Gold Trail 1

The capsule that crosses the seas! How gold smuggling thrives without a bar

The gold landed safely in Kerala 24 hours before its scheduled arrival through two female carriers. The capsules were hidden in their bodies, and they boarded the flight to take it back home to the right persons.

I contacted the smuggling racket in Kerala directly and told them that I was keen on investing a considerable amount in gold smuggling. I had to cross many hurdles before I contacted agent Shabeer from Kasargod.

Without beating around the bush, I came straightaway to the point. "My name is Jayarajan from Thaliparamba," I told him. "I have raised the money through the real estate business I did with my friends. I have no difficulty in deploying Rs 4-5 crore in gold smuggling," I told him.

The agent did not doubt it since I had reached him through his established contacts. However, I put a condition: I should be able to witness the various stages and practices of gold smuggling. "Then only I will deploy my money," I told him.

The agent yielded after I put pressure on him.

Finally, I was allowed to be part of the meeting in a hotel room at Al Muteena in Dubai at noon on July 26.

The scenes at the gold market

Shabeer reached the hotel room with the head of the smuggling racket Mr M. We reached an understanding that Mr M and I would form a partnership to transport illegal gold, and Shabeer could be deployed as the main agent.

Shabeer was entrusted to take care of carriers and other matters. The gold will be smuggled by hiding it in the body or dress of the carriers or cardboard boxes.

I was unconvinced. “Words won’t do. Can I see how the gold is concealed?” I asked.
"Different people do all these tasks. They don't show them even to us, then how can you ask to see the process?" one of them asked me.

But I was adamant. And I demanded that I should be allowed to see the process of hiding. Shabeer called someone over the phone. Finally, we headed to the gold market called Dubai Gold Souk. Jewellers, some owned by Malayalis, fill the Gold Souk. Among them are world famous brands as well as small showrooms. The bylanes are also filled with small gold shops.

Shabeer accompanied me. And he took me to jewellery store owned by a Kozhikode native. The ground floor houses the jewellery shop, and the ornament-making unit is on the top floor. This pattern is replicated across most jewellery shops.

When we reached, the jewellery owner was on the top floor. From the corridor, the door to the ornament-making unit opened. I saw seven to eight people engaged in doing something in a cardboard box. Though I wanted to see it in detail, they did not let me. They escorted me out fast and closed the door.

The jewellery owner spoke to me on the veranda. Two people at the jewellery were watching us closely. I also spotted the CCTV camera and decided to keep my mobile in my pocket. The jewellery owner explained how they hide the gold in dresses and cardboards.

I left, but I told them I would come back. The next day Mr M and Shabeer came to my hotel room. “I have seen it and I am convinced. But that’s not enough. I need some evidence to show to my partners,” I told them. Mr M agreed to take photos and video if a big-ticket investment is made. The next night, I received a voice message on WhatsApp: “Reach Gold Souk at 4 pm tomorrow.”

 

Golden birds that fly ahead
I reached Dubai Gold Souk before 4 pm the next day. Mr M stepped in at 5.30 pm.

From the main road, we walked through the twists and turns of a dingy corridor to the Gold Souk. In between, we entered a tea shop to have tea. The extended exercise was probably to check whether someone was following me.

Again after some twists and turns, we reached the second floor of a building. From there, Mr M purchased one-and-a-half kilograms of gold dust by handing over some currencies.

"How do you dispatch it?” I asked when we got out from there.
“They will be turned into capsules and then concealed in body,” he told me.
“When will you send it?”
“Tomorrow,” he replied.

Suddenly a young man sporting a black T-shirt and pants appeared on a battery-powered scooter. Without uttering a word, Mr. M handed over the two packets to him. In lightning speed, the young man disappeared.

“How long will it take?” I enquired again.
“Half an hour,” he answered.
“Can I see it being turned into capsules?”
“It is not possible. Even we are not allowed to.”
I was not done yet. “How many capsules can one make from 1.5 kg?”
“Six. 250 grams each. Let’s go to the office. The youths will bring the stuff there,” he told me.

By 7.45 pm, youths brought the stuff to the office.
Six black capsules.

Mr. M scanned the capsules using a hand-held scanner. A strong beep sound emerged.

After some time, Mr. M went to the washroom, and I took a photo of the capsules using my mobile. In five minutes, Mr. M left for his residence in his car after packing the capsules in a small bag. He took me along.

“So, we will meet tomorrow,” he said.
“When will it be sent?”
“Tomorrow night.”
I alighted on the way. I was allowed to contact Mr M over the phone only the following afternoon.

“We’re sending the consignment today, right?” I asked.
“The stuff landed last night in Kozhikode, and reached the destination safely. Is the evidence not enough?"
(The 'stuff' crossed the seas 24 hours ahead of schedule, possibly because of a lack of trust in the new 'investor').

On the night of the 28th itself, two female carriers were brought to Mr M's office, and the capsules were set in their body, and then they were sent to the airport.

They carried the capsules to the house in Kozhikode, took them out, and handed them over to the smugglers. On July 29 morning, at a secret location, it was melted, impurities were removed, and the pure gold was handed over to the jewellery in Malappuram. (My source confirmed that it reached Malappuram).

 

Cost of the smuggling operation (which started at 6 pm on July 28 and ended early morning on July 29):
The price of one and a half kg gold: 3,17,160 dirhams
Crushing cost: 300 dirhams
Cost to make capsules: 600 dirhams
Ticket for carriers: 1080 dirhams
Taxi and other expenses: 500 dirhams
Agent's commission: 2000 dirhams
Total expenditure in Dubai: 3,21,640 dirhams
The total amount of gold recovered in Malappuram after removing impurities: 1497.40 grams
Amount realised from local jeweller: Rs 78,08,940 (at Rs 5215 for one gram)
Remuneration for the carriers: Rs 1,00,000
Melting charge: Rs 6000
Taxi and other costs: Rs 6000
Amount relaised in Rs : Rs 76,96,940

If it is divided by the reverse hawala rate of 22.6244, earnings would be 3,40,205 dirhams

(Hawala and reverse hawala rates are calculated in lakh rupees. Hence four decimal points are considered. This means if Rs 1 lakh is given in Malappuram, one gets 4420 UAE dirhams in Dubai).

Total profit of operation: 18565 dirhams (i.e. 3,40,205 minus the expenses incurred in Dubai 3,21,640 dirhams)

As per the hawala rate in Malappuram, this comes to Rs 4,20,022. This is the net profit from smuggling 1.5 kg of gold. The profit in one kg is Rs 2,80,014. If the agent is excluded and smuggling is held with own carriers, the agent commission can be saved. (There will be differences in profit as per variations in the gold price and hawala rates).

 

Converting dust into capsule
Gold in the dust form is mixed with maida using castor oil and water and then rolled and filled in a condom to turn it into a 250-gram capsule. Sometimes an insulation tape is strapped over it.

Later they are concealed inside the body.

Gold retrieved from carriers is heated on a gas stove to remove impurities. After some time, maida and castor oil in the capsule burn away. Gold will emerge as a solid roll.

Being a global commercial centre with liberal financial policies, Dubai doesn't have strict rules regarding gold trading. One can take any amount of gold from Dubai to outside countries. The legally purchased gold from Dubai becomes smuggled metal in India and other countries when they are brought in over the permissible limit.

(This is the first part of the investigative series on gold smuggling by Malayala Manorama.)