Nepal’s Smugglers Cash in on India’s Love of Gold

September 4, 2013 at 10:06

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After a long drive from across the border in China, the white truck arrived in Nepal’s capital at dawn with a seemingly innocuous cargo of Chinese-made clothes.

But hidden in a cylinder inside the vehicle’s front bumper was the latest haul of gold smuggled from Tibet — bars weighing some 35 kilograms (77 pounds) and worth several million dollars on the black market.

Nepal’s police were waiting for the truck and its 24-year-old driver just inside the city, after tracking them for several days along the highway that connects Nepal with China.

“We had been informed from our reliable source that a consignment of gold was on its way from Khasa(a border town in Tibet),” Uttam Kumar Karkee, a senior superintendent, who led the operation in July told AFP.

Nepal’s police and inland revenue department say the illegal shipment was ultimately destined for neighbouring India, where seizures of smuggled gold, including from its closest neighbours, have reportedly soared this year.

The seizures in India coincide with the government’s campaign in recent months to deter legal imports of the precious metal — including by hiking import duties.

Under pressure over a faltering economy, the government is trying to break that country’s obsession with gold. Imported in vast quantities, it is partly blamed for blowing out the current account deficit and pushing down the rupee to record lows.

In Nepal, police have seized far more illegal shipments bound for India this year compared with 2012. Its organised crime unit cannot say whether Indian consumers and traders are turning to the cross-border black market as a direct result of efforts to discourage legal imports.

But making it harder and more expensive to import gold certainly presents smugglers with opportunities.

“There is a growing demand for gold in India. So the smugglers are cashing in on that,” the department’s deputy director general Anand Raj Dhakal said.

A total of 69 kilograms of smuggled gold was seized in Nepal in the last six months, most of it from Tibet, compared with 18 kilograms for all of 2012. But that’s only the tip of the iceberg, says Nepal Police spokesman Nawaraj Silwal, who estimates only 10 percent of all smuggled gold is confiscated.

The seizure in July, which led to the arrest of several Kathmandu businessmen, came hot on the heels of another police bust in mid-May. Four men were arrested on Kathmandu’s outskirts, each with four bars of gold (16 kilograms in total) in the soles of their shoes. This stash was also bound for India, according to police deputy superintendent Chakra Bahadur Singh.

In a typical smuggling run, trucks transport the hidden gold overland from Tibet into Kathmandu, where the stash is shifted to freight trucks that ply the roads between Nepal and India, says Silwal, who singles out the Indian border town of Raxaul as a smuggling hub.