Tirath Khemlani

Tirath Khemlani (1920 - 1991) was a Pakistani broker who played a pivotal role in the Loans Affair which helped destabilise the Gough Whitlam Government in Australia. He was employed by Dalamal and Sons, a London-based commodity-trading firm, and was engaged in late 1974 by Rex Connor, a senior Minister in the Whitlam Government, to arrange a $AUD4 billion loan.

Khemlani dealt primarily and, to a large degree, exclusively with Rex Connor who, at the time, was Minister for Minerals and Energy. Amongst other things, Connor planned to use loan to finance a natural gas pipeline that crossed over Australia.

The raising of foreign loans for the Australian Government is typically undertaken by The Treasury (a body of the Federal Government) and it was common knowledge that Treasury usually raised funds from US Banks or financiers. Conner's attempt to secure $AUD4 billion was unusual for several reasons, including:

1) The size of the loan was extremely large.

2) When a project of this scale and cost is undertaken, governments often attract foreign investment and ultimately form a business partnership, whereby the foreign investor would retain partial ownership and/or rights over the resources once the project is complete. However, this option was rejected by Connor who was renowned for his desire to have Australian resources controlled and owned by Australians.

3) The Minister for Minerals and Energy was raising the loan independent of Treasury.

4) Rather than attempting to raise the loan from US financiers, Connor attempted to raise the loan from Arab financiers, with Khemlani acting as the intermediary. There are unconfirmed reports that Arab financiers offered lower interest rates on governmental loans than US Banks/financiers.

Connor was duly authorised to raise loan(s) through Khemlani in late 1974. Between December 1974 and May 1975, Khemlani provided sent regular telexes to Connor advising that he was close to securing the loan.

However, the loan never eventuated and in May 1975, Whitlam sought to secure the loan through a major US investment bank (name undisclosed). As part of the loan procedure, this bank imposed an obligation on the Australian Government to cease all other loan raising activities pertaining to this loan and accordingly, on 20 May 1975, Conner's loan-raising authority was formally revoked.

The Loans Affair hit its high point in mid-late 1975 when it was revealed that Conner had continued to communicate with Khemlani and allegedly requested and/or supported Khemlani's continued efforts to raise the loan after his loan-raising authority had been formally revoked.

The Melbourne Herald newspaper journalist Peter Game tracked down Khemlani in mid-late 1975 and following an interview, he broke the story that ultimately opened up the Loans Affair. When Connor directly denied Khemlani's version of events, as reported in the Sydney Herald, Khemlani flew to Australia in October 1975 and provided Peter Game with telexes sent to him from Connor that refuted Connor's denial.

On 13 October 1975, Khemlani provided a statutory declaration and a copy of the incriminating telexes sent from Connor's office, a copy of which was forwarded to Prime Minister Gough Whitlam. Upon receiving the documents, Whitlam dismissed Rex Connor from his government for misleading parliament. In his letter of dismissal, date 14 October 1975, Prime Minister Whitlam wrote: "Yesterday I received from solicitors a copy of a statutory declaration signed by Mr Khemlani and copies of a number of telex messages between office Mr Khemlani’s office in London and the office of the Minister for Energy. In my judgment these messages did constitute "communications of substance" between the Minister and Mr Khemlani."

While the loans affair was a pivotal event leading to the dramatic dismissal of the Whitlam government in November 1975, Khemlani faded into obscurity. Most of the public comment and observations on the loans affair after October 1975 were provided by Allan Crawford, the Australian spokesman for Khemlani.

In 1981, Khemlani was arrested in New York for attempting to sell stolen securities. From 1981 until his death in 1991, little is known of his activities.

Some speculated that Rex Connor may have been a sacrificial lamb for Whitlam. Allan Crawford, the Australian spokesman for Khemlani, stated that it was unbelievable the Hon Gough Whitlam QC, Prime Minister of Australia, had not been told of the progress of negotiations for the $U.S. 8000 million Arab loan. Nonetheless, most public accounts indicate that Connor persisted with Khemlani with neither the authority or Whitlam's knowledge.

According to The Australian newspaper, Khemlani's nickname was reputed to be "Old Rice and Monkey Nuts" because he traded in commodities rather than money.

References

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