-By Financial affairs correspondent
(Lanka-e-News -26.Jan.2025, 11.45 PM) Sri Lanka is no stranger to scandals, but the sheer scale of the ongoing gold smuggling operation from Dubai is dazzling—literally. Every day, between 85 to 100 kilograms of gold is smuggled into the country through Bandaranaike International Airport (BIA), a lucrative operation worth an estimated $45 to $50 million in U.S. dollars. The smugglers’ routes, methods, and brazenness paint a picture of a deeply entrenched network thriving on systemic failures, corruption, and regulatory inertia.
Two years ago, in January 2023, State Minister of Finance Ranjith Siyambalapitiya publicly admitted the glaring failures of Sri Lanka Customs in curbing gold smuggling. Fast forward to 2025, and not only has the problem persisted—it’s gotten worse.
In Colombo’s bustling gold market, the signs are as clear as day. Dealers openly conduct business with gold brought in by carriers flying in from Dubai, without hesitation or fear of reprisal. These dealers, around 20 key players in the market, rely on smugglers who operate under the radar—or, more accurately, under the complicit watch of certain Customs officials.
The modus operandi is simple yet sophisticated. Passengers from Dubai, many from the Bandaragama in Atulugama area, act as couriers, often smuggling gold in body cavities, disguised jewelry, or hidden compartments in luggage. Upon arrival at BIA, they are waved through Customs with the assistance of well-placed “bad apples” among officials.
From there, the gold floods Colombo’s wholesale gold market, where it’s sold with impunity. The smuggling operation is so brazen that it functions almost like a parallel economy, with no attempt to hide its existence.
The smuggled gold isn’t just about shiny trinkets or profit margins for dealers. It fuels a black economy powered by the Havala system—a shadowy, informal financial network. Through this system, foreign currency is exchanged illegally, bypassing formal banking channels and depriving Sri Lanka of vital foreign exchange reserves.
The estimated $45 million flowing through this network daily is a significant blow to the economy. It exacerbates the country’s financial woes, destabilizes currency exchange rates, and strengthens the underground economy, making legitimate economic recovery efforts even harder.
The elephant in the room is corruption, particularly within Sri Lanka Customs. The operation’s success hinges on the complicity of officials stationed at BIA. These bad apples not only turn a blind eye but actively assist smugglers by bypassing checks and enabling their seamless entry into the country.
One might wonder how a single international airport can facilitate such a massive operation without intervention. The answer lies in systemic failure and the lack of accountability mechanisms. Despite occasional raids and seizures, the larger network continues to operate unscathed.
The consequences of this unchecked gold smuggling are manifold:
1. Loss of Revenue: With $45 million worth of gold smuggled daily, the government loses significant customs duties and taxes.
2. Foreign Exchange Drain: The Havala system undermines formal financial institutions, depleting the nation’s foreign reserves.
3. Economic Instability: The influx of illegal gold destabilizes legitimate gold markets, creating price disparities and discouraging lawful trade.
4. Weakened Rule of Law: The widespread corruption and impunity erode public trust in law enforcement and the judiciary.
Sri Lanka isn’t alone in battling gold smuggling, but other nations have implemented robust measures to curb it effectively:
1. Rigorous Sentences: Countries like Singapore and Thailand impose harsh prison terms on gold smugglers, sending a strong deterrent message.
2. Hefty Fines: Some Asian nations levy fines up to 1,000% of the gold’s value in addition to seizing the contraband. A $20,000 piece of smuggled gold could result in a $200,000 fine.
3. Technological Interventions: Advanced screening technologies, including AI-based detection systems, have significantly reduced smuggling in countries like the UAE.
In 2023, the government issued a Gazette Notification (No. 2312/77) aimed at curbing gold smuggling. But the move has been little more than a bureaucratic exercise, with no tangible impact on the ground.
The government and Customs need to adopt a multi-pronged approach to address the issue:
1. Strengthen Customs Oversight: Conduct independent audits and rotate staff frequently to minimize corruption at BIA.
2. Introduce Hefty Penalties: Impose fines and mandatory prison sentences that act as a deterrent.
3. Enhance Surveillance: Invest in cutting-edge screening technologies and train Customs officials to detect hidden gold.
4. International Cooperation: Collaborate with Dubai and other transit countries to identify and disrupt smuggling networks.
5. Target the Dealers: Crack down on Colombo’s wholesale gold market and prosecute those openly trading in smuggled gold.
At its core, the gold smuggling operation is a symptom of deeper systemic issues—corruption, weak enforcement, and economic desperation. Addressing it requires more than just seizing gold and issuing notifications. It demands political will, institutional reform, and a commitment to restoring the rule of law.
As it stands, Sri Lanka Customs’ failures at BIA are emblematic of a larger problem: the state’s inability to enforce its own laws. Until this changes, the smuggling networks will continue to thrive, and the nation’s economy will bear the brunt of this golden betrayal.
In the words of a frustrated observer at Colombo’s gold market: “It’s not just gold they’re smuggling—it’s our country’s future.”
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by (2025-01-26 19:22:17)
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