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Month: February 2019

Housing outlook around Australia: the bad and the ugly

Housing outlook around Australia: the bad and the ugly

The outlook for Sydney’s housing is less clouded than for Melbourne.Anyone who has followed my blog on MacroBusiness will be aware that this columnist holds a bearish view on the Australian housing market overall.
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This view is based primarily on the fact that Australian home prices experienced a decade of strong growth that was not matched by the growth in underlying fundamentals: incomes, rents and construction costs (see chart below).

While my overall view of the Australian housing market is pessimistic, it is by no means uniform, with some capital cities providing superior investment prospects than others.

In this report, I provide my 12-month price forecasts for each of Australia’s capital city housing markets, based on consideration of key price drivers: housing finance; housing supply; affordability; and the macroeconomic outlook. My forecasts are based on a “stable” economy, and would change materially should conditions deteriorate (e.g. a Chinese “hard landing”).


Relative to the rest of the nation, Sydney’s housing market has displayed resilience, with detached house values declining by 6.4 per cent since peak and unit values remaining flat as at May 2012, according to RP Data-Rismark. This result compares with declines of 8.1 per cent (houses) and 2.8 per cent (units) at the national capital city level.

Over the next 12-months, Sydney’s home prices are projected to perform slightly better than the national average, experiencing a price shift of between minus-3 per cent and 1 per cent.

While Sydney home prices are the most expensive in the nation on a price-to-income basis, due to its relatively attractive rental returns, Sydney’s price-to-rent ratio is below the national average, suggesting that buying is relatively more attractive than renting.

Sydney’s housing market is also relatively supply-constrained, experiencing one of the lowest home construction rates in the nation.

The number of homes for sale in Sydney is also not particularly elevated, and has fallen from this time last year.

In addition, Rental vacancy rates, while higher than last year, are below the national average, as is the average time taken to sell a home.


Melbourne’s recent price performance has been poor, declining by 11.0 per cent (houses) and 7.4 per cent (units) since peak as at May 2012, according to RP Data-Rismark. Yet, despite the sharp decline in values, Melbourne’s housing market still offers the worst investment fundamentals in the nation and is the market most at risk of a severe house price correction.

Our baseline forecast is for Melbourne home prices to decline by between 5 per cent and 8 per cent over the next 12 months. This pessimistic view is based a wide range of considerations.

First, Melbourne home prices are the second-most expensive in the nation on a price-to-income basis, and owing to its very low rental returns, the most expensive when home prices are compared against rents. Melbourne’s housing supply is also relatively abundant, with the rate of construction running well above average, as are the number of homes for sale, which are nearly 20 per cent above last year’s levels.

There is also significant construction in the pipeline.


Brisbane’s recent price performance has been poor, declining by 12.4 per cent (houses) and 10.8 per cent (units) since peak as at May 2012, according to RP Data-Rismark. However, investment fundamentals are improving, which should result in above-average performance over the coming 12 months, with prices forecast to shift by between minus-2 per cent and 2 per cent.

Brisbane home prices are relatively affordable, with its ratio of house prices-to-incomes the second lowest out of the major capitals and its home prices compared to rents the lowest, suggesting that buying is relatively attractive compared with renting.

Housing supply in Brisbane is tightening, with dwelling construction rates running below average and the number of homes for sale some 8 per cent below last year’s levels (albeit still elevated). Rental vacancy rates in Brisbane also remain tight relative to both the national average and last year’s levels.


Perth’s housing market is likely to be a star performer over the coming year. Although values have declined by 9.5 per cent (houses) and 4.7 per cent (units) since peak, which are above the average decline nationally, fundamentals have improved significantly, which should support price growth of between 2 per cent and 5 per cent over the next 12 months.

Affordability in Perth has improved considerably, with home prices relative to incomes the lowest in the nation, and prices compared with rents below the national average.

Rents are also rising sharply – up by around 16 per cent over the past year according to RP Data – caused by a rental vacancy rate that is the second lowest in the nation and has tightened considerably compared with the same period last year.

The tightening of Perth’s rental market has been driven by the highest population growth in the nation combined with a low rate of dwelling construction. The number of homes for sale is also relatively low, and has fallen by 14 per cent since the same period last year.


Adelaide’s housing market has performed surprisingly well, experiencing the lowest decline in values from peak in the nation (3.7 per cent for houses and 3.6 per cent for units as at May 2012, according to RP Data-Rismark). However, the good fortune is unlikely to last, with prices predicted to fall by 2 per cent to 5 per cent over the next 12 months.

Although Adelaide housing provides better-than-average affordability when measured against incomes, prices are more expensive than average when compared with rents.

The overall supply situation in Adelaide is deteriorating. Dwelling construction relative to population growth is the highest in the nation, whereas the number of homes for sale is elevated and some 3 per cent higher than the same period last year.


Hobart’s housing market has been one of the weakest performers in the nation, declining by 11.8 per cent (houses) and 8.9 per cent (units) from peak as at May 2012, according to RP Data-Rismark.

A broad range of indicators suggest that Hobart housing is unlikely to improve any time soon, with prices predicted to decline by a further 4 per cent to 7 per cent over the next 12 months.

Housing affordability is not a key concern in Hobart, with home prices amongst the lowest in the nation compared to both incomes and rents.

Rather, the supply situation is deteriorating, with the number of homes for sale some 20 per cent higher than a year ago and dwelling construction rates relative to population growth running well above the national average. Similarly, rental vacancy rates in Hobart are around 50 per cent higher than this time last year and are the second highest in the nation after Melbourne.


Darwin’s housing market has experienced the heaviest losses in Australia, falling by 15.2 per cent (houses) and 16.9 per cent (units) from peak as at May 2012, according to RP Data-Rismark.

However, key indicators suggest that Darwin’s fortunes are turning around, which should support price growth of between 3 per cent and 6 per cent over the next 12 months.

Affordability in Darwin has improved considerably, with home prices relative to incomes just below the national average, and prices compared to rents the second lowest in the nation. Rents have rising sharply – up by around 14 per cent (houses) over the past year according to APM – caused by a rental vacancy rate that is the lowest in the nation and has tightened considerably over the past year.

The tightening of Darwin’s rental market has been driven by the lowest rate of dwelling construction in the nation. Meanwhile, the number of homes for sale is also relatively low, and has fallen by 30 per cent since the same period of last year.


Relative to the rest of the nation, Canberra’s housing market has displayed resilience, with values declining by 5.0 per cent (houses) and 7.9 per cent (units) since peak, according to RP Data-Rismark.

However, the outlook for the capital is mixed, resulting in projected price shift of between minus-3 per cent to 0 per cent over the coming year.

Although Canberra’s housing market is relatively affordable – with prices relative to both incomes and rents below the national average – the supply situation has deteriorated somewhat, driven by a recent housing construction boom, as well as a near doubling in the number of homes offered for sale over the past two years. Canberra’s rental vacancy rate, too, has been rising, although it remains roughly half that of the national average.

Source: BusinessDay

Leith van Onselen is the Chief Economist at the Macro Investor newsletter. He has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs. To read the full Australian Cities Housing Valuation Report 2012/13, sign up for your free trial at Macro Investor (www.macroinvestor南京夜网.au)

This story Administrator ready to work first appeared on Nanjing Night Net.

DJs ‘bidder’ renews attack on media for failure

DJs ‘bidder’ renews attack on media for failure

The obscure investor group, EB Private Equity, which pulled its bizarre $1.65 billion bid for David Jones, has again blamed media coverage and public commentary as the prompt for dropping an unlikely takeover off for the upmarket retailer.
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A message posted on EB Private Equity’s website last night says “inaccurate” publicity surrounding its corporate play had made it difficult to hold discussions with its financial partners.

“Our intention was to hold preliminary discussions with the David Jones board while financial partners continued to be approached. Recent unfounded, inaccurate and ill-informed publicity around our proposal has made it difficult for these discussions to take place,” the private equity firm’s website reports.

It also blamed the David Jones board for the failed talks.

“Our proposal was made in an effort to engage with the board. However, the board has made it clear it does not intend to engage in these discussions based on our proposal. This is our only statement on this matter and we are not giving further interviews and comment in any way.”

However, mystery still surrounds the background, financial strength and credibility of EB Private Equity and its chairman John Edgar.

In other developments overnight the contact email address from EB Private Equity’s website has also disappeared. The website of Laura Panton, the 20-year old web creator from West Yorkshire who created the site for the Luxembourg-based EB Private Equity firm also remains offline.

Last Friday David Jones informed the market it had been approached by EB Private Equity with an incomplete $1.65 billion bid for the retailer. But concerns over the credibility and bona fides of the little-known company grew over the weekend and by Monday the entire takeover offer was withdrawn.

Shares in David Jones rose 20 per cent when the offer was unveiled but about much of Friday’s gains were lost yesterday when EB Private Equity said it was walking away from the deal.

David Jones shares were recently unchanged for the day at $2.33.

This story Administrator ready to work first appeared on Nanjing Night Net.

Queensland’s financial crisis and the pain to come

Queensland’s financial crisis and the pain to come

In April, the Informant examined the decision of Queensland’s Newman government to appoint a commission of audit to review the state’s finances. Its first report, issued last month, covered the overall state of public sector finances, and its second, due in December, will examine government programs and service delivery.
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The use of audit commissions external to government is not new. There are relatively recent examples in NSW (Nick Greiner, 1988), Victoria (Jeff Kennett, 1992, and Ted Ballieu, 2011), Queensland (Rob Bordidge, 1996) and federally (John Howard, 1996). There are earlier precedents, too, such as the Whitlam government taskforce in 1973 (chaired by H. C. Coombs) and a royal commission on public spending in 1918, in the aftermath of World War I.

The recent Queensland commission’s findings, their veracity and the audit’s methodology will be scrutinised closely, as will its effect on the state’s public sector, which employs about 200,000 people. The audit found the government’s finances were in a parlous state, and Premier Campbell Newman has since committed to shedding many jobs. It’s worth asking why it took an external audit and a change of government for the full situation of that state’s finances to become known. What does this tell us about Queensland’s existing watchdogs: its auditor-general and, indeed, its Treasury? Was this an indication of a politicised public service, in which no one had the integrity to tell their political masters the truth, or ensure that others who could tell the public knew? The other peculiar issue is how Queensland’s finances deteriorated so quickly since 2006, given it’s a resource-rich state that should be riding a resource boom.

These issues may be relevant to more than one state. Queensland’s audit commission could be seen to be following the well-established tactic of new governments that wish to implement major reforms, and seek to justify them by blaming the previous administration’s mismanagement. It has been used by other non-Labor governments, such as Kennett’s, which wanted to implement neoliberal or ”new public management” policies. However, if the Queensland commission’s assessment of state finances is correct, then the use of such external instruments, while having a ”political” role, are also legitimate in identifying independently the extent of a financial problem and providing government with the ”evidence” for the subsequent actions – spending cuts – that inevitably follow.

Features of audit commissions

Before assessing the Queensland commission’s work, it’s worth noting the features of such bodies.

First, most of them, with the exception of the Coombs taskforce in 1973, were appointed by non-Labor governments. There are several possible explanations for this. One is that they have tended to be appointed after a Labor government’s term ended with poor financial outcomes. Another is that non-Labor parties tend to oppose ideologically a large public sector and, upon winning office, want to cut it back.

Second, such bodies are usually appointed by incoming governments that have been out of office for long periods: Newman (14 years), Borbidge (seven), Howard (13), Kennett (10), Ballieu (11) and so on. Parties out of office for long periods naturally suspect that the bureaucracy is both politicised and part of the problem: profligate, incompetent and top-heavy.

Last, audit commissions draw their members from outside existing government agencies, and the members usually have significant professional standing and expertise. Borbidge’s, for example, was chaired by well-accomplished academic Dr Vince Fitzgerald. Kennett and Howard’s were chaired by Professor Bob Officer, who was the chairman of finance and the deputy director of Melbourne University’s business school. Ballieu’s was chaired by Dr Michael Vertigan, a retired head of Treasury with a record of conducting state and federal government inquiries. However, as the Informant noted in April, the appointment of former federal treasurer Peter Costello as chairman of Newman’s recent commission differentiates it from these other audits, and makes it appear more politically motivated than it probably is. Such an appointment has few positives if the aim of the review is to provide credible evidence.

The Queensland findings

The commission’s findings are horrendous. Moreover, there has been little refutation of their overall accuracy. They include:

■ The government had embarked on ”an unsustainable level of spending that has jeopardised the financial position of the state”.

■ Government finances had deteriorated sharply since 2006 to the point that it was ”borrowing heavily to support the budget”.

■ State debt is now $64 billion and likely to be $100 billion by 2018-19.

■ The cost of Queensland of losing its triple-A credit rating added $100 million a year to interest payments.

■ The previous government’s projected budget surplus needed urgent revision – $3 billion in ”fiscal consolidation” (i.e. cuts) was needed for the budget to be in ”genuine surplus” in three years.

■ Treasury’s forward budget estimates were ”overly optimistic”.

■ The previous government, which enjoyed a revenue surge between 2001 and 2007, left no reserves for unexpected circumstances (e.g. the global financial crisis and natural disasters).

■ Public service productivity was poor.

■ Capital spending was financed increasingly by loans – an increase from 34 per cent in 2005-06 to 96 per cent in 2010-11.

The commission’s report is highly critical of both the growth in Queensland Public Service staff numbers and, more importantly, expenses due to classification creep and wage rises. Some of these problems were known beforehand, though they were not acknowledged by the Bligh government. For example, the public service’s growth and costs, which the commission identifies as a key underlying cause of the budget blow-outs, had been detailed by external researchers, such as the Institute of Public Affairs’ Julie Novak in a public paper in 2009.

The audit recommendations

The 206-page report recommends a two-stage fiscal strategy.

The first is to achieve a surplus in 2014-15 by what it describes as ”a $3 billion process of fiscal repair over three years”.

The second is a debt-reduction strategy of $25-30 billion, to restore the debt-to-revenue ratio to 60 per cent by 2017-18. Once this is achieved, the government should ”set medium-term targets of maintaining a zero fiscal balance in the general government sector on average over the economic cycle, and of keeping total government debt levels constant to [general state product]”.

In recommending how to achieve these targets, the commission acknowledged ”there are limited prospects to boost revenue. It is likely, therefore, that a major part of the adjustment burden will need to be borne by the expenditure side of the budget.” And so has been the case.

For example, in the first stage, the commission supported the government’s policy of capping public sector wage growth at 3 per cent a year as the most important measure in reducing recurrent spending. This means a substantial cut in jobs. On June 19, Newman told state Parliament there were 20,000 too many public servants in Queensland. Although some contract staff have already lost their jobs, the commission’s report has ignited fears that the cuts will extend to ”permanent” public servants; an option the LNP eschewed in opposition. There is little doubt now, given the report’s tone, that such cuts will occur.

Other suggested spending cuts included reviewing discretionary grants, targeting government services, and assessing partnerships with the federal government to determine the costs to the state. The proposed national disability insurance scheme was cited as an example of such a review.

The thrust of the commission’s proposals is towards reducing services by way of ”demand management”; i.e. contracting out, privatisation, means-testing and charging. It recognises political realities by saying the state ”would continue to have a role in those instances where no other provider exists (for example, in the more decentralised parts of the state)”. The report also advocates ”exiting expenditure activities more appropriately supported by other levels of government”. The examples given are residential aged care, primary and community healthcare and services for job seekers, which the report suggests should be handed over to the Commonwealth or the private sector. Whether the Commonwealth would accept is another question.

Revenue-raising strategies included a deficit levy (which the government rejected), broadening the base of land tax, increasing gambling taxes and mining royalties, increasing the progressiveness of transfer duty and the rate of landholder duty, and improving taxpayer compliance. None of these received strong endorsement from the commission, so the focus will stay on spending cuts.


The Queensland audit commission’s findings are an damming indictment of previous Labor governments’ financial management, but also their lack of integrity. Even if some see the commission process as politically motivated and manipulative, the audit findings are hard to refute.

The immediate issue is how deeply Newman will need to cut Queensland’s public sector and whether this can be done without creating future problems.

But the long-term, and more important, task is the reform of Queensland’s system of government. Accurate financial information should never be suppressed, and the public service must provide frank and fearless advice. The paradox of public service ”reform” in the age of new public management is that public servants inevitably see their jobs as giving ministers what they want and need. With so many jobs now under threat, it’s hard to see this kind of politicisation decreasing.

Understandly, the audit commission did not address this issue, which fell outside its scope. Yet the Newman government, with almost 90 per cent of the seats in Parliament, has the power to address it, and for the sake of Queensland citizens it must.

Dr Kate Jones is a research fellow and and Professor Scott Prasser is the executive director at the Public Policy Institute in the Australian Catholic University.

This story Administrator ready to work first appeared on Nanjing Night Net.

Drug kingpin sentenced to 30 years

Drug kingpin sentenced to 30 years

About to learn his fate… Tony Mokbel arrives at court this morning. Tony Mokbel leaves court after the sentencing.
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John Silvester: Cutting a dealFrom drug lord to porridge days

Drug boss Tony Mokbel was today jailed for a minimum of 22 years for masterminding a multi-million dollar drug trafficking empire.

Supreme Court Justice Simon Whelan said Mokbel had shown “an arrogant contempt for the law and an incorrigible determination to persist in serious business-like drug trafficking regardless of the circumstances or possible consequences for yourself or others”.

Justice Whelan said drug trafficking had been Mokbel’s business.

“It was your area of expertise,” he said. “It was your career.”

Justice Whelan said he did not believe Mokbel was sorry for what he had done.

“Thing have not turned out as you planned, and no doubt you now regret that, but to describe such feelings of regret as remorse is, I think, misconceived.”

Mokbel had told a psychologist he would like to apologise to the community and to the courts for his crimes and that he recognised “dealing in drugs was wrong and that it caused damage to a lot of people”.

The judge jailed Mokbel for a total of 30 years with a non-parole period of 22 years, less 347 days for time already served.

Mokbel will be eligible for parole when he is 67 years old.

Justice Whelan said he would have jailed Mokbel for life without parole if he had not pleaded guilty to the drug charges he faced.

Medical evidence had been given that Mokbel had a life expectancy of 24 years or less because of his coronary heart disease. Mokbel suffered a minor heart attack at Barwon Prison in February.

The judge, whose sentencing remarks were streamed live via video on the internet for the first time in Victoria, said a psychological report revealed that that while Mokbel had shown a “remarkable degree of psychological resilience to date”, he was experiencing a range of physical manifestations of anxiety.

As he was being led from courtroom four, a smiling Mokbel winked and said “See you guys” to the media.

He had earlier stood in the dock flanked by five security guards yawning a number of times as he waited for the judge.

Mokbel pleaded guilty in April last year to charges of trafficking large commercial quantities of methamphetamine and MDMA, and inciting an undercover policeman to import a commercial quantity of MDMA.

He made millions through The Company, which he ran like a legitimate business with records being kept on a computer.

The charges stemmed from three separate investigations code-named Orbital, Quills and Magnum.

In Magnum, The Company distributed at least 47 kilograms of methamphetamine (speed) between January 2006 and June 2007 with a wholesale value of about $4.7 million. The street value was worth much more.

A plea deal led to charges in relation to four other investigations into his drug manufacturing empire to be dropped, and the prosecution also agreed to seek a non-parole period of between 20 to 23 years.

Mokbel’s ex-girlfriend, Danielle McGuire, who has reportedly restricted him from seeing his youngest child, Renate, was not in court for his sentencing today.

McGuire left the drug boss for Bandidos sergeant-in-arms Toby Mitchell.

She had been living with Mokbel in Athens in 2007 and the then six-month-old Renate when he was arrested.

McGuire had fled her Melbourne beauty salon and moved overseas in July 2006, four months after Mokbel had disappeared.

He had fled Melbourne just days before he was to be convicted in the Supreme Court for cocaine trafficking. He was later sentenced in his absence to 12 years jail.

Mokbel had been hiding out in a farmhouse in the Victorian country town of Bonnie Doon before taking a yacht from Western Australia to Greece.

He was arrested at an Athens cafe in June 2007 carrying a forged Australian passport and a fake NSW driver’s licence in the name of Stephen Papas, of Albion Street, Bondi.

In each ID photo, he was wearing the same ill-fitting toupee he had on when police swooped.

This story Administrator ready to work first appeared on Nanjing Night Net.

The voice: ‘ Every one person you kill there is like taking 50 lives’

The voice: ‘ Every one person you kill there is like taking 50 lives’

The voice … Sayed Zabiuddin Ansari.Forty-eight hours into the bloody assault on Mumbai in November 2008, smoke was billowing from the wreckage of the Taj Mahal hotel and commandos were flushing out the last gunmen holed up in the opulent landmark of India’s financial capital.
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A short distance away in the city’s southernmost peninsula, security forces were still battling at Nariman House, a Jewish centre where two of the Islamist militants had taken half a dozen people hostage, including a rabbi and his pregnant wife.

“Remember that every one person you kill there is like taking 50 lives,” a coordinator of the rampage told the two men, according to the transcript of a telephone conversation picked up by Indian intelligence.

“Get rid of these people. Kill them.”

All six in the centre were killed before the gunmen were slain by security forces.

In all, 166 people were killed in the three-day frenzy of attacks on two upmarket hotels, Mumbai’s busy railway terminal and a fashionable cafe.

India says the voice urging the 10 militants on to bloodshed was that of Indian-born Sayed Zabiuddin Ansari, who was speaking from a “control room” in the Pakistani city of Karachi.

Last month, after more than a year of painstaking diplomacy that involved India, Saudi Arabia and the United States, Ansari was quietly put on a plane in Riyadh, flown to New Delhi and arrested.

For India it is a huge breakthrough. New Delhi is hoping that Ansari’s capture will help prove its allegation – strenuously denied in Islamabad – that the Mumbai carnage was directed by people connected with Pakistan’s security establishment, particularly the shadowy ISI military intelligence agency.

That could stir fresh tensions between South Asia’s nuclear-armed rivals, who have already fought three wars since their independence 65 years ago, and it could put further strain on the ragged relations between the United States and Pakistan.

Ansari’s extradition from Riyadh – which officials say came after pressure from Washington and despite pleas from Islamabad for him not to be sent to India – may also have delivered a jolt to Pakistan’s traditionally close relations with Saudi Arabia.

‘A window into the control room’

Indian investigators say Ansari, who is also known as Abu Jundal and Abu Hamza, has confessed he was in the “control room” talking the gunmen through their operation by satellite phone.

They believe that, alongside him there, was Hafiz Saeed, founder of the Lashkar-e-Taiba (LeT) militant group whose emergence the ISI nurtured in the 1990s as a proxy to fight Indian forces in the disputed Himalayan territory of Kashmir. Earlier this year the United States placed a $10 million bounty on Saeed’s head, but he still moves freely around Pakistan.

Ansari’s arrest may turn out to be far more critical to shedding light on the command and control of the 2008 attacks than Mohammad Ajmal Kasab, the only gunman to be taken alive and who is now on death row in a Mumbai prison.

“It is a window into the control room, who set it up, who was coming into it, who was going out,” said Ajit Doval, a former head of the Intelligence Bureau, India’s domestic spy agency, which has been questioning its prize catch at an undisclosed location.

“It takes us one step closer to the role of Pakistani establishment in the attacks. That will be the big worry in Islamabad,” said Doval.

Indian officials caution that they are unlikely to find a smoking gun leading directly to the headquarters of Pakistan’s powerful military, but they say Ansari’s arrest nonetheless provides crucial details suggesting some level of complicity.

A Pakistani security official told Reuters there was quite simply no ISI involvement, and there wasn’t even a control room.

Quiet and shy boy

Ansari carried a Pakistani passport – a fake, the Pakistani security official said. He was born 30 years ago in India, and brought up in a village near the dusty town of Beed, some 350 km (220 miles) east of Mumbai.

When he was about 15, his family moved to a Muslim-dominated neighborhood in Beed town, a crowded and down-at-heel area with narrow lanes, dug-up roads, open drains, a vegetable market and two mosques.

Locals say that Ansari was a timid and quiet boy, coming off worst when there were street brawls and barely making a mark at school.

“None of the teachers remember teaching him,” said Bharat Sonavane, principal at Beed’s Balbhim College for Art, Science and Commerce, where Ansari was a student.

Trained as an electrician, he found work that brought money for a family struggling to make ends meet, including one job re-wiring the local police headquarters.

Ansari suddenly disappeared in 2006 after police linked him to an arms haul case. For the next six years his family received no word of him, until last month when his bearded face was splashed on news networks announcing his deportation and arrest.

“We thought he might be dead by now,” said Ansari’s mother, Rehana, a 65-year-old diabetes sufferer who spoke to Reuters from her father’s tiny home in Beed.

“One night he just left home and we didn’t hear from him for almost six years. No phone call, no letter,” she said, holding back tears in pale green eyes framed by a black burqa, the all-enveloping garment worn by many Muslim women on the subcontinent.

“It pains us … we never imagined our Zubi would be linked to this.”

Shortly after nightfall on November 26, 2008, three inflatable speedboats pulled up on the shores of Mumbai. The 10 men aboard had sailed across the Arabian Sea from Karachi for days, hijacking an Indian trawler on their way and killing its crew.

When they were accosted by local residents, the men were prepared. Ansari told his interrogators that he had coached the gunmen to speak Hindi with a local accent so that their assault could be passed off as a home-grown attack rather than traced back to Pakistan: at one point during the operation he scolded them for not using the proper dialect.

Indian officials who analysed the phone conversations with the gunmen had long suspected that one of the handlers was an Indian because he used words only a fluent Hindi speaker would use, while the others spoke the mix of Punjabi and Urdu common to large parts of Pakistan.

Ansari, investigators say, has provided the names of four other people in the Karachi control room, which New Delhi maintains could not have operated without some state support.

Two of them he named as Sajid Mir, also known as Sajid Majid, and Sameer Ali.

A Pakistani-American, David Headley, who was convicted of scouting targets in Mumbai ahead of the attacks, gave the same two names to a Chicago court last year as helping mount the operation.

Headley identified Sameer Ali as a major in the ISI who had recruited him when he was briefly detained near the Pakistan-Afghan border in 2006 and Sajid Mir as a man handling foreign recruits for the LeT.

Mir was also believed to be the handler of a Frenchman accused of plotting an attack in Australia soon after the September 11 attacks. French judge Jean-Louis Brugiere who investigated the case said he believed Mir was an officer of the Pakistani military.

Ansari’s revelations could have a bearing on investigations in the United States, where families of six Americans who were killed in the Mumbai attack have filed lawsuits alleging that the head of the ISI at the time, Lieutenant General Ahmed Shuja Pasha, and other operatives helped the LeT plan and orchestrate its operation.

“We believe Ansari’s interrogation provides further corroboration of active ISI support in the attacks,” said an official of the Indian Intelligence Bureau. “They were physically present in the control room.”

Pakistan rejects accusations

Pakistan, which has conducted its own investigation into the Mumbai assault and indicted seven members of the LeT – an organisation it has officially banned – roundly rejects the charge that members of the ISI were involved.

“The Mumbai plot came to the attention of the ISI in 2005 or 2006,” the Pakistani security official said. “The leadership of the LeT was contacted and told not to go ahead with it. But the LeT waited. After Pasha took over as ISI chief, they managed to slip under the radar and carry it out.”

He said five handlers were scattered across Pakistan at the time, not together in a control room. Ansari himself was in the Sindh town of Thatta, speaking to the men in Mumbai from a Thuraya satellite phone.

The Pakistani prime minister’s adviser on interior affairs, Rehman Malik, said Ansari’s involvement showed that India had extremists in its own backyard who were being sent to Pakistan.

“I have the right to know how he was radicalised – was he radicalised through Muslim extremism or was he radicalised through Hindu extremism?” Malik told Reuters in an interview during a visit to London last weekend.

Indian investigators said that after leaving his hometown in 2006, Ansari crossed the porous border with Bangladesh and travelled by air to Pakistan. But it was not until some time in 2008 that they established his presence there.

The security official in Islamabad said Ansari first went to Pakistan during a brief conflict with India in the Kargil district of Kashmir in 1999, which broke out after Pakistani soldiers and militants poured across the de facto border between the two countries there.

“He thought he could just join the mujahideen on his own, but he didn’t manage,” the official said, describing Ansari as someone who “really believes Muslims are being suppressed around the world”.

Early last year, Ansari obtained his fake Pakistani passport and flew to Saudi Arabia, where – the official in Islamabad said – the LeT thought he could blend in with the many Pakistani laborers there. Indian police believe he was “talent-spotting” in Saudi Arabia in preparation for another “massive attack”.

However, he was arrested there a few months later.

That was the starting point for a year-long effort by Indian intelligence to convince Riyadh that – despite the Pakistani passport – he was an Indian citizen and must be sent back.

“We kept telling them, don’t send him to Pakistan, he is our man and if he went there he would be lost to us. In July (last year) we told the U.S. to prevent him from going to Pakistan,” the Indian intelligence bureau officer said.

In May of this year, the United States put its foot down, telling Saudi Arabia there was overwhelming evidence that Ansari was an Indian national wanted for the attacks.

“The decision of the Saudi authorities to transfer Ansari to Indian custody, mindful of the unhappiness of Pakistan, will be seen in Pakistan as a blow to its much-vaunted relationship with Saudi Arabia,” said Bahukutumbi Raman, a former head of India’s external intelligence agency, the Research and Analysis Wing.

He said Riyadh’s move reflected a growing fear that the LeT may act as a Trojan horse on its soil for al Qaeda, which is now on the backfoot in Afghanistan and Pakistan.

“Why did the Saudis eventually agree to give him up? And that, too, to a non-Islamic country? We know they have given suspects to the U.S. but not to us,” said Doval, the former Indian Intelligence Bureau chief. “That’s a shift.”


This story Administrator ready to work first appeared on Nanjing Night Net.