The Adukias: Fall of South Asia's Mafia Henchmen(2/4)

Nepal gold carnival organizers and their modus operandi—tarnishing Nepal's image as a regional gold transit hub

In 2010, Rakesh was scuttling between HK and Nepal with frequent stopovers in Kerala. A close eye-witness relayed that he travelled using aliases under three different passports. At the moment, we’re not sure what names were used. In Nepal, he was busy preparing grounds for hydro-investors, mainly India, with linkages to the PM then, Mr. Baburam Bhattarai. It’s all fine until you couldn’t find news anywhere of such high profile visit in the media. A big investor in town for the biggest investment Nepal’s ever seen with no trace of the visit. Digest that!

Rakesh was organizing investors meet privately to bolster his reputation to visitors and newfound hosts in his circle. Again, standard, often exaggerated, networking/sales process. However, if you go back and look at the actual context along with visitor names, you immediately smell the rot. We will refrain from drawing linkages due to uncertainty and that some deals may not have gone through. We noticed he has a habit of doubling down on PR anytime he’s in serious trouble—otherwise always quiet in media. He did it it 2010 with interviews splashed in local Nepalese econ newspapers about his wherewithal to bring in investments to the tune of several lakh crores(>US $1bn) but he wouldn’t bring, owing it to Nepal’s conditions then. Fast forward to late 2023 and we see similar positioning again.

Now, lets talk about the recent gold episode. The day over 60 kg gold was confiscated during delivery, several names flashed pointing fingers at possible suspects before investigations had begun. One prominent name came up repeatedly during initial days was of Mr. Deepak Malhotra, Samsung Nepal dealership owner. Mr. Malhotra own companies that manage various retail outlets inside and outside the airport, so pointing fingers at him made sense without a chance to pass public or legal scrutiny. The relentless campaign made Mr. Malhotra come out with tears publicly and explain he was not responsible pleading for the campaign to stop. The whole blame campaign was a well thought out decoy to buy time and cover all possible trails reaching the perpetrator in case consignment got caught. And, it worked!

After the media trial was over, investigators finally knocked on Mr. Rakesh Adukia’s door for questioning only to find him missing in action. When the news got out that he was absconding there was phone call interview with news24 reporter. Several acute observers in their comments suspected the voice did not match Mr. Adukia’s which added more fuel to the ongoing saga. In a couple of days, there was news of his son Rohan Adukia’s arrest and was in custody for questioning. This is when he finally sat down for a staged interview after a month pointing direct fingers at Pawan Golyan for his current state of affairs, but not a single word on the gold fiasco. This begs a question: Why would a man with so much stake in financial market risk his reputation by not clearing his name in the gold episode when given the chance?

Surprisingly, Rajasthan India was the only other place in the region where Gold was making incessant noise in the past year besides Kathmandu and Biratnagar, East Nepal. A cursory check with some filters and you get several state gambling sites selling off gold, confiscation from government officials possession, Urea Gold and a gold mine which was slated to be auctioned off before RJ state election in India.

Elections coming up, gold is back making news at regional drop-off location and last delivery location. Our readers should get the drill by now. Modus operandi of gold cartel in the region for the longest time.

So, how exactly do the smugglers manage to move such huge illegal consignments under the radar? The trick of the trade is to find a drop off airport location where authorities can easily be bribed to look the other way¹ and then use unsuspecting ground transport for end mile delivery. This involves a lot of modern day transport mules in the form of people and local jewelry shops that could easily melt, hide gold since Nepal has no hallmark requirements. May be it’s time for GoN to deliberate on the need for hallmark requirements to bring this menace to an end, for once and for all and spike up the daily import quota if there’s actual demand.

Adukia’s foray into gold is not Rakesh’s making alone. His father did it, his brother does it and the saddest thing is, he’s willfully forcing his offsprings² to follow their grandfather footsteps. Setting up Wealth Exchange (weX) during 2010 debacle was just their stepping stone to a larger share of the regional gold market which would further open up their gold missions in the region. Please bear in mind, in a spot commodity exchange, if the security holder wants physical delivery of the exchanged good, the commodity exchanges are obligated under law to deliver just like a security certificate for equity markets. So, it’s not always speculating on the prices for getting certificates. Wonder if the Adukias ever complied or made provisions for delivery. Even if they did, they’d have to wait out a few months with the daily import quota limit in Nepal. In that case, it wouldn’t be a spot exchange anymore.

Every time there is news on gold smuggling, we noticed noise tapers off with: Used to happen a lot more during Kings rule earlier. Being on the same boat as other person does not make it a lesser crime. The Adukias, so far, remain just suspects without any incriminating evidence against them—at least going by info publicly available.

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1. When checking the scanner monitors the airport authorities are taking ‘Look the other way’ too seriously.. money seemingly does a lot😉. We believe, a few were implicated for dereliction of duty and needs to be done more often so there’s no more “look the other way’ for non-indictment of the officials

2. As a standard policy in NI, we often refrain from highlighting young, growing up kids/associates of potential perpetrators unless absolutely necessary