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India’s Most Shocking Smuggling Racket

Author: Hartosh Singh Bal
Publication: Open
Date: July 28, 2012
URL: http://www.openthemagazine.com/article/international/india-s-most-shocking-smuggling-racket

The arrest of Uzbek smuggler Olga Kozireva 12 years ago brought to light one of the most brazen illicit operations this country has ever seen. But those likely to get away are the government officials who were bribed with money and sex to look the other way

On 28 August 2000, Olga Kozireva, an Uzbek, arrived at Delhi’s Indira Gandhi International Airport from Bishkek by Kyrgyzstan Airlines flight No K2-545. As is the case even today, the arrival of a woman from a former Soviet republic was not a rarity, but even so, Olga stood out. She was 26, fluent in Russian with a little English to get by, and she had a diploma in medicine from the Red Cross Society in Tashkent. Her grainy passport photograph suggested a look that was to become famous a decade later with the release of The Girl with the Dragon Tattoo. And her effrontery at the airport actually seemed to belong in fiction. She had the temerity to walk through the green channel with 27 bags weighing a total of 2,200 kg registered on her air ticket.

Only a fool could have believed she would make it through, but Olga was no fool. In that year alone, between January and August, she had travelled to India 68 times, often with even bigger consignments. But something finally went wrong that day. After four years of letting Olga and several other Uzbek women walk past with little or no scrutiny, a Customs officer decided to act.

The Smuggling Racket

The tale that unravelled in the ensuing investigation would be unbelievable if it were not true. Since 1997, Olga and her accomplices had been brazenly walking through the airport’s green channel—for those with nothing to declare—with tonnes of baggage. The day she was caught, the consignment had Chinese silk being flown in from Uzbekistan, a prohibited item that had done great damage to India’s domestic industry. In 2000 alone, there were 23 instances of similar consignments of Chinese silk being cleared with only nominal penalties. Officials on duty, it seemed, had deliberately noted only small quantities of Chinese silk in their records, charged minor penalties and let huge consignments into the country.

This, though, was less astounding than the fact that of the 84 trips she made just through IGI Airport in Delhi since 1997, Customs officials on 42 occasions did not even log a description of the goods she was carrying. On 35 occasions, her flight number was not recorded. During this time that she was flying into India from Pakistan, Uzbekistan and Kyrgyzstan, no one has any idea what she had brought in, apart from Chinese silk. At least one news report at the time states that in October 1999 and June 2000, her accomplices brought in bullet-proof jackets. It’s safe to assume these were not meant for Indian security forces, so the implications of this are disturbing.

While recent news reports do not highlight the financial scale of the racket, a simple calculation based on the Customs probe suggests that the amount involved was large. One of the officials involved revealed to Customs investigators that apart from the Uzbek women provided to them for sex, a bribe of roughly $500 was paid on every bag brought in.

On the day she was caught, Olga had 27 bags, and an estimated Rs 5 lakh had been arranged as a bribe to evade Customs duty of around Rs 50 lakh. Taking into account the number of times Olga had visited India since 1997, this roughly adds up to Rs 5 crore in bribes to ensure duty evasion of Rs 50 crore. Considering the fact that she was one among several Uzbek women making similar trips, the racket has meant Customs losses of hundreds of crore in a period when the rupee was worth much more.

The Modus Operandi

The racket seems to have begun on a modest scale in 1997 when some Indian Group B officers of the rank of superintendent and inspector were first approached. As Olga and her accomplices grew confident of getting material past Customs, the scale of their operation increased to the point that by 2000, Olga herself was walking in through immigration and Customs at IGI airport once every two or three days. The frequency of her visits alone should have triggered an alarm among security officials at immigration, but their failure to act has never been examined.

According to Olga, the man behind the scandal was an Afghan named Mamoor Khan who had left India shortly before her arrest. The arrangement with the officers was simple: even before the consignment was loaded—in Pakistan, Uzbekistan or Kyrgyzstan—the staff on duty at IGI were contacted, and they in turn would indicate which shift would be appropriate for getting the contraband through.

The network was vast and included staff at some airports where the material was loaded. The investigation found that ‘the staff of [Kyrgyzstan Airlines] at Bishkek and other places were hand in glove with offender passengers to suppress weight of excess baggage carried by them without recording the actual weight of the goods [in lieu] of illegal gratification from the offending passengers.’ The airline, which was later fined, informed DRI officials that, ‘this matter has been investigated and [the] services of staff responsible including that of Mr Dusheev, Head of Manas Airport, [have] been suspended.’

In Delhi, as the flight would be about to arrive, traders from Chandni Chowk—a locality in old Delhi—would already have turned up at the airport with delivery trucks to pick up the consignment. They would pay the officials the pre-arranged bribe, and wait for the flight to land. The payment ranged from $400 to $700 a bag, depending on its size. One of the officials later admitted having received sexual favours, too, from Uzbek women.

The contraband, usually transported in large sacks, would then be taken out and loaded on the waiting vehicles. None of this could have been possible without the involvement of the senior staff at Customs clearance. The material was not hidden from anyone’s view, nor could it be hauled off surreptitiously. Moreover, in several cases, a nominal weight had been recorded for a much larger consignment, an assessment that could only have been made by the shift in-charge, usually a Group A official of the rank of deputy commissioner or above.

Olga’s arrest had thus exposed an airport smuggling racket unprecedented in its scope and gumption. The financial losses, while large, were not as significant as the possible threat to national security. Under the circumstances, it was to be expected that investigations would commence speedily, and end in action against the officials involved. But if the scandal was astounding in itself, what has followed since is even more incredible.

The Customs Investigation

Two different kinds of offences were involved: one related to the criminal conduct of the officials involved, a case that was handed over to the CBI, and another related to smuggling that dealt with Customs and was investigated by the Department of Revenue Intelligence (DRI).

The problem became clear at the very beginning. The DRI at the time was headed by MK Zutshi, whose wife Vijaya Zutshi was commissioner at the airport till mid-

2000. Moreover, DD Ingty, then additional director of the DRI, had been additional commissioner at the airport from 1997 to 1999. This may in some measure explain why the DRI took the otherwise inexplicable decision to restrict its investigation only to the year 2000.

When the case finally did come up before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), this tribunal began its conclusions and findings by stating, ‘It is shocking to read para 557 of impugned order. Learned Adjudicating Authority noticed that Ms Olga K admitted in her statement that she along with her associates was coming to India right from the year 1997. But show cause notice was issued to different persons to deal with the illegal clearances made mainly [during] the year 2000, even though extended portion was invokable (sic) for a period of 5 years…’

Given this background, it wasn’t surprising that no Group A officers—that is, officers of the rank of deputy commissioner who supervise shifts and their seniors—serving at the airport were part of the probe.

They were not the only ones kept out; the appellate tribunal in its judgment noted that ‘RN Zutshi (an inspector not related to the then DRI chief whose confession formed the initial basis for the investigation) has deposed unequivocally that 60 per cent of the bribe money used to go to the Preventive Department of the Airport which also manned the exit gates of the Airport. Superfluous investigations were conducted and blame was put entirely on the officers involved in baggage clearance keeping the Preventive Wing completely out of the scope of investigation, making sketchy, superficial, deliberately flawed and incomplete adjudication proposals.’

The appellate tribunal judgment, pronounced in 2011, was the result of an appeal filed against the decision of the airports commissioner who had, based on these ‘sketchy’ DRI investigations, decided to fine seven Customs officials of the rank of superintendent and below. The cumulative fines ranged roughly from Rs 2 lakh to Rs 15 lakh.

Further, the appellate tribunal imposed a fine of Rs 1 lakh each on 14 other Custom officials who had been spared by the commissioner. These officials filed an appeal to the High Court, which sent the matter back to the appellate authority because the case against each had not been dealt with individually but been clubbed together. The matter has since been pending with the tribunal despite a High Court order demanding an early hearing.

This is because the case has been repeatedly listed before a bench that did not pass the original order, even though the original bench of DN Panda and Rakesh Kumar continues to sit and hear other matters on a regular basis. The Revenue Department, which operates under the Union Finance Ministry, has direct control over the appellate tribunal, but it has failed to take any action in this case so far. Given the Ministry’s record in the context of the CBI investigation, this does not seem surprising.

The Cbi Investigation

The case was taken over by the Central Bureau of Investigation (CBI) in March 2001. This agency asked the Finance Ministry for its sanction to prosecute nine group A officers and 35 Group B and C officers through the Director General (Vigilance). The Ministry finally granted this sanction in March 2006, but only against 27 officers and just five of the nine Group A officers.

The five Group A officers are VK Singh Kushwaha, then additional commissioner at the airport, apart from HR Bhima Shankar, Rajiv Gupta, Virender Kumar Choudhary and Upendra Gupta, who were all deputy commissioners. These officers continue to serve in senior positions in the department even as the trial goes on.

After the framing of charges, the actual trial began only in 2011, long after the case had faded from public memory.

In a startling development since, reported in The Financial Express, Finance Secretary RS Gujral has written to CBI Director AP Singh earlier this year asking the agency to apply to the judge for a closure of the case against the five officers.

While the CBI has clarified that it will not be dropping the case, the existence of this letter—obtained by the paper through a Right to Information (RTI) application—has not been denied by the Ministry.

According to the newspaper’s report, the letter states that the cases were referred to the attorney general, who, after examining the charges and departmental enquiries, has recommended the withdrawal: ‘It has been decided by the competent authority that the case [before the special judge, Tis Hazari] is fit for withdrawal of prosecution.’

Open received no response from the finance secretary at the Ministry on why it has had this change of mind when the facts have not changed since its sanction for prosecution was first granted. Clearly, if the case against the five officers falls through, the others also get away.

As for those against whom a sanction-to-prosecute was denied by the Ministry in the first place, departmental inquiries were initiated. These have since been closed. Deepak Garg, Deputy Commissioner (Preventive), head of the same preventive wing that came in for so much flak from the appellate authority, is now a member of the DRI and is among the select few tipped to join the Tax Research Unit in the Revenue Department, the body responsible for framing the Union Budget.

Second Life

It would be interesting to examine this case afresh in light of the debate over the Lokpal Bill. The extent of corruption in this case is evident, embracing almost the entire Customs staff serving at IGI Airport for a period of five years. The fact that smuggling took place, bribes were paid and there was a grave threat to national security is not in doubt. But as far as the Government is concerned, no official seems to be guilty.

Olga Kozireva served a two-year sentence before she was granted bail, which she jumped and has since made her way back to Uzbekistan. Only one inspector of the department, the one who admitted to sleeping with Uzbek women, was dismissed from service.

Every aspect highlighted in the debate over corruption in this country over the past two years has played a role in this particular case.

The Government has used its discretion on granting sanction-to-

prosecute to let off several officers, and is now attempting to do likewise even in case of those against whom sanction was first granted. This delay has resulted in the trial proceeding at a far slower pace than it should, and as public memory fades, the overburdened CBI seems to have other things on its mind.

As for the DRI investigation, it reveals the hollowness of any mechanism to check corruption that exists within the framework of a department. The very people responsible for overseeing work at the airport, it turns out, were directly or indirectly associated with the investigation.

The failure of the department, as opposed to the CBI, to act against any Group A officer reveals how cronyism within services such as the IAS, IPS and IRS has reached an extent where senior officers go out of their way to protect their own, whatever their crime.

Even while no senior officer has been called to account, fines have been levied against 21 Group B and C officials by the appellate tribunal—the only judgment that has been passed so far in this 12-year-old case.

The tribunal could not act against senior officials because they were not arraigned in the case, so it seems we have a situation where those in charge of duty shifts at IGI Airport bear no responsibility for what happened in the periods under their watch, nor are they called to account for misrepresenting the sizes of consignments, which cannot be done by their juniors.

Juniors have been fined, but they have been absolved of any wrongdoing in departmental proceedings. Clearly, abetting smuggling does not seem to be ‘conduct unbecoming of a government servant’ in India.
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