Swapna, Sarith lost out on at least Rs 30 lakh profit after gold seizure

P S Sarith and Swapna Suresh
P S Sarith and Swapna Suresh

(This is Part 2 of the series 'Kerala's Shady Gold Rush' by Malayala Manorama. Part 1 here: Who is Swapna Suresh, the woman wanted in the gold-smuggling case? Part 3: Hogging gold, laundering money: Strange ways of the smugglers)

Thiruvananthapuram: Those involved in the gold smuggling racket that came to light at the Trivandrum International Airport made a profit of Rs 4 lakh on every kilogramme of the precious metal of 24 carat that landed in India.

P S Sarith, who has been arrested in the case, has told the investigators that Swapna Suresh, suspected to be the key figure in the racket, and he shared 25 per cent of the amount.

In other words, Sarith and Swapna would have pocketed Rs 30 lakh if they had succeeded in getting customs clearance for the diplomatic baggage that was seized with 30 kg of gold worth Rs 14.82 crore on Sunday.

Since January, the two have smuggled gold using the diplomatic channel more than 10 times, Customs officials said based on evidence and confidential details they have obtained so far in their investigations.

They continued their operations during the lockdown as airborne cargo movements were allowed though international passenger flight services were stopped.

Smugglers were motivated by the appreciation in gold prices during the COVID-19 pandemic as people started buying the precious metal as investment amid the uncertainty caused by the spread of the virus.

New mode

Customs officials said that using the diplomatic channel is the most novel way of smuggling gold they have ever come across at least in Kerala.

The ‘diplomatic baggage’ route has expanded the methods used to smuggle gold, making tricks such as hiding the metal in body parts or using the help of flight attendants outdated and obsolete.

The other ways of smuggling, like paper gold, medicine gold, will also be a thing of the past, Customs officials said.

When ground handling, flight crew and immigration employees have all been arrested for gold smuggling over the years, the use of diplomatic channel that provided more safety was indeed a new way of carrying out the operations, they said.

They said it is very difficult to detect gold smuggling without specific information. Most gold smuggling and seizure in Kerala take place at the Cochin International Airport.

Big catch

The Trivandrum Airport operation was quite big, given that the value of gold seized is about half that of what is detected at the Cochin Airport annually, the officials said. The 30 kg of gold seized on Sunday is worth Rs 14.82 crore.

Why fear vanished from smuggling

Most smuggling cases at airports have involved gold weighing between 500 grammes and 1.5 kg. The fact that those caught with gold up to Rs 1 crore can easily get out on bail has prompted many to take to smuggling. They only lose the gold that is confiscated.

How the bid fell flat

When the Customs Department seized the diplomatic baggage with gold on Sunday, P S Sarith Kumar, a former PRO of the UAE consulate in Thiruvananthapuram and an accused in the case, came to the Trivandrum Airport with an official said to hold the responsibility of the Consulate General at the consulate.

The official was in an Arabic costume.

The Customs officials were threatened that if they did not release the baggage, they would face serious consequences. But the team under assistant commissioner H Ramamurthy did not yield to the threat.

Sarith went back by making more threats.

After they were convinced that the baggage contained gold, Customs officials sought the permission of the External Affairs ministry to open the baggage. They needed the permission since the baggage came with a diplomatic tag.

After they obtained the permission of the UAE Ambassador in Delhi to open the baggage, they summoned the official at the Thiruvananthapuram consulate again.

He came to the airport attired in jeans and t-shirt. The PRO of another organisation was also with him.

When the Customs officials opened the bag in front of him and found 30 kg of gold, he said he was innocent and that the gold did not belong to him.

He said he had only wanted food items from UAE. Sarith Kumar was responsible for getting things from UAE and delivering them to him, he said.

Sarith Kumar was arrested following this revelation.

Falling gold tax revenue

The state government had collected Rs 629 crore as tax on gold three years ago. But, now that amount has fallen to Rs 400 crore.

The implementation of the GST (goods and services tax) alone is not to be blamed for this huge fall.

Before the GST, some amount of smuggled gold used to end up with sellers and retailers. The government used to get sales tax on this part of the smuggled gold since value-added tax was in place.

But, with the advent of the GST, it became difficult for smugglers to route gold for local sales.

This has resulted in the development of a parallel market for smuggled gold, with none of it getting into the formal economy.

Gold traders' associations have repeatedly sought action against smugglers, but the government has not take any meaningful steps to act against them.

One-third of the world’s gold comes to India. In 2007, the country imported 800 tonnes, but now it has crossed 1,000 tonnes. The price of gold then was Rs 9,000 per sovereign; now it is about Rs 40,000.

Huge margin

For every kilo of gold brought into India, smugglers save Rs 7 lakh by avoiding import tax, bank premium, GST and income tax. They make a profit of at least Rs 4 lakh even after considering the cut for the carriers and middlemen at various places.

(This article has been compiled by B Murali and contributed to by Jojo John Puthezhuthu, K Jayaprakash Babu, Raju Mathew, Mahesh Gupthan, AS Ullas and Jogy Simon.)

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