David Mulford in a cable to Washington in 2006 when he was the US ambassador to India also alleged that corruption in Jammu and Kashmir was widespread and prevalent not only among mainstream politicians but separatists as well.
"Corruption cuts across party lines and most Kashmiris take it as an article of faith that politically-connected Kashmiris take money from both India and Pakistan," Mulford said in the cable which was released by Wikileaks last week.
The April 2006 cable, released by Wikileaks and titled "Kashmiri politics as filthy as Dal lake", alleges that politicians -- mainstream as well as separatists -- amassed wealth within the country and abroad.
Mulford observed that the spread of corruption undermined popular support of existing political parties and separatists.
"Money from Pakistani and Indian intelligence agencies and from Saudi and other foreign extremists has further distorted Kashmiri politics, incentivized leaders to perpetuate the conflict, and perverted state and central government institutions," he added.
In another US diplomatic cable, Mulford quoted JKLF chairman Yasin Malik as alleging that Kashmir is all a "money game".
"Kashmiri politics is no longer about ideology, it's all a money game," the US diplomatic cable dated April 2006 quotes Malik as saying.
The cable further alleged that a "recurring theme" throughout the interactions with Kashmiris suggest how Indian and Pakistani money has made all Kashmiri political actors dependent on "handouts".
The cable said that state administration gets "rivers of money" for development but the streets in J and K are "appalling, even by Indian standards."
It however, believed that the funds to Kashmiri politicians from India and Pakistan will stop flowing once the Kashmir issue is resolved.