The court passed the order on a petition filed by the Enforcement Directorate (ED) challenging the high court order granting bail to MR Khan, who has been accused in various money laundering cases
New Delhi: The Supreme Court today stayed the release of Pune-based stud farm owner Hassan Ali Khan, accused in money laundering cases, on bail which was granted by the Bombay High Court last week, reports PTI.
A three-judge bench headed by justice Altamas Kabir said the effect of the Bombay High Court's order granting bail to him shall not be operational till Thursday.
The court passed the order on a petition filed by the Enforcement Directorate (ED) challenging the high court order granting bail to MR Khan, who has been accused in various money laundering cases.
"Let the matter be listed on Thursday. In the meantime, order of Bombay High Court of 12th August on bail shall not be given effect to," the bench said.
"The documents reveal that Hassan Ali Khan has huge funds in his accounts to the extent of $800 million with a bank outside India," the ED contended.
The agency, in its petition, alleged that various transactions led by Mr Khan through his foreign bank accounts reveal his association with international arms dealer Adnan Khashoggi.
"The documents point to deep linkage between Mr Khan and Mr Khashoggi," the agency further said while pressing for stay on Bombay High Court's order granting bail to Khan.
The high court had granted bail to Mr Khan on 12th August after observing that the agency had failed to show the wealth amassed by him was proceeds of crime.
"There are no ingredients of proceeds of crime in the case made out by the Enforcement Directorate against the applicant. He deserves to be released on bail," the high court had said.
The ED had said that Mr Khan and his arrested accomplice Kashinath Tapuriah had deep links with bank officials in the US, Switzerland, Singapore, UAE and other countries.
It had alleged that Mr Khan has links with Mr Khashoggi, and in 2003, $300 million was apparently received by him from the arms dealer from weapon sales.
It had also said the accused had created a complex maze of structures and transactions to hide the true source of funds and frustrate the investigations.
Anna calls on people not to allow agitation against corruption to fizzle out, but to court arrest. Team Anna members describe detention as “return to emergency”
New Delhi: Anna Hazare has said that his detention today marks the beginning of a "Second Freedom Struggle" and he called on people not to let the agitation against corruption, urging them to fill jails. Members of Mr Hazare's team immediately condemned the detention of Anna and some team members describing it as a "return of emergency".
"My dear countrymen, a second freedom struggle has begun and now I have also been arrested. But will this movement be stopped by my arrest? No, not at all. Don't let it happen," Mr Hazare said in a pre-recorded message.
The 73-year-old Gandhian, who was scheduled to begin a hunger protest against corruption in Delhi's JP Park area this morning, asked people to court arrest and go to jail in a country-wide agitation against corruption and for a strong Lokpal.
"Time has come my countrymen when there should be no place left in jails in India to accommodate any more persons," Mr Hazare said.
He also asked people to maintain peace. "I once again request my fellow countrymen that peace should be maintained and there must be no violence... Crores of people have joined this movement and a second line of leaders are standing to lead this movement. There are many who will continue to lead you and this fight will go on," he said.
Mr Hazare said leaders like Kejriwal, Bedi, Prashant Bhushan, Manish Sisodia, Arvind Gaud, PV Rajgopal, Shanti Bhusan and Akhil Gogoi will lead the agitation.
Mr Hazare and some of his close associates, Arvind Kejriwal, Kiran Bedi and Shanti Bhushan, were detained this morning as the Gandhian appeared firm about going ahead with the protest and defying prohibitory orders.
Anna Hazare's team described the detention as a "return of emergency without a formal proclamation".
"This is a return of emergency without official proclamation. What crime did Anna commit? Unless we unite, we will be imposed by a defective Lokpal which protects corruption. We now need solutions not statements of intentions," Ms Bedi told the Press Trust of India.
Ms Bedi alleged "somebody else" is behind the police action as the force is capable enough to handle such peaceful protests. "This has not been done by Delhi police; somebody else is behind it. Delhi police is capable enough to handle peaceful protests," she said. "When Anna asked the police about his crime, police said they were following orders."
On the detention of Mr Hazare, she said that there was not much of a difference between detention and arrest. "What is the difference between detention and arrest? There's no difference. When you are detained that means you are temporarily arrested and when your freedom is curbed, that is arrest," she said.
Governments across the world have initiated actions that have allowed markets to ignore many of their basic problems. More money is not the answer—it is making underlying problems worse
The market volatility of the past week is hardly surprising. The only thing that is surprising is what took it so long. The flood of free money over the past year has allowed markets to wallow in profits from all sorts of 'risk on' bets. Everything from obscure commodities to emerging market bonds benefitted from this speculative orgy. These distortions caused by government action allowed the markets to ignore many of the most basic problems. The list is certainly long.
Last week it was the US government's irresponsible handling of its debt negotiations. This week it is the seemingly interminable debt issues in Europe. Then there is the very real problem of weak growth or perhaps outright recession. Still the market cheered when the Federal Reserve promised to keep interest rates low for another two years. They should have panicked and sent the market down another 10%. More money is certainly not the solution. Instead it may be making the problem worse, much worse.
Over the past 25 years, central banks' prime directive has been to avoid recession at all costs. As soon as the equity markets take a slight dip, the central bankers are there to flood the markets with money. Interest rates plummet and everyone jumps back in. The recession may be avoided, but the collateral damage has been bubbles, which exacerbate the next downturn.
But you cannot just blame it on the developed countries' central banks. After the crash in 2008, China went on a massive stimulus binge of its own. Starting in 2009 its state-owned banks lent out a total of 21.3 trillion yuan. In 2008, the total lending was only 583 billion yuan. So just the bank-lending alone has been over 14 times the normal amount. Worse, the bank lending does not include loans from non-banks and the shadow banking system, which could almost double the numbers. The combination of cheap money from developed countries together with over-stimulus from China has created a host of unintended consequences.
One of the main consequences has been inflation. The Chinese just reported another month of rising inflation, which analysts brushed, off citing pork prices. Nothing could be more absurd. The Chinese are trying to control it through regulations with things like price controls which never work. For a variety of reasons hiking interest rates are ineffective. As Nobel Laureate Milton Friedman pointed out, "Inflation is always and everywhere a monetary phenomenon".
Despite a year and a half of tightening the amount of loans in China is still on track to be about the same as last year. The result is intransigent inflation and a real-estate bubble.
China is hardly alone in dealing with inflation. Almost all the emerging markets are being suffocated with cheap money and overheated economies. To deal with it, central banks around the world-with the exception of the United States-are raising interest rates. But these rate rises could cause severe issues for the real problem underlying slow economic growth: debt.
Economic downturns are the plumbing of capitalism. When money is allocated inefficiently, during a recession, uncompetitive firms and sectors fail. In most instances both investors and creditors of the failed firms pay a price. They lose money. Eventually the market reaches equilibrium and growth can begin again. But thanks to misguided attempts to prevent recessions, this has not occurred. The US is still mired in a housing crisis. Europe is saddled with over-leveraged countries. Japan is still stuck after 20 years.
Free money has now spread debt bubbles around the world. New consumers in emerging markets have borrowed more than they can pay back. The result is a rising mountain of new debt. In Poland, over the past 6 years, the amount of mortgage debt grew by 728%. In Brazil, despite some of the world's highest interest rates, consumer debt has increased 100% since 2007.
Of course, credit bubbles spawn bad debts. Consumer defaults in Brazil are expected to increase by a third this year. In March the State Bank of India reported that its net profit for the quarter was nearly wiped out by provisions for bad loans. Meanwhile the bad loans to local governments in China could equal 8% of GDP (gross domestic product).
But that is not the bad news.
The bad news is that the legal mechanisms for clearing the debt like bankruptcy and foreclosure simply don't exist in emerging markets. These economies do not even have information reporting mechanisms like credit reporting agencies. So the markets do not really have any idea how large the problem is.
So instead of solving the problem, cheap money has and will make it worse especially in emerging markets, the recent source of global economic growth. As interest rates rise, the true damage will become clear. The overdose of cheap money medicine will kill rather than cure.
(The writer is president of Emerging Market Strategies and can be contacted at [email protected] or [email protected].)