Over the past three months, parallel probes are being held into the case by various central investigation agencies. Multiple controversies, many of which are political, have also surfaced.

Stylised image of gold smuggling accused Sandeep Swapna Sarith Sivasankar IASFrom left: Sandeep, Swapna, Sarith, Sivasankar IAS
Delve Gold smuggling case Wednesday, November 04, 2020 - 12:32

What started as a routine gold haul by the Customs (Preventive) Commissionerate in Kochi on July 5 this year, has snowballed into a political turmoil in Kerala, with three central investigation agencies investigating various angles of the crime. From a case of gold smuggling, the investigation has branched out into money laundering, irregularities in Kerala government’s LIFE Mission housing programme for the poor and alleged improprieties in other government projects.

Over the last few months, with daily developments in the case, many may have lost track of what's happening and why. TNM has put together an extensive explainer on the case and its ramifications. Please note that though parts of the story is based on statements by the accused, these are contestable and not fully admissible in court and the accused may have a different version later.

How the gold smuggling case unfolded

July 5: The bag seized by the Customs on July 5 was meant for Rashed Khamis Ali Musaiqri Al Ashmia, the acting Consul General of the UAE Consulate in Thiruvananthapuram. After seeking the necessary permission from the Ministry of External Affairs (MEA) and the UAE Ambassador to India, the Customs officials opened the bag only to discover that other than dates and noodles and other groceries, the bag also had 30.2449 kg of gold, costing Rs 14.82 crore, hidden inside pipe fittings and locks.

Watch video of the smuggled gold:

Hours after the bag was opened, officials made the first arrest in the case — Sarith PS, a former Public Relations Officer of the Consulate. He had been handling the consignments that had been arriving for the Consulate officer, and continued to do so even after resigning his job.

Based on Sarith’s statement to the Customs, names of Thiruvananthapuram residents Swapna Suresh, Sandeep Nair and Faisal Fareed, who was in UAE at the time, surfaced.

Thirty-nine-year-old Swapna was a former employee of the UAE Consulate who was working as a staff employee on contract for Space Park, a project under the state government’s IT Department. She was soon suspended.

Both Swapna and Sandeep managed to escape Thiruvananthapuram, when the city was under triple-lockdown due to COVID-19.

July 10: Upon the notification of the Union government, the National Investigation Agency (NIA) registered a case in the incident. The agency alleged that the proceeds of the crime could be used for funding terrorism in India. NIA named Sarith, Swapna, Faisal Fareed and Sandeep as the first, second, third and fourth accused respectively, and booked them under charges of Unlawful Activities (Prevention) Act (UAPA).

However, the special NIA court in Kochi has raised serious doubts on the terror funding charge and asked whether the NIA was able to prima facie establish the allegations including suspected terror links. Stating this, the court had granted bail to 11 accused, most of whom were financiers.

The following day, on the night of July 11, NIA nabbed Swapna and Sandeep from their hideout in Bengaluru. On July 13, the Enforcement Directorate (ED) also registered a case, booking Sarith, Swapna and Sandeep under the Prevention of Money Laundering Act (PMLA).


Sandeep and Swapna (middle) with NIA officials after arrest

Over the last three months, the Customs and NIA have booked a total of 30 people, including alleged kingpin of the racket KT Ramees, the distributors of the smuggled gold and those who allegedly invested the money for smuggling.

Shockingly though, this is reportedly the first time that gold smuggled through diplomatic baggage was seized in the country. The investigation agencies also say that the gang had smuggled a total of 166.882 kg gold through the same channel in 21 instances.

How the smuggling was executed

According to the investigation officers, both Sandeep Nair and Malappuram native KT Ramees, have a history of smuggling gold and have been acquaintances for many years. In 2014, both Ramees and Sandeep were even convicted after Customs seized 3.5 kg gold at Trivandrum International Airport.

According to what Swapna told the ED, in mid-2019, Ramees allegedly approached her and Sarith, through Sandeep, enquiring about the possibilities of smuggling gold through diplomatic cargo. Both Sarith and Swapna took Ramees into confidence by explaining the nuances of the ‘diplomatic immunity’ under the Geneva Convention and how the consignments meant for the Consulate will not be checked.

At the time of this alleged conspiracy, Swapna was still the Secretary to Consul General of the UAE Consulate. She resigned from her job in the Consulate in September 2019.

The alleged plan was set. But in order to be doubly sure that the diplomatic channel is ‘safe’, Ramees allegedly arranged two consignments for ‘trial’ smuggling. In July 2019, Sarith allegedly forged the required authorisation letter for the Customs clearance by making a seal of the UAE Consulate (rubber stamp). Using the forged authorisation letter, Sandeep told ED, the racket managed to get the clearance from Dubai Airport, and succeeded in the ‘trial’. Following the similar pattern, the racket smuggled gold 21 times, until it got busted this July.


Links of accused persons (from report submitted by NIA to court)

According to Swapna’s statement, she, Sarith and Sandeep facilitated gold smuggling four times last November, 12 times in December, once each in January and March this year and twice in June. Notably, the racket, which allegedly started smuggling three kilograms of gold each time, decided to exploit the lockdown situation and raised the quantity in June. Fifteen kilos of gold were smuggled twice each in June. And in July, it was the largest consignment — 30 kilograms.

According to ED, it was Ramees who allegedly handled the smuggled gold when it reached Kerala and distributed it to three persons, who, in turn, distributed it to eight other persons (now accused in the case).


Gold distribution (from report submitted by NIA to court)

Fraud within fraud

Investigators allege that in order to make more gains, both Swapna and Sarith had chalked out a parallel plan. The duo had made Sandeep and Ramees believe that the Consul General had to be given a ‘commission’ amounting to 1,000 USD (about Rs 75,000) per kilogram of the smuggled gold. But this amount was shared equally between Sarith and Swapna.

It is learned that Sarith has given statements to the investigation agencies that UAE Consul General “was not aware of the illegal activities”. But notably, both Swapna and Sarith have alleged that Rashed Khamis Ali Musaiqri Al Ashmia, Charge d’Affairs of the Consulate, was paid a total of 3,000 USD, which were proceeds of the smuggled gold, twice in June.

Rashed Khamis left the country days after the gold smuggling came to light. Soon after he left India, his gunman tried to take his own life.

It is also alleged that both Swapna and Sarith have gained Rs 27 lakh each as proceeds of the crime, while Sandeep received Rs 13.4 lakh.

Read: Gold smuggling case: UAE Consular officer leaves India, his gunman found with injuries

Top bureaucrat Sivasankar’s name surfaces

Just as Swapna Suresh’s name surfaced in the gold smuggling, reports of her alleged links to top officials in the Chief Minister’s Office (CMO) started surfacing. The first name to tumble out was senior IAS officer M Sivasankar, who was the IT Secretary and the Principal Secretary to Chief Minister Pinarayi Vijayan. He was suspended from the posts, at the time, for his association with Swapna. In subsequent investigations, it was found he, too, had some link with the gold smuggling case. His call records, too, showed that Sarith and Swapna had contacted him on multiple occasions.

On July 16, the bureaucrat, who is said to have been a favourite of CM Pinarayi, was suspended from service on the basis of a departmental enquiry. But the Opposition parties in Kerala insisted that a suspension was not enough, they continued to demand the resignation of CM Pinarayi.

Sivasankar was quizzed multiple times by the National Investigation Agency, Customs Department and Enforcement Directorate. He was finally arrested by the ED on October 28.


M Sivasankar after being arrested

Sivasankar told the investigation agencies that he has known Swapna closely since 2017. He also told ED that Swapna had many financial difficulties and that he has helped her financially in some instances. The IAS officer helped Swapna open a bank locker, where she is suspected to have kept the proceeds of the crime. His role in her appointment in the Space Park, a project under the IT Department when Sivasankar was the Secretary, has raised questions of impropriety.

However, throughout all the inquiries, he maintained that he was not aware of the illegal activities of both Swapna and Sarith.

Helping Swapna open a bank locker

When NIA raided Swapna’s bank lockers in the State Bank of India and Federal Bank in Thiruvananthapuram, the agency seized Rs 1 crore and nearly one kilogram of gold from it. Swapna told investigators that she opened the locker at State Bank through Sivasankar’s Chartered Accountant.

The Chartered Accountant P Venugopal, who has been named as a witness by the Enforcement Directorate, said that he opened a joint locker in his and Swapna’s name, on the direction of Sivasankar. Denying this, Sivasankar said that he only introduced Swapna to the accountant to help her open fixed deposits in a legally permissible way to deposit money. According to Sivasankar, Swapna told him that she used to get large amounts as tips from visiting dignitaries, including USD 15,000 (Rs 9.75 lakh then) from the Ruler of Sharjah when he visited Kerala in 2017.

However, certain Whatsapp chats showed that Venugopal kept Sivasankar updated about the account. To prove any involvement by Sivasankar in the gold smuggling racket, the agencies will have to prove that he knew what exactly the account was being used for.

The gold and cash seized from Swapna’s locker led to the next question: Where did she get this from? This is when the Kerala government’s housing mission for the poor people called ‘Life Mission’ got dragged in.

LIFE Mission row

The explanation given by Swapna about the source of the money in her locker was yet another storm waiting to hit the CPI(M)-led Left Democratic Front (LDF) government.

Swapna said that the money was the commission she received for helping a contractor bag a project under the Kerala government’s ambitious LIFE Mission programme. Congress and BJP immediately strengthened their demands for the CM’s resignation, alleging corruption. Press meets of CM Pinarayi Vijayan those days witnessed many tense moments between journalists and the CM, as questions on the alleged discrepancies in LIFE Mission were repeatedly asked.

The controversy against the state government gained momentum as Congress MLA Anil Akkara representing the Wadakanchery constituency in Thrissur district, filed a complaint with the Central Bureau of Investigation (CBI) on August 20. In his complaint, the MLA alleged that there are Foreign Contribution (Regulation) Act (FCRA) violations in the ongoing LIFE Mission project in Wadakanchery. He alleged that the apartment complex constructed as part of the project was sponsored by UAE-based Red Crescent, a humanitarian organisation affiliated to the International Federation of the Red Cross and Red Crescent Societies.

According to the Memorandum of Understanding (MoU) signed between Red Crescent and LIFE Mission chief on 11 July 2019, the former agreed to donate Rs 20 crore to construct a housing complex for the victims of 2018 Kerala floods, and a women and children health centre, in Wadakanchery. Kochi-based Unitac Builders and Developers and Sane Ventures LLP got the contract for the project. The two companies allegedly paid commission to Swapna when she was a staff of the UAE Consulate.

Meanwhile, MLA Anil Akkara's complaint stressed that accepting funds directly from Red Crescent was an FCRA violation. Caught in a political storm, the state government ordered a probe by Vigilance and Anti-Corruption Bureau (VACB) into the allegations.

Though the state government initially maintained its cool stating that the funds were received directly by the contracting companies and that it had no role, things turned sour as the CBI registered a case against the Managing Director of the contracting company and ‘unnamed officials of Life Mission’.

The case has been registered under section 120 (punishment of criminal conspiracy) of the Indian Penal Code and section 35 (punishment for contravention of any provision of the act) read with section 3 (prohibition to accept foreign contribution) of FCRA.

Earlier in October, responding to the plea of the state government, the Kerala High Court stayed the CBI probe against the government for a period of two months. But notably, the FIR has not been quashed and the probe against contracting companies continues.

UAE Consulate’s role

The UAE Consulate was initially actively involved in the Life Mission project at Wadakanchery. After the first MoU on July 11, 2019, a second agreement was signed in the project on July 31 that year. However, this was signed between UAE Consul General and Unitac Builders and Developers and Sane Ventures LLP. Neither Red Crescent nor Life Mission was party to the agreement.

As per the stay order of the HC, two days after the second MoU was signed, 40% of the total project amount was transferred to Unitac Builders and Sane Ventures, and the construction commenced.

According to statements given by Swapna and officials of the two companies to various investigation agencies, the UAE Consulate officials also allegedly received a hefty commission as part of the deal.

Santhosh Eappen of Unitac Builders and Vinod PV of Sane Ventures said that after learning about the project in Wadakanchery through Sandeep's acquaintance Yedhu (who was an employee of Unitac), they met with Khalid, reportedly an Egyptian national who was the Head of Finance of the UAE Consulate, and Swapna Suresh. They asked the duo’s help to bag the contract.

In their statement, both Santhosh and Vinod said that Khalid demanded 20% and after they received the project amount from Red Crescent, Rs 3.80 crore (part of the amount was converted into US dollars) was handed over to him. They have also added that a total of Rs 25.20 lakh was transferred to the bank accounts of Swapna, Sandeep, Sarith and Yedhu via Sandeep’s firm.

Soon, Khalid’s name has also surfaced in a recent case filed by the Customs Department, which alleged that he smuggled foreign currency of USD 190,000 from Kerala to UAE with the alleged help of Swapna and Sarith. According to reports, Khalid was ousted from the Consulate after the news of his alleged involvement in the case surfaced.

Sivasankar’s role

Swapna has claimed that as per her direction, Santhosh Eappen had met Sivasankar ‘to get connected with the Life Mission CEO’ and get necessary approvals.

But Sivasankar, in his statement to the ED, said that his only involvement was that he took part in a meeting with Red Crescent officials and the UAE Consulate, on behalf of the Chief Minister’s Office. He has stated that only the project where the sponsorship is to be made was discussed in the meeting, and nothing else.

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