SOUTH ASIA INTELLIGENCE REVIEW
Weekly Assessments & Briefings
Volume 10, No. 41, April 16, 2012

INDIA	PAKISTAN

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FICN: Relentless Intent
Ajit Kumar Singh
Research Fellow, Institute for Conflict Management

Pakistan’s external intelligence agency, Inter Services Intelligence (ISI), continues to pump increasing volumes of Fake Indian Currency Notes (FICN) in its campaign to raise finances for, and to provide financial assistance to, Islamist terrorists, in order to sustain their jihad against India, and to destabilize the Indian Economy. As new routes are discovered, and large amounts of fake currency are recovered, it is abundantly clear that this strategy has intensified over time, bringing volumes of FICN into India that have significant destabilizing impact. According to one recent report, the Government of India (GoI) estimates that FICN worth INR 160 billion is already in circulation within the country. Direct links to FICN have been documented in at least 15 cases of terrorist funding.

Significantly, on April 3, 2012, acting on inputs provided by Indian agencies, the Nepal Police arrested a Vietnamese woman in possession of FICN worth INR 9.8 million, at Tribhuwan International Airport in Kathmandu. The consignment had been delivered to her in Vietnam by conduits working for Pakistani handlers. The woman reached Kathmandu, where she was arrested, via Bangkok (Thailand). The arrest exposed a completely new route (Pakistan-Vietnam-Nepal-India) of FICN flows, even as established routes come under closer scrutiny. The Pakistan-Bangladesh-India and Pakistan-Dubai-India trajectories, for instance, have been on India’s intelligence radar for some time now, and, as one unnamed senior intelligence officer notes, "There is greater screening of passengers coming via Dubai [United Arab Emirate (UAE)] or Bangladesh. One would generally not suspect a Vietnamese coming from her country to be carrying fake currency."

Noting other changes in modus operandi, another official observed, “counterfeiters keep reinventing themselves” and “the (Vietnamese) woman paid the required duty on the high-end liquor bottles stuffed with FICN and made it a legitimate consignment." In another recent incident, he disclosed, "we had busted a racket in which fake currency was concealed in cigarettes. The accused had removed tobacco and rolled notes into the empty space."

Reflecting the increasing trends in the injection of FICN into the Indian financial system, the Annual Report (2010-11) of the Financial Intelligence Unit (FIU), under the Ministry of Finance, stated that there was a 400 per cent increase in Counterfeit Currency Transaction Reports (CCTRs) received by the agency. The report stated that, during financial year 2010-11, the agency received 423,539 CCTRs with a value of over INR 350 million. There were 127,781 CCTRs for the financial year 2009-2010, with a face value of INR 100 million. 35,730 CCTRs were recorded in financial year 2008-2009 and just 8,580 in 2007-08.

Pakistan’s involvement in the production and circulation of FICN has long been established. More recently, the National Investigation Agency (NIA) reconfirmed the Pakistani role after it arrested two persons on March 28, 2012, along with FICN amounting to INR 985,000. The Agency disclosed that the FICN was being smuggled into India by Pakistan-based FICN dealer Iqbal Kana, who belongs to Kairana Tehsil of Muzaffarnagar District in Uttar Pradesh (UP), India, and who operates from Pakistan. Noting the very high quality of duplication exhibited in the FICN seized at Taliparamba, Kerala, on September 18, 2011, the NIA stated before the Kerala High Court, on February 14, 2012, that the involvement of a state (Pakistan)-sponsored racket was a certainty. Sources disclosed that an ISI officer, Aslam Chaudhary, was understood to be the main person within the ISI, handling the printing of FICN in Quetta (Balochistan), Karachi (Sindh), Lahore (Punjab) and Peshawar (Khyber Pakhtunkhwa). Reports also indicate that the paper for the fake notes is sourced from London, Netherlands, Germany, Italy and France. A March 10, 2012, report indicates, further, that Dubai is emerging as a new and major printing centre for FICN. The notes are printed in denominations of INR 500 and INR 1,000. Earlier, on August 13, 2011, one news report claimed that a ‘secret’ report prepared by Indian intelligence agencies asserted that China was also being exploited as a major staging post for the FICN flooding into India. The report claimed that the movement of FICN was actively facilitated by Pakistan’s High Commission in Dhaka and Embassy in Kathmandu.

Pakistan is believed to facilitate at least 28 important ‘FICN networks’, which operate out of Bangladesh, Nepal, Pakistan and Bangkok. Countries including the United Arab Emirates (UAE), Sri Lanka and Malaysia have also been used as transit points. Apart from nationals from these countries, the Indian security agencies have arrested FICN couriers from Somalia and Hong Kong as well.

Nepal, however, with its entirely porous borders with India and poor internal security system, remains the route most preferred by Pakistani handlers. Media reports indicate that nearly 75 per cent of the FICN flow, emanating from Pakistan, made its way to India through Nepal. On January 31, 2012, an unnamed Border Security Force (BSF) officer stated, in a news report, that FICN of a face value of INR 80 million had been seized in Nepal over the preceding three years. Not surprisingly, the border Districts of Bihar provide a principal transit route for couriers from Nepal. Bihar has witnessed a steep rise in the smuggling and circulation of FICN in 2011. According to the State Police, FICN worth INR 4.14 million were recovered in 2011 (till December 15). In the corresponding period of 2010, FICN worth INR 1.86 million had been recovered, while in 2009 FICN worth INR 1.30 million was recovered. Similarly, according to a March 30, 2012, report, FICN was being pumped into 40 Districts of UP, which also borders Nepal. Media reports, meanwhile, suggest that 36.8 percent of large FICN seizures in India (above INR 1 million) over a five-year period had been ‘directly sourced’ from Pakistan.

The Rajasthan and Punjab borders are the other corridors through which Pakistani agents push fake currency into India. Sea-borne consignments have also been known to be delivered to Tamil Nadu (from Sri Lanka) and Gujarat (from Pakistan). The fake currency is offered to crime networks throughout India at a 1:2 ratio of original currency to counterfeit currency.

Sources indicate that three nodal centers have been set up in Jammu in Jammu & Kashmir (J&K), Malda in West Bengal, and in Nepal, for the distribution of FICN across India. Jammu is the nodal point for the western, southern and northern parts of India, while Malda is the principal conduit for West Bengal, Bihar and the north eastern States. The centre in Nepal is used for stocking and distribution of counterfeit notes and smuggling them to Bangladesh for distribution across Assam and the eastern frontier states. Sources also note that at least 12 modules have been set up in cities and towns across India, to penetrate deep into urban and rural areas.

As stated, reports link FICN to at least 15 cases of terrorist funding. Lashkar-e-Toiba (LeT) operative David Coleman Headley, in his disclosures to US authorities, confessed to having been given INR 250,000 in FICN in Pakistan by his handler for a trip to India to set up the plot for the November 26, 2008, Mumbai terrorist attacks (also known as 26/11), which eventually resulted in 166 fatalities. Sources indicate that the LeT has been used by the ISI for distribution of FICN in India, even as it is partially funded by FICN flows. In March 2102, moreover, the CBI exposed an FICN racket operating in India’s Northeast with help from militants in Nagaland. The revelation was made after interrogating Malda-based Barkat Ali, who was arrested on March 12, 2012, near the Guwahati Railway Station in Assam.

India’s security agencies have succeeded in mounting some pressure on FICN couriers over time.  In the most successful operation in the recent past, the NIA synchronized operations with different State agencies and the BSF in January 2012, to expose an international network of FICN handlers. On January 6, 2012, it arrested the leaders of the network, Morgen Hussain, and Rakib Sheikh, while simultaneous raids were conducted across the country, in which another 12 persons were arrested and significant seizures were made. On the revelation of the persons arrested, the NIA arrested another two persons – Imran and Jenab – on March 28, 2102, along with FICN worth INR 985,000. According to the NIA, “Morgen Hussain and Rakib Sheikh of Jamsedtola, Mahabbatpur, PS Kalichak, Distt. Malda were coordinating smuggling and circulation of FICN across the country…”

Earlier, on December 22, 2009, in Jharkhand, the SFs had arrested D. Manarul Sheikh (48), an alleged kingpin involved in circulation of counterfeit currency. “Sheikh is one of the most important accused and a key player in the circulation of FICN across the country. Preliminary investigation reveals that the fake notes came from Bangladesh and Nepal,” Deputy Superintendent of Police N. Mohan, who led the team, stated. Meanwhile, Abdul Rehman Haji from Hosdurg Kolavayal in Kasargod District (Kerala), who is said to be the chief operator of a cartel engaged in supplying FICN printed in Pakistan to Kerala and Karnataka, was arrested in Dubai by the Dubai Police, on March 7, 2012.

On August 6, 2010, a Committee set up to review practices and procedures regarding procurement of sensitive items relating to currency, had recommends the waiver of customs duty on imported machinery for bank note paper production and printing, and the establishment of a single agency at the National Level to coordinate the activities of intelligence, law enforcement and investigating agencies dealing with the FICN menace. Minister of State in the MHA, Jitendra Singh, in a written reply to a question in the Rajya Sabha (Upper House of Parliament) on December 11, 2011, disclosed that the MHA had constituted a Terror Funding & Fake Currency Cell (TFFC) in the NIA in 2010 to focus on Terror Funding and Fake Currency cases. The NIA, as of now, is investigating five FICN related cases.

Despite these, as well as several other security and administrative measures, and the very significant arrests and recoveries of the recent past, there appears to be no respite from uninterrupted FICN inflows into India. Relentless flows from Pakistan, and Islamabad’s unwavering intent to support terrorism and promote every possible form of instability within India, have easily neutralized the limited gains of every Indian initiative till now. It remains to be seen whether New Delhi will be able to find the means, and more importantly, the capacities and capabilities, to push the Pakistani game plan to failure.

INDIA

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Naga Factionalism Escalates
Veronica Khangchian
Research Associate, Institute for Conflict Management

There seems to be no end to the fratricidal rivalry among the Nagas, which has persisted since the formation of the National Socialist Council of Nagaland-Khaplang (NSCN-K) and NSCN-Isak-Muivah (NSCN-IM) following the split of the original NSCN on April 30, 1988. More recently, turf wars between Naga groups have resulted in escalating violence since the further split of both the NSCN-IM and the NSCN-K. The NSCN-Khole-Kitovi, a ‘splinter group’ of NSCN-K, was formed on June 7, 2011; and the Zeliangrong United Front (ZUF) on February 25, 2011.

The NSCN-Khole-Kitovi faction was formed after the ‘expulsion’ of the NSCN-K’s ‘chairman’ S.S Khaplang by the dissenting group, on June 7, 2011, for Khaplang’s alleged ‘dictatorial leadership’. While Khaplang and the cadres who chose to remain loyal to him continued to identify themselves as NSCN-K, the other faction, which ‘expelled‘ Khaplang, came to be known as NSCN-Khole-Kitovi, under the leadership of Khole Konyak and Kitovi Zhimomi. The two factions were initially involved in war of words with the NSCN-K declaring that Khole and Kitovi Zhimomi (leaders of the new faction) had become “prisoners of the NSCN-IM”. Earlier, the Khole-Kitovi faction had described S.S. Khaplang as a ‘Burmese national’ and asked him not to interfere in ‘Naga affairs’. Frequent and violent clashes, however, began in December 2011.

The formation of new Manipur-based Naga outfit, the Zeliangrong United front (ZUF), on February 25, 2011, added another dimension to intensifying Naga factionalism. Factional fights have frequently been witnessed both within and beyond Nagaland, in Manipur, Arunachal Pradesh and Assam and also outside India’s frontier in Myanmar, where Naga groups have their base.

ZUF was formed with the proclaimed objective of protecting the interests of the Zeliangrong tribe. On its first raising day on February 25, 2012, the group denied claims that it was a breakaway faction of the NSCN-IM, though it had earlier been reported that ZUF was created when some 10 NSCN-IM cadres, who deserted the group along with arms and ammunition, joined up with NSCN-K cadres. On November 11, 2011, the NSCN-IM claimed that ZUF was formed to “challenge the (Naga) nation”. The NSCN–IM declared, “It is the duty of the Naga Army to check anti-national elements caused by the ZUF (sic). On the other hand, ZUF warned NSCN-IM, declaring that the latter group would be responsible for any ‘unfortunate incident’ that occurred in future in the ‘Zeliangrong region’ (the Zeliangrong Naga inhabited areas of Assam, Manipur and Nagaland). The ZUF is against NSCN-IM operations in the areas it claims as its own. The NSCN-IM had served notice on the ZUF to ‘surrender’ by March 10, 2011, or face ‘strong resistance’.

Nineteen incidents of fratricidal clashes among Naga factions have already been reported in 2012, 14 of these in Nagaland (between NSCN-K and Khole-Kitovi), two in Arunachal Pradesh (between NSCN-K and NSCN-IM), two in Manipur (one between NSCN-K and NSCN-Khole-Kitovi and the other between NSCN-IM and ZUF) and one incident in Assam (NSCN-K and NSCN-IM). These incidents have resulted in 20 fatalities (till April 15, 2012). The number of injured stands at 15. The largest proportion of fratricidal violence has been registered between the NSCN-K and the NSCN-Khole-Kitovi in Nagaland. Earlier, a sharp spike in Naga factional violence had been registered in 2011, with a total of 49 killed and 13 injured.

Factionalism was at its peak in the years 2008, 2007 and 2006 with 119 killings (79 incidents), 90 killings (62 incidents), 74 killings (60 incidents), respectively.  A sharp drop in such killings in 2009 and 2010 resulted from the ‘Covenant of Reconciliation’ (CoR) signed by the top leaders of NSCN-K, NSCN-IM and the Federal Government of Nagaland / Naga National Council (FGN/NNC) on June 13, 2009, after a Naga Reconciliation meet was held in Chiang Mai in Thailand from June 1 to June 8, 2009. The CoR, however, quickly lost its effectiveness, as tribal and leadership tensions grew.

In the latest of such incidents, two militants, one from NSCN-K, identified as Tsilise, and another from NSCN-Khole-Kitovi, identified as Johnson, were killed when the two groups clashed at Sanphure village in Kiphire District of Nagaland, in the morning of March 30, 2012. An NSCN-K cadre also sustained injuries in the clash, which lasted 3 to 4 hours. Official sources indicate that the clash took place when the NSCN-K attacked the Sanphure ‘designated camp’ at Kiphire, which they claimed was ‘illegally’ occupied by NSCN-Khole-Kitovi. NSCN-K later asserted that the camp was among the four allotted to them.

On March 28, 2012, NSCN-Khole-Kitovi and NSCN-K cadres had clashed at a place between Natha Old and Natha New, on the outskirts of Zunheboto District, Nagaland, though no casualty was reported. NSCN-K claimed that firing had occurred due to “provocation” by NSCN-Khole-Kitovi, who had threatened to chase the NSCN-K out from Zunheboto.

On March 26, 2012, an NSCN-K tatar (core member) was abducted and subsequently killed by militants at Pfuchama village in Kohima District, Nagaland. The deceased had recently been released from prison, after he was arrested on charges relating to illegal possession of arms. The father of the deceased, A.K.D. Angami, the former NSCN-K ‘chairman’ for the Angami region, had been killed in his own village on February 9, 2006.

Earlier, on March 17, 2012, a kapur (area administrator) of the NSCN-Khole-Kitovi, identified as Kito Sumi, was shot dead by suspected NSCN-K cadres at Naga Hospital in Kohima. A civilian was also injured in the incident.

The worst of recent incidents occurred on March 15, 2012, when three dead bodies, suspected to be of NSCN-Khole-Kitovi cadres, were found a few hundred metres away from Chui Village Junction in Mon District, Nagaland. According to sources, the deceased were ‘arrested’ some days earlier by NSCN-K cadres, who killed them on March 14.

Other prominent factional clashes among Naga groups, within and outside Nagaland, since February 25, 2011 (formation of ZUF), include:

February 29, 2012: Suspected NSCN-K militants killed two NSCN-Khole-Kitovi militants, identified as Khamhi Konyak and Lemnyu Konyak, at Phomching Town under Mon District.

February 5, 2012: Two NSCN-Khole-Kitovi cadres, identified as one 'sergeant major' Thangboi and 'corporal' Jackson Kuki, were killed, and another was injured, after NSCN-K cadres attacked a 'mobile camp' of NSCN-Khole-Kitovi on the outskirts of Athibung area in Peren District, Nagaland.

January 8, 2012: NSCN-IM claimed that two militants belonging to NSCN-K were killed and four were injured, when the latter attacked the NSCN-IM camp in Chasha village in Tirap District, Arunachal Pradesh.

October 7, 2011: Six cadres of the NSCN-IM were killed and another five were injured during an ambush by ZUF cadres at Leishok village in the Nungba sub-division of the Tamenglong District in Manipur. About 60 NSCN-IM cadres were travelling to the village in two trucks, when they came under attack. Referring to the October 7 shootout, the ZUF stated, on October 13, 2011 that it was a ‘sad incident’ caused by an intrusion by ‘outsiders’ (NSCN-IM), which had disturbed the peaceful atmosphere: “It is natural for us to protect our land and we are doing it with our own volition.”

In Tirap-Changlang (Arunachal Pradesh), violence has been going on for nearly a decade, as the NSCN-IM and NSCN-K engage in a contest to secure dominance over the two strategically located Districts in Eastern Arunachal Pradesh. These Districts serve as a crucial transit route for militants from India’s north-east, who take shelter in largely un-administered areas of Myanmar. The Nungba sub-division of Tamenglong District, Manipur, is afflicted by the NSCN-IM, ZUF confrontation. Myanmar is the turf where NSCN-IM and NSCN-K fight for supremacy. The last such incident in Myanmar took place on February 28, 2011, when severe fighting broke out between NSCN-K and NSCN-IM cadres somewhere inside Myanmar. At least two NSCN-K cadres were reportedly injured in the fighting.

Nagaland Chief Minister Neiphiu Rio, on February 29, 2012, decried the rising factionalism among Nagas, observing, “Though the world and outsiders recognize Naga people, yet Naga people themselves do not recognize each other and though Nagas have ceasefire with others, they do not have ceasefire among themselves.” Questioning the rationale of the fratricidal war, Nagaland Home Minister Imkong L. Imchen, stated, on April 2, 2012, “Killing of Nagas by the Nagas is not a demonstration or reflection of Naga nationalism and has got nothing to do with Naga political issue but it amounts to criminal offence only (sic).”

Rising Naga factionalism has disturbed an otherwise fast-improving security scenario in Nagaland. From its recent peak of 145 fatalities, including 101 militants, 42 civilians and two Security Force (SF) personnel, in 2008, fatalities within the State had come down to just three (all militants) in 2010. Fratricidal battles have, moreover, marginalized all reconciliation efforts initiated by the Forum for Naga Reconciliation (FNR). The FNR, in its “Naga Reconciliation Meeting” on February 29, 2012, adopted a resolution which “calls upon all armed confrontations to cease with immediate effect, from this day February 29, 2012, and to decisively take steps towards Naga reconciliation”. The call failed to unite the Nagas, and to end the violence.

SFs have, through all this, inclined to keep off the internecine conflicts between various Naga factions, in a complete abdication of state responsibility. The various cease fire agreements with the principal insurgent groups have long prevented state agencies from taking effective action, despite endemic violations of ‘ground rules’ by the insurgents and various patterns of lawlessness, including enveloping extortion – projected as ‘taxation’ by various groups in their areas of dominance – as well as acts of violence and intimidation, including those relating to factional turf wars. The cease fire agreements have held since the first of these was signed between the Centre and the NSCN-IM in 1997, and timorous state agencies have been unwilling to challenge local dominance of various groups in order to impose the law of the land, since. Significant motivation for factional proliferation and violence arises out of the vast revenues and power exercised by the various insurgent groups, and this is accentuated by divergent tribal identities and loyalties. Ceasefires notwithstanding, the people of Nagaland, it seems, will have to wait much longer before they can experience a real peace.

The South Asia Intelligence Review (SAIR) is a weekly service that brings you regular data, assessments and news briefs on terrorism, insurgencies and sub-conventional warfare, on counter-terrorism responses and policies, as well as on related economic, political, and social issues, in the South Asian region.

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