2ndlook

Indian fake currency trail gets hotter

Posted in British Raj, Business, India, Indo Pak Relations, Islamic Demonization by Anuraag Sanghi on January 17, 2012

A Rs.100 Pakistani Haj Note - for use in Saudi Arabia only.  |  Image source State Bank of Pakistan - sbp.gov.pk  |  Click for larger image.

A Rs.100 Pakistani Haj Note - for use in Saudi Arabia only. | Image source State Bank of Pakistan - sbp.gov.pk | Click for larger image.

When India counterfeited Pakistani currency

For a few years after Partition, Reserve Bank of India (RBI) was the common authority for India and Pakistan until 30th September 1948.

‘Pakistan (Monetary System and Reserve Bank) Order, 1947′ allowed for Indian Notes to be modified for use in Pakistan and to be placed into circulation from 1st April 1948. The modification to the Indian Notes consists of two inscriptions on the front of the Notes “Government of Pakistan” in English at top, while “Hakumat-e-Pakistan” at bottom of the white area reserved for viewing the watermark were inscribed. The inscribed Notes were in the denomination of 1, 2, 5, 10 and 100 Rupee. It is important to note that these inscriptions are due to modifications to the printing plates and they are not ‘overprints’.

From 1948-1956, Pakistan independently issued different currencies of varying denominations. In 1956, came news from the Pakistani Joint Secretary Cabinet to the Pakistani Cabinet

that according to some reliable source, there was an offically (sic) sponsored organization in Calcutta which were forging Pakistani currency notes on a big scale, that were in circulation in India.

In this connection it was suggested that the new series of Pakistani Bank Notes with a portrait of Mr. Muhammad Ali Jinnah should introduced. In this regard the 100 Rupee Note was issued on 24th December, 1957. It was predominantly green in color, a portrait of Mr. Muhammad Ali Jinnah, watermark of Mr. Jinnah and a security thread on front and the illustration of the Badshahi Mosque on back of the Note were introduced. (via State Bank of Pakistan – Museum & Art Gallery; Pakistani Currency).

Soon afterwards, to print Pakistani currency independently of India, Pakistan contracted with British companies – mainly, Thomas De La Rue & Company.

This name,  De La Rue, rings a bell. A loud bell.

History repeats

Now De La Rue is the same company that supplies currency paper to RBI also for Indian currency notes. Curiously, the specific paper that RBI uniquely specified also landed up in the hands of Pakistani counterfeiters, who have released fake currency worth hundreds of crores.

Cut back to 1956 Pakistan.

Remember that 1956 was also the year when Pakistan became a republic – and the first constitution of Pakistan was adopted. Governor General Sahibzada Sayyid Iskander Ali Mirza (a Shia Muslim from Bengal, direct descendant of Mir Jaffer) became the first President of the Pakistani Republic. Two years later, came Ayub Khan’s coup that started the tradition of Army rule in Pakistan.

To an emerging Pakistan in 1956, after a 9 year struggle to write a constitution, when confronted with news that its economy was threatened by fake currency from its estranged neighbour, India, was confirmation of its worst fears. After the 1949 British devaluation of the pound, the Pakistani rupee (like the Indian rupee), was overvalued. To overcome the hawala and smuggling threats to the Pakistani economy, Pakistan introduced a special currency – the Haj Notes. The counterfeit currency problem (reportedly centered in Kolkatta) added to Pakistani woes.

Some 50 years later, India, an emerging economy, making its mark on the world in the 2000-2010, discovered that Pakistan was counterfeiting Indian currency.

Something fishy here.

A man in Zimbabwe goes shopping. Hyper-inflation has made things difficult for Zimbabwe.  |  Image source - smh.com.au  |  Click for source image.

A man in Zimbabwe goes shopping. Hyper-inflation has made things difficult for Zimbabwe. | Image source - smh.com.au | Click for source image.

Parallels & Patterns

The common factor between the 1956 Pakistani problem of counterfeit currency – and in India now, is the De La Rue company.

Currency paper technology is not available off-the-shelf – or the kind of paper that any one can buy from the corner stationery shop or the local paper mill. India did not have the paper technology in 1956, and Pakistan does not have the technology today to make counterfeit currency.

There are roughly about 12 companies, mostly European, in the world that dominate the security printing business – and these are monopoly businesses. These companies work closely with their respective parent governments – and clients governments.

Gaddafi’s regime was starved of currency notes, before his downfall. He could not pay his soldiers. Robert Mugabe’s regime has been without a national currency, due to sanctions imposed by the German government on the German company, Giesecke & Devrient. When the German company resisted sanctions against Mugabe, the Anglo-Saxon press, started a smear campaign against the German company. There have been thin reports about Jura JSP, an Austrian company, replacing the German company, which may help Zimbabwe to tide over the currency crisis.

All the while, some British companies are keep a hold over some critical Zimbabwe assets..

The De La Rue scandal

In 2010-2011, RBI which imports 95% of its security paper requirements, did not invite De La Rue for negotiations.

Why? RBI is not saying anything.

RBI in most years was a huge chunk of De La Rue’s business – and in most years, about 25% of De La Rue’s profits.

What is De La Rue saying about loss of RBI business?

Nothing except, that it has sacked its CEO – John Hussey, a De La Rue veteran of 27 years. De La Rue’s French rival, François-Charles Oberthur Fiduciaire, or simply Oberthur Technologies, promptly picked up Hussey as an ‘advisor.’

Shortly after that, De La Rue also confirmed that the British Serious Fraud Office (SFO) had been called in – and two other senior executives, Mark Jeffery (Director – Manufacturing) and Jonathan Garside (Director –Sales), also resigned.

So, what happened?

The paper that RBI specified is not the paper that De La Rue supplied. De La Rue wrongly self-certified this inappropriate quality paper, to be as per RBI specs.

Coming to brass-tacks

The British press, hinted much and said little. De la Rue, RBI’s biggest supplier of many decades, was shut out from recent tenders. And later denied security clearance, also. So much for the story and intrigue.

All this still does not answer an important question.

This was not an accident – or an aberration? 1956 in Pakistan; and in 2006, in India. John Hussey, the previous CEO of De La Rue, instead of hiding his face in disgrace, has joined  French company as a valuable ‘advisor.’

Obviously De La Rue is protected.

Who is protecting De La Rue?


2ndlook blogs have written extensively and covered this subject in the past. For more click at previous posts below

One Response

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  1. admin said, on January 18, 2012 at 3:13 am


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