February 15, 2007 ☼ Economy ☼ Security
This is an archived blog post from The Acorn.
India’s booming economy provides a good opportunity for those with some money to make, potentially, a lot more money. It is natural that terrorists and criminals would exploit this to raise funds for their operations. The start-up capital may come from Pakistan, but savvy terrorists shouldn’t find it that hard to generate healthy returns from investing in the Indian economy. That was the general point M K Narayanan, India’s national security advisor, made at the Munich security conference last week. The PTI headline, however, screams “Terrorist groups manipulating Bombay Stock Exchange.”
Here’s what Narayanan actually said (and he’s quoted in the same article):
“Isolated instances of terrorist outfits manipulating the stock markets to raise funds for their operations have been reported. Stock exchanges in Mumbai and Chennai have, on occasions, reported that fictitious or notional companies were engaging in stock market operations” [IE]
“Isolated instances” are not “new modus operandi” as described by the PTI. Investing in stocks, less manipulating the market, is a terribly risky way for terrorists to raise funds. Transactions are traceable and there is a relatively higher degree of oversight in stock market transactions. Why go through all the trouble when there are easier, less risky, routes to capital gains? As Narayanan says, in addition to all the illegal activities like money laundering and counterfeiting, terrorist organisations have many non-illegal ways at their disposal: direct investment in ‘legitimate business enterprises like restaurants, real estate agencies and shipping’. That’s not to mention simply passing the hat around (or else…).
The sensationalisation, therefore, is not only misleading. It also diverts attention from Narayanan’s real call to action — that tax-havens and financial centres in the Gulf region must not use banking secrecy as a reason not to share information on potential sources of terror financing.
Update: The Indian Express, which carried the PTI report on its online edition, blames Narayanan for indulging in loose talk. From this blog’s perspective, it was loose reporting. How many people actually know what Narayanan said at the Munich conference other than from PTI’s reporting?
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