DRI exposes ₹941 crore gold diversion scam involving six Chennai jewellers
- In Reports
- 03:49 PM, Oct 07, 2024
- Myind Staff
The Directorate of Revenue Intelligence (DRI) and Chennai Customs uncovered a scam involving six jewellers from Chennai. These jewellers allegedly diverted around 2,170 kg of gold, worth ₹941 crore, under the guise of exporting gold jewellery to Dubai and Malaysia. This took place between 2020 and 2022.
Following their registration as exporters, the jewellers obtained thousands of kilograms of duty-free imported gold bars from banks and other government-designated agencies, with the understanding that the gold would be used to make jewellery that would be exported. However, only 10% of the gold was utilised to make jewellery and the remainder of the gold was transferred to the open market in order for allegedly selling it in black.
The manufactured gold jewellery was allegedly mislabeled as 22 carats and exported with the help of a group of customs officers who had accepted large bribes in exchange for clearance, according to the two thorough investigation reports that Principal Customs Commissioner M Mathew Jolly of the Chennai Air Cargo Complex released in January 2023 and September 2024.
Several jewellery producers from Mumbai, Kolkata, Rajkot, and Chennai were involved in a large-scale scam. They were producing fake gold jewellery and illegally selling pure gold bars in the open market. Investigators found that six exporters bought 2,507 kg of pure gold but used only 337.02 kg to make jewellery. The rest, 2,170 kg, worth around Rs 941 crore, was illegally sold. Additionally, they allegedly exported 2,612 kg of fake gold jewellery as part of the scam. "To clear the consignment, customs officials accepted lakhs as bribes."
According to the investigation reports, this fraud broke multiple laws, including the Customs Act, and resulted in a significant loss for the government exchequer due to customs duty and GST. The investigation also revealed a significant money-laundering scheme by describing the transfer of funds overseas via Hawala channels. In addition to the six jewellers, other parties involved in this scam include several manufacturers, a few customs officers, the logistics company handling the shipments, a leading private sector bank, and a major public sector government agency.
In January 2022, Chennai DRI officials uncovered a case at the Chennai Air Cargo complex during the inspection of a consignment heading to Dubai, which was declared as 22-carat gold jewellery. However, a gold expert discovered that the items were fake, made of 90% brass or copper. The jewellery was cleverly designed so that an X-ray spectrometer would only detect the outer layer, misleading the results.
Later, the DRI conducted a number of searches in several cities, including Rajkot, Kolkata, and Mumbai, in order to confiscate digital records, gold bars, and incriminating documents that had been obtained from the designated agencies. To determine the scammers' method of operation, investigators combed through hundreds of documents detailing their paper trail.
Further investigation revealed that a group of customs officers, who were specially trained to check the authenticity of consignments, were involved in corruption. These officers accepted bribes ranging from ₹3 lakh to ₹5 lakh for every 10 kg of fake gold they cleared. In fact, three customs officers cleared shipments without being rostered and without the officers assigned to those shifts knowing about it.
The RBI-nominated agencies have also come under fire from customs and the DRI for selling gold bars to exporters when spot inspections revealed that they were subletting the product to manufacturers in distant places like Mumbai, Rajkot, and Kolkata. They also lacked manufacturing facilities on their property.
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