srinagar.

After the fraud came to light, Shafi Dar was arrested and subsequently dismissed from service. During the financial year 2018-19, a conspiracy was hatched between Mohd Shafi Dar, then Chairman of J&K State Cooperative Bank, Hilal Ahmad Mir, Abdul Hamid Hajam, Mohd Mujeeb ur Rehman Ghassi, then Registrar Cooperative Societies J&K and Syed Ashiq Hussain, Deputy Registrar Cooperative Societies.

Mohd Shafi Dar, in his capacity as Chairman of J&K State Cooperative Bank, sanctioned the loan of Rs 223 crore in favour of Hilal Ahmad Mir, a resident of Magarmal Bagh. The loan was sanctioned for the construction of a satellite housing colony at Shivpora, Srinagar. Fake and fraudulent documents were provided to the bank. As expected, the loan went bad and was written away as a non-performing asset (NPA).

Dar and Mir created an imaginary satellite township in Shivpora in order to loot the wealth of the bank. They cheated the bank and provided fictitious supporting documents for the sanction of the loan.

In blatant misuse of his position, Dar directed the bank loan investigating officials to create a positive report in favor of a construction agency named Jhelum Cooperative Housing Building Society.

After the loan went bad, the fraud came to light and the case was handed over to J&K Anti Corruption Bureau. After a preliminary enquiry, ACB found that the Chairman of J&K Co-operative Bank Ltd, in connivance with officials and beneficiaries of the scam, sanctioned Rs 223 crore in favour of a non-existent co-operative society named Jhelum Cooperative Housing Society to build a colony at Shivpora, Srinagar. According to the documents, the cooperative society was supposedly run by one Hilal Ahmad Mir, son of Kh. Sanaullah Mir, resident of Magarmal Bagh in Srinagar. Investigation further revealed that Jhelum Cooperative Housing Building Society had not even been registered with the Registrar of Cooperative Societies.

An FIR was registered against Mohd Shafi Dar for this fraud against the state and he was arrested. A supplementary charge sheet was produced by ACB against Mujeeb ur Rehamn Ghassi and  Ashiq Hussain for deliberately issuing the approval letter to J&K State Cooperative Bank with the signature of the Registrar, knowing that such a society did not exist.

Devious Modus Operandi

The accused devised a detailed modus operandi in order to defraud the state. The Society approached the secretary to the Government Cooperative Department, Abdul Majeed Bhat through the medium of an application. Directions were sought from the Cooperative Department to J&K State Cooperative Bank Ltd, Srinagar, for the grant of financial assistance of Rs 300 crore for the construction of a satellite township on 300 kanals of proprietary land in the outskirts of Srinagar city. The conspiracy of routing the application through the office of the Registrar of Co-operative Societies was a camouflage. It was done to hide the illegal acts of the accused and give it the stamp of government approval. Otherwise, there was no precedent of routing a loan application through the office of the Registrar for sanction of a loan in favor of a cooperative society.

The application of Hilal Ahmad for seeking financial assistance was approved. It was forwarded to the chairman J&K Cooperative Bank, Srinagar, by Mohd Mujib ur Rehman Ghassi, then Registrar Cooperative Societies Ltd, J&K, for the sanction  of the loan.

As Chairman of the State Cooperative Bank, Mohd Shafi Dar conspired with borrower Hilal Ahmad and others to sanction the loan amount of Rs 250 crore in favour of the fictitious society. Out of that, Rs 223 crore was released.

The amount was raised by the bank as loan on FDRs of JKSTCB (J&K State Cooperative Bank, Srinagar) with J&K Bank. The entire loan amount was transferred into the account of accused Hilal Ahmad Mir, Chairman of the fake and fictitious society. The whole amount was transferred through RTGS/NEFT into the accounts of 118 persons, who were supposedly shareholders /legal heirs of the land measuring 257 kanals and 19 marlas in Shivpora, Srinagar. After the fraud came to light, out of the loan amount of Rs 223 crore which was transferred into the accounts of 18 fake land owners, Rs 202 crore was frozen by the state. The land which was illegally leased to a fictitious society was attached by the government. After completing investigation, the charge sheet has been filed before the court.

KZINE SPEAK

Corruption, nepotism, and brazen violation of norms and procedures has been the hallmark of the previous political formations in Jammu and Kashmir. There has been a systemic and systematic attempt to siphon the state exchequer by the political elites and their subservient bureaucracy. Banks in particular have been on the target of the looters. The state has been made to suffer by the nexus of corruption in political and permanent bureaucracy. It is amazing to see government subsidiaries and semi-autonomous financial institutions being looted by rogue officers in connivance with the political bosses.

Jammu and Kashmir Cooperative Bank Ltd has always been on the top of the target list of babus and politicians. There is now concrete evidence that the corrupt thrived on the loot, and also channeled it to the kitty of terrorists for fueling subversive activities in Kashmir.

Corruption is a global phenomenon and a major problem in India. It is not rare to Kashmir. What is unprecedented is the loot of the public money for fueling terrorism in Kashmir.  Resources of the state have been used to weaken and even disintegrate the state. The political system has been so insensitive and incogitant that the entire system has been hijacked by non state actors. There are instances which prove that the state has no clue about how and where the financial reserves vanished.

The major source of terror funding in Kashmir has been the real estate business. There is documentary evidence suggesting that every single individual having links with terrorist organizations is in the real estate business. With the crackdown by the law enforcement agencies, hawala channels and foreign funding has declined significantly. But local reserves of funding are still intact, and this business sustains because of the funding extended by the banks.

It is shameful to find that in case after case, state reserves and resources have systematically reached the terrorists. Jammu and Kashmir Cooperative Bank in particular has been consistently exploited by rogues. Influential businessmen close to the political elites have looted the reserves of the state in order to nourish the terror ecosystem.