FBI arrest points to Pakistan influence-peddling scheme

A Virginia man was arrested Tuesday by FBI agents in a suspected influence-peddling scheme to funnel millions of dollars from the Pakistani government, including its military intelligence service, to U.S. elected officials to help drive India out of the disputed Kashmir territory in South Asia.

Syed Ghulam Nabi Fai, 62, a U.S. citizen and resident of Fairfax, was charged with participating in a long-term conspiracy to secretly act as an agent of the Pakistani government in the U.S. without disclosing that affiliation as required by law.

Mr. Fai, executive director of the Kashmiri American Council (KAC) in Washington, is accused of submitting annual strategy reports and budgetary requirements to his Pakistani government handlers to secure U.S. congressional support to encourage the executive branch to support “self-determination” in Kashmir.

According to an FBI affidavit, he received “approximately $500,000 to $700,000 per year from the government of Pakistan” for contributions to members of Congress. But the Justice Department said there was no evidence to show that any of the elected officials who received the donations were aware the money originated from the Pakistani government.

A federal magistrate judge on Tuesday ordered Mr. Fai held until a detention hearing Thursday. Assistant U.S. Attorney Gordon Kromberg said Mr. Fai faces up to five years in prison if convicted.

While none of the beneficiaries of the donations was identified, Federal Election Commission (FEC) records show that both Democrats and Republicans were the recipients of contributions from Mr. Fai and the KAC. The largest donations were $9,500 to the National Republican Senatorial Committee (NRSC) and $7,500 to Rep. Dan Burton, Indiana Republican.

“I am deeply shocked by Dr. Fai’s arrest,” Mr. Burton said. “I’ve known Dr. Fai for 20 years and in that time I had no inkling of his involvement with any foreign intelligence operation and had presumed our correspondence was legitimate.

“For as long as I’ve known him, Dr. Fai has been either a permanent legal resident of the United States or a citizen and as such any political contributions I may have received from Dr. Fai over the years are completely legal,” he said. “However, if there is any doubt about the origin of these contributions, I will donate those funds to the Boy Scouts of America.”

Brian Walsh, a spokesman at the NRSC, said while the Fai donations predated the committee’s current leadership, the accusations were “very disturbing” and the committee would cooperate in any ongoing probe.

Although the charges do not include accusations of espionage, they come at a time of strained relationships between the U.S. and Pakistan, including a recent withholding of U.S. aid to Islamabad. A Navy SEAL team in May found and killed Osama bin Laden in a town dominated by the Pakistani military, reviving charges of official Pakistani complicity with al Qaeda and other Islamist terrorist groups.

The Pakistani Embassy in Washington, in a statement, said: “Fai is not a Pakistani citizen, and the government and embassy of Pakistan have no knowledge of the case involving him.”

Telephone calls to the KAC went unanswered.

Also named in the suspected scheme is Zaheer Ahmad, 63, a U.S. citizen who lives in Pakistan and is now considered a fugitive. He is accused of recruiting “straw donors” to contribute to the KAC, whose true source was the Pakistani government.

Mr. Fai and Mr. Ahmad were named in a one-count criminal complaint saying they conspired to act as an agent of a foreign government without registering with the attorney general in violation of the Foreign Agents Registration Act (FARA) and to falsify, conceal and cover up information they had a duty to disclose.

“Mr. Fai is accused of a decades-long scheme with one purpose - to hide Pakistan’s involvement behind his efforts to influence the U.S. government’s position on Kashmir,” said U.S. Attorney Neil MacBride in Virginia. “His handlers in Pakistan allegedly funneled millions through the Kashmir Center to contribute to U.S. elected officials, fund high-profile conferences and pay for other efforts that promoted the Kashmiri cause to decision-makers in Washington.”

According to the FBI affidavit, the KAC, also known as the “Kashmir Center,” calls itself a “not-for-profit organization dedicated to raising the level of knowledge in the United States about the struggle of the Kashmiri people for self-determination.”

Although the KAC held itself out to be a Kashmiri organization run by Kashmiris and financed by Americans, the affidavit said it is one of three “Kashmir Centers” that actually are run by elements of the Pakistani government, including Pakistan’s military intelligence service, the Inter-Services Intelligence Agency (ISI). The others are in London and Brussels.

Some of the charges of Pakistani support for terrorism center on the ISI and Lashkar-e-Taiba, an officially banned jihad group that launches terrorist attacks against India over the Kashmir dispute. The terrorist group planned and executed from Pakistan, reportedly with aid from the ISI, the 2008 Mumbai attacks that killed more than 160 people.

The KAC told the Internal Revenue Service that it received no foreign grants, according to IRS records.

But a confidential witness told investigators he participated in a scheme to obscure the origin of money transferred by Pakistan’s ISI to Mr. Fai to use as a lobbyist for the KAC in furtherance of Pakistani government interests, according to the affidavit. It also said the witness said the money was transferred to Mr. Fai through Mr. Ahmad.

A second confidential witness told investigators the ISI created the KAC to propagandize on behalf of the government of Pakistan with the goal of uniting Kashmir. The affidavit said the second witness said ISI’s sponsorship and control of KAC were secret and ISI had been directing Mr. Fai’s activities for the past 25 years.

When questioned by the FBI about his relationships in March 2007, the affidavit said Mr. Fai said he had never met anyone who identified himself as being affiliated with the ISI.

In March 2010, the Justice Department sent Mr. Fai a letter notifying him of his possible obligation to register as a foreign agent with the department through the FARA.

In his written response to Justice, Mr. Fai asserted that neither he nor the KAC had ever engaged in any activities for or provided any services to Pakistan or any foreign entity. In a March interview with the FBI, Mr. Fai again denied having any relationship with anyone in the Pakistani government.

“FARA is designed to ensure that the U.S. government and American public know the underlying source of information and identity of persons attempting to influence U.S. policy and laws,” said Lisa Monaco, assistant attorney general for national security. “The defendants are accused of thwarting this process by concealing the fact that a foreign government was funding and directing their lobbying and public relations efforts in America.”

According to the affidavit, four Pakistani government handlers directed Mr. Fai’s U.S. activities and he had been in touch with his handlers more than 4,000 times since June 2008.

“Foreign governments who try to influence the United States by using unregistered agents threaten our national security,” said James McJunkin, assistant director in charge of the FBI’s Washington field office. “The charges underscore the dedication of special agents who enforce laws - like the FARA violations charged here - that are designed to detect and defeat those who attempt to surreptitiously exert foreign influence on our government by using agents who conceal their foreign affiliations.”

Kashmir is a disputed border area claimed by both India and Pakistan. It was split after British rule ended in 1947. India and Pakistan have fought two wars over the region.

As KAC’s executive director, Mr. Fai wrote five opinion pieces on the Kashmir situation for The Washington Times between April 1992 and January 2001.

In addition to Mr. Kromberg, the case is being prosecuted by Assistant U.S. Attorney Daniel Grooms, both of the U.S. Attorney’s Office for the Eastern District of Virginia, and trial attorney John Gibbs of the Counterterrorism Section of the Justice Department’s National Security Division.