Diamond smugglers jailed in Shenzhen

PUBLISHED : Thursday, 28 April, 2011, 12:00am
UPDATED : Thursday, 28 April, 2011, 12:00am


A Hong Kong-based cross-border diamond-smuggling racket has been broken up, with the Shenzhen authorities seizing 200 million yuan (HK$238.19 million) worth of precious stones.

Swift justice has been meted out to three Hongkongers and 22 Indian nationals behind what is one of the largest smuggling operations of its kind. They were arrested between January and March this year.

According to a Shenzhen court official, all of the accused pleaded guilty in the city's Intermediate People's Court last month and have been jailed.

The contraband operation was based in Hong Kong, and the movements of a gang member between the city and Shenzhen were key to the smugglers being caught.

But if Hong Kong police knew anything about the two-year operation they are refusing to say so. The case was made public by authorities in Shenzhen only yesterday and Hong Kong police declined to comment last night.

The Indian consulate general's office in Guangzhou sent representatives to watch the trial, the court official said.

Shenzhen customs yesterday said the smuggled diamonds, believed to be from India, were sold to jewellery factories in the city and, after processing, distributed to retailers as legally acquired gems. The price of raw stones in Shenzhen rose 10 per cent after the break-up of the smuggling ring, customs officials said.

The phenomenal growth of diamond sales on the mainland, which is expected to become the largest consumer market for polished diamonds in the next decade, has provided huge incentive for smuggling.

Last year, the total volume of the diamond trade in the country shot up by 88.1 per cent. Beijing has dropped the raw stone tariff from 33.9 per cent to about 17 per cent to encourage imports, but many dealers still complain that the duty rates are too high.

'[China] is our strongest growth market. Our main challenges are the import tariff, language barriers and red tape,' an Indian diamond dealer said.

Shenzhen customs said unpaid tax on the seized diamonds amounted to 43 million yuan.

The case first came to the Shenzhen authorities' attention in 2009, when a Hong Kong resident told local police he had been robbed of three million yuan worth of diamonds in Lowu, Shenzhen.

'We found out that [he] was actually unemployed. The fact that he had all these diamonds was suspicious,' a spokesman for Shenzhen customs said. 'We did a background check and found that he frequently travelled from Hong Kong to Shenzhen - about five to seven times a week. Each time he stayed just two hours. So he was listed as a key target.'

Shenzhen authorities tailed the man for two years, gathering evidence on the smuggling ring. Shenzhen customs finally took action in January and the last ring member was arrested on March 31. Shenzhen customs did not say if it had been in contact with the Hong Kong authorities for help.

Shenzhen customs said the gang had set up a legal diamond import business as a front to cover up the smuggling. The gang was mainly operated by Indian nationals from Gujarat and Mumbai. The three Hong Kong residents were professional smugglers employed by them.

Shenzhen is one of the mainland's key jewellery manufacturing and processing centres, with more than 2,300 factories staffed by over 300,000 workers. Total turnover of the jewellery trade in Shenzhen was 80 billion yuan last year.

Additional reporting by Danny Mok