DIKSIA.COM - The loans affair, also known as the Khemlani affair, was a political scandal that rocked the Whitlam government of Australia in 1975. It involved the government's attempt to borrow billions of dollars from the Middle East through a shady Pakistani banker, Tirath Khemlani, without following the proper procedures and constitutional requirements. The affair exposed the government to allegations of corruption, incompetence, and deception, and contributed to its downfall in the 1975 constitutional crisis.
Background: The Whitlam Government and Its Ambitious Plans
The Whitlam government came to power in 1972, ending 23 years of conservative rule by the Liberal-Country Party coalition. Led by Prime Minister Gough Whitlam, the Labor Party promised a bold and progressive agenda of social, economic, and cultural reforms. Some of the achievements of the Whitlam government included the establishment of universal health care (Medibank), the abolition of university fees, the recognition of Aboriginal land rights, the withdrawal of Australian troops from Vietnam, the adoption of a new national anthem (Advance Australia Fair), and the promotion of a more independent foreign policy.
One of the key ministers in the Whitlam cabinet was Rex Connor, the Minister for Minerals and Energy. Connor had a grand vision of developing Australia's vast natural resources and securing Australian ownership and control over them. He believed that Australia could become a major player in the global energy market and use its mineral wealth to fund its social programs and infrastructure projects. To achieve his goals, Connor needed a massive amount of capital, which he sought to obtain from overseas loans.
The Khemlani Connection: A Risky and Secretive Deal
In late 1974, Connor was introduced to Tirath Khemlani, a London-based commodities trader who claimed to have access to large sums of money from Middle Eastern sources. Khemlani offered to arrange loans for the Australian government at favorable terms and with a generous commission for himself. Connor was impressed by Khemlani's credentials and agreed to pursue the deal.