Nepal: A Hub For Transnational Gold Smuggling? – Analysis


By Hari Bansh Jha

Recently on 18 July, 100 kilograms of gold that was imported from Hong Kong to Kathmandu-based Ready Trade Pvt Ltd was seized at Sinamangal, quite close to Nepal’s Tribhuvan International Airport (TIA) in Kathmandu.

The gold that was supposed to be smuggled to India was concealed inside motorcycle brake shoes and electric shavers. Immediately after this incident, the Department of Revenue Investigation (DRI) of the Nepal government arrested 18 people, including nationals from Nepal, China, and India for their alleged involvement in gold smuggling. Besides, it also constituted a six-member probe committee to investigate the lapses that resulted in the smuggling of the gold without detection.

Even before this incident, Ready Trade Pvt Ltd had imported nearly 1,997 kg of gold from Hong Kong. During the raid conducted by the DRI in the warehouse of this firm, the government authorities found gold weighing and melting machines along with the boxes that were used to conceal the gold. It is, however, intriguing that the legal owner of this firm is not a high-profile businessman but merely a daily wage workerwho resides in Melung Rural Municipality 1 in the Dolkha district of Nepal.

Before this 100-kg gold scam, the government authorities had busted 33 kg of gold at the TIA in 2017, but the gold went missing and has remained so. Sometime back, a senior leader of the ruling Maoist party was suspected to be involved in smugglinggold worth 9 kg under the cover of electronic cigarettes. Now photos and videos are surfacing on social media showing alleged gold smugglers posing with other high-profile Maoist leaders.

Now questions are being raised over how the TIA security officials, who can detect even a small coin, failed to detect a quintal of gold. How could such a huge consignment of gold pass through the airport amidst tight security? The credibility of both the human and technical security mechanisms at the TIA is also at stake because a certain company that is known for its involvement in gold smuggling has been given the contract of managing the airport’s external as well as its internal zones.

However, gold smuggling is not a new phenomenon in Nepal. It was prevalent even under the Panchayat system (1960-1990). Later, the political system changed but the smuggling of gold continued unabated. Though gold smuggling is taking place daily, it is rare that the gold is seized. And, even if it is seized, it is not the main players but the peddlers who are punished.

There is a feeling that the seizure of the smuggled gold is just to show how efficient the government authorities are in addressing the smuggling issue. As such, pressure is mounting on the government to form a special commission of inquiry to investigate the case of a gold scam. Nepal’s reputation in the international community has degraded as it is now exposed as a transit point for gold smuggling. It is well known that the gold is mostly imported to Nepal from China and then smuggled to India. In this regard, Rajendra Lingdel, Chairman of the Rastriya Prajatantra Party, said, “This small quantity of gold was seized just to show it to someone. Nepal is becoming a transit point for gold smuggling. It has come to light that the gold was seized only after other countries put pressure on it.”

Hemanta Malla Thakuri, former deputy inspector general of Nepal Police, spelt out that the non-detection of such a large volume of smuggled gold is not possible without collusion amongst the smugglers, customs officials, and other people at the top level. He also termed the smuggling of gold as an act of organised crime with an international dimension because gold was brought from a third country.

Furthermore, while addressing the meeting of the Law, Justice and Human Rights Committee of the House of Representatives (the Nepalese Parliament), Nepali Congress lawmaker Sunil Sharma asked for the resignation of Deputy Prime Minister and Home Minister Narayan Kaji Shrestha, and Finance Minister Prakash Sharan Mahat, for their failure to check the smuggling of gold at the airport. This is so because the Customs Department at the TIA functions under the Finance Ministry, while the police discharge their duty under the Home Ministry. Shekhar Koirala, a senior leader of the Nepali Congress, even suspected the involvement of another high-profile person in gold smuggling.

The CPN-UML, the main opposition party in the country, accused the government of trying to protect the main culprits involved in gold smuggling. It has demanded an independent high-level investigation into the gold smuggling and, for this, it has been obstructing the proceedings of the House of Representatives for quite some time. The National Youth Federation Nepal, a youth wing of CPN (UML), conducted a torch rally in Kathmandu to press the government to act against those involved in the gold smuggling. It also charged the government with ‘protect[ing] the mastermind by arresting only the carriers”.

Only time will tell how the Government of Nepal can reach the roots of the gold scam. But what remains concerning is the way the government has dismissed any possibility of constituting an independent high-level investigation committee on the flimsy ground that the DRI is already investigating the case. Given the fact that the investigating agency, the DRI, is a government body and that high-level politicians have been suspected for their involvement in this case, it is doubtful if the report of this agency would be impartial. In such a case, it is difficult to assume that the real culprits, including the mastermind behind the scam, are going to be punished. But it should not be forgotten that any leniency in punishing the real culprits involved in gold scams would not only erode Nepal’s image among the global community, but it might also have a detrimental effect on the economy and security of the country.

About the author: Hari Bansh Jha is a Visiting Fellow at the Observer Research Foundation

Source: This article was published by the Observer Research Foundation

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ORF was established on 5 September 1990 as a private, not for profit, ’think tank’ to influence public policy formulation. The Foundation brought together, for the first time, leading Indian economists and policymakers to present An Agenda for Economic Reforms in India. The idea was to help develop a consensus in favour of economic reforms.

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