Terror hand in stock market under watch: Chidambaram

NEW DELHI: Finance minister P Chidambaram on Tuesday confirmed warnings of intelligence agencies that terror funds were flowing into the stock market. Speaking in Rajya Sabha, Chidambaram candidly admitted that government was tracking at least one case of suspected terror-stained money on the bourses. Replying to a question raised by Samajwadi Party MP Shahid Siddiqui, the FM said, "Yes, recently one case has come to our notice. It is suspected that it may be linked to a person under watch. I cannot divulge further details." This sparked intense speculation and inquiries, but the admission tallies with the assessment first revealed by national security advisor M K Narayanan.

In September, TOI had reported that Research & Analysis Wing (RAW), country's external intelligence agency, had alerted the government and Securities & Exchange Board of India (Sebi) about investments made by a prominent Saudi businessman alleged to have links with Osama bin Laden.

But this is the first time the government has admitted the presence of terror investments in the financial market. Till recently, finance ministry officials had sought to dismiss reports of terror funds on Dalal Street as "good topic for dinner table discussion".

Earlier this year, government and Sebi had scoffed at Narayanan's warnings about possible use of terror funds in stock markets. Narayanan had, in fact, mentioned that tainted money had found its way through stock markets like Chennai. But Sebi and finance ministry babus could not make any headway on the tip-off.

Sources said intelligence agencies were currently investigating the links of the Saudi billionaire in India as well as his networks and investments abroad. However, so far, the agencies have not met with much success to nail the tycoon with interests in a leading satellite phone company.

"A lot of money is coming into the country from the Gulf region and the Middle-East. It is difficult to say which is good and which is bad money," a leading spook said. The government is, however, keeping a close watch on all the investments coming into the country, particularly from that region, the official added.

A note prepared by the National Security Council Secretariat had also suggested the use of participatory notes, a derivative instrument used byunregistered foreign entities to invest in India, as a possible instrument being exploited by terror financiers.

The government's flip-flop on the issue came in for some criticism in the House on Tuesday with BJP's Ravishankar Prasad recalling that Chidambaram had earlier denied any such investment in the markets. He wondered what one could make out of FM's statement of "suspected" involvement of terrorists.