The Gold-Studded Route

Air customs officials at the airport are clearly astounded at the gold that is being brought in through legal channels. On any given day, between 150 and 200 kilos are brought in by 40-odd couriers who fly in from Sharjah, Muscat, Dubai and Abu Dhabi. Every week, 25 international flights land at Kozhikode. And the gold-laden men who alight don't really look like people who could have invested Rs 25 lakh forthe 5 kg consignment that they bring in.

Says C.K. Ravindran, assistant customs commissioner, Kozhikode airport: "About 70 per cent of the gold coming into the country is through this airport. And it's brought in by people who have nothing else to do with the gold other than the fact that they bring it in. We can spot the typical courier from a distance. Most of them are illiterate and have that frightened look. All they want to do is pay the duty and hand over the consignment to the men waiting for them."

The underworld seems to have twisted to its advantage Manmohan Singh's liberalised gold import policy, which entitles NRIs who have been out of the country for over six months to bring in 5 kg gold on payment of Rs 22 per gm in foreign currency as duty. What the underworld does is to mobilise foreign exchange through the hawala channel to buy the gold in Dubai and send it across to India to be pumped into the black markets in Bombay and Ahmedabad. The final spoils, after the duty and the money paid to the couriers, is about Rs 70,000 for every 5 kg consignment. This works out to Rs30 lakh a day.

In fact, customs officials feel the profit margin could be much higher. This is because the gold is finally sold in the black market to those who wish to convert their unaccounted wealth to gold. According to market estimates, the demand for gold in India is the largest in the world, with an annual consumption of over 300 tonnes. While a sizeable chunk of this comes from local sale of gold by private individuals, the bulk of the gold has to come into the country from abroad.

According to customs officials, the Gulf end of the racket operates out of Sharjah and is very well organised. Couriers are given detailed instructions on what they should do on arrival in India. The gold has to be handed over to the local agent, who wears clothes of a particular colour and identifies himself with a password. The agent is accompanied by musclemen who hover around the airport, just in case. Often, the larger of the operators leave the airport with 70 to 80 kg of gold.

But the customs authorities are helpless. Explains Ravindran: "They are doing nothing illegal by bringing in the gold. We know there is a racket. But there's nothing we can do; they pay the duties." Between April and July last year, Kozhikode customs collected as much Rs 54.17 crore as duty.

While there's nothing illegal in bringing in gold in 5 kg consignments, Indian laws are flouted at the stage where the gold-buying operations are financed. Foreign currency is made available for procuring gold through two sources. Malayalees employed in the Gulf are offered a price higher than the official bank rate for their dirhams and riyals. At the other end of the hawala tunnel, the money is paid to the families in Kerala by the local underworld agents. A sizeable section of expatriates from north Kerala who work as labourers in the Gulf send their salaries home through this channel.

The other source is dollars procured in India which are sent through couriers to the Gulf. This is a more risky operation and customs officials are not able to put their finger on why the gold-runners would want to take forex out of the country. But those manning Kozhikode airport speak of regular seizures of dollars and other foreign currency and they feel there is a link between the inflow of gold and the forex outflow. However, Ravindran is of the view that there has been a lull in the smuggling out of foreign exchange and says the expatriates are the major source of money. He insists the gold racket violates FERA regulations.

In the days of a more stringent gold import policy, the smugglers were the main source of gold. After the law changed its mind, Bombay became the conduit through which legal gold was brought in. However, the operations there ran into trouble when the income tax authorities—chasing the gold's destination—started keeping tabs on the couriers. Also, the state government and the Bombay Municipal Corporation octrois added Rs 80,000 to the cost of bringing every 5 kg consignment.

KOZHIKODE, on the other hand, has no octroi levies and the Income Tax Department has not been particularly alert in tracking down the end-recipients of the incoming gold. Using the advantage of working in an isolated village, the local representatives have set up a network which receives the gold at the airport and transports it to Bombay and other centres across the country. Says M.K. Gopinath, customs superintendent, Kozhikode airport: "They (the underworld operators) find this a very peaceful place. There's no security risk. They can operate with absolutely no interference."

More than anything else, what has made Kozhikode a haven for the gold dealers is the fact that there is no dearth of couriers. Kozhikode and the northern districts adjoining it like Malappuram have a very large expatriate population which works as unskilled labourers in the Gulf countries. It is this labour that is tapped for bringing in gold.

Also, the Malabar coast has had links with the Bombay underworld for well over three decades. Haji Mastan had friends in north Kerala before Dawood Ibrahim and there have been suspected gold landings in the past off the Kozhikode coast. One line of thinking among customs officials is that the local operators must be linked to the mafia in Dubai and Bombay since anoperation which requires considerable buying power cannot be run by local Kozhikode operators alone.

The modus operandi of bringing in the gold is fairly simple. Gulf Malayalees returning home on leave or after completing their two-year contract are approached by agents of the gold network and a free air ticket is offered on the condition that a consignment of gold will be taken by the Gulf returnee and handed over to the man waiting for him at Kozhikode airport. The customs duty of Rs 22 per gm in foreign currency is also given to the courier. But the incentive for him is the free ticket. A return ticket from a destination in the Gulf works out to be about Rs 30,000. There are enough takers for the 'take the gold and fly back home free' scheme.

A typical courier is ill-dressed and comes back home minus the trappings of his better employed brethren in the Gulf. He is almost always employed as a labourer and earns between Rs 5,000 and Rs 7,000 per month. After the two-year contract, the employer abroad does not even pay for his return ticket. Therefore, a free ticket back home is clearly a windfall. It's enough incentive to undertake the risk—in any case, he is confident he is not doing anything illegal since the duty is paid.

To get to the bottom of the racket, the investigating officials have to track down the end-recipients of each consignment. Only then can it be ascertained whether the sale is an open transaction or a black market deal. Right now everyone in Kozhikode knows the place is the entry-point for the gold but the trail thereafter is lost in the grey market by lanes of the cash-rich state.