Kerala has always had a fascination for gold, so much so that the small state is by far the top consumer of the precious metal in the country. Now, the yellow metal is making waves in the state after a smuggling racket in purported “diplomatic baggage” was busted on Sunday.

The details are sketchy and gold smuggling is not a new phenomenon in the state but a new element has been added by revelations that at least one of the suspects is a sacked employee of the consulate of the United Arab Emirates (UAE) in Thiruvananthapuram, the Kerala capital.

The second suspect is also said to be a sacked employee of the consulate but this has not been confirmed. What has been confirmed is that she was an employee of an IT park in the state capital till Monday, which has gifted manna from heaven to a forlorn Congress-led Opposition to seize upon the matter and use it to target chief minister and CPM leader Pinarayi Vijayan.

This is what has emerged so far: the two suspects, Sarith and Swapna Suresh, have been accused of smuggling 30kg of gold in “diplomatic baggage” that arrived by air cargo at the international airport in the Kerala capital.

Sarith, who according to local media was a former public relations officer at the consulate, has been arrested. He had gone to collect the baggage, sources said. Swapna, who local media said was a former executive assistant at the consulate, is absconding. Both were sacked by the consulate about six months ago, the sources said.

Swapna, who later got appointed as operations manager at the Kerala IT department’s Space Park in Thiruvananthapuram, was sacked on Monday after she was named as a key conspirator in the gold smuggling racket.

Customs officials, who suspected foul play, seized the cargo that came from the UAE on Friday. Since they were not authorised to break it open, they waited for orders from the ministry of external affairs. On Sunday, customs had said it suspected a smuggling syndicate had misused the name of a person who enjoys diplomatic immunity.

Visuals released by the customs department show the gold, valued at Rs 15 crore in the Indian market, was converted into cylinders that were inserted into an air compressor.

Swapna was apparently well-connected, having worked at the Air India ground handling company Air India Sat, the UAE consulate and then in the IT department.

The Gulf News daily quoted the UAE Ambassador to India, Ahmad Abdul Rahman Al Banna, as saying that the male suspect had been terminated by the consulate some months ago. “We fired him because he was not doing his job,” Al Banna said on Monday afternoon. “Unfortunately, he used different means and ways to misuse the name of the consulate,” he said.

However, Al Banna said he did not know about the reported involvement of a woman in the case, the Gulf News added.

The UAE embassy in India said in a statement that it “utterly condemns the attempted misuse of diplomatic channels by an individual engaged in smuggling activity. The embassy firmly rejects such acts and unequivocally affirms that the mission and its diplomatic staff had no role in this matter…. The UAE looks forward to fully cooperating with Indian customs authorities to thoroughly investigate this matter and urges stringent legal action against those involved”.

The statement suggested that the sacked employee did exploit the diplomatic channel. “The employee in question was fired for misconduct long preceding this incident. At this time, it appears that this individual exploited his knowledge of the mission’s channels to engage in criminal activity,” the embassy said.

Kerala has been a hub for gold smuggling for years. The customs department had registered six gold smuggling cases on June 22 and 23 and three other cases earlier.

It is suspected that the gold smuggling syndicates have been using Kerala natives returning from the Gulf after losing their jobs to transport the consignment.

Since Kerala is one of the biggest markets for gold jewellery, smuggling has been rampant because of the price difference. According to one source, a gold merchant can save around Rs 5 lakh for every kilo of smuggled gold.

M.P. Ahammed, chairman of Malabar Gold, one of the largest gold retailers based out of Kerala, said about 75 per cent of gold sold in India is sourced from illegal channels like smugglers.

“International mafia is behind all gold smuggling. They use women and youth as carriers. The reason why India is a favourite destination is due to the high rate of taxes,” said Ahammed.

“Until 2011, import duty on gold was just 1 per cent. (Former finance minister) P. Chidambaram hiked it to 10 per cent and the present finance minister made it 12.5 per cent,” he said.

“Each sovereign of smuggled gold saves Rs 5,300, managing to cut out 12.5 per cent import duty, 3 per cent GST and income tax. This is why India is attractive to smugglers,” said Ahammed who called for a reduction in duty and tight regulations.

The “diplomatic baggage” racket has been busted at a time the Opposition has been finding itself on the back foot because of the soaring popularity of chief minister Vijayan for the way his government had addressed the pandemic.

Grabbing the opportunity with alacrity, leader of the Opposition Ramesh Chennithala demanded an investigation by the CBI into the gold smuggling and asked how a person who had faced a crime branch investigation was appointed in the Space Park. “We want to find out who was behind appointing her in such a key position,” he said.

Chennithala said there was a crime branch case on Swapna for allegedly falsely accusing a senior officer at Air India Sats of sexual harassment.

The chief minister said at his daily media briefing that “no one will escape in the case”. “The authorities have clear information about the network and investigation is going in the right direction,” said Vijayan.

He also offered all help to the customs department.

“But there are some people who want to link the chief minister and his office to any such case,” he said, hinting at state BJP president K. Surendran’s allegation that the first call to release the accused had gone from the chief minister’s office.

“He should realise that the customs (a central agency) is investigating the case,” he said.

State IT secretary M. Sivasankar told a channel that he would cooperate with the investigators. “Let the investigation proceed. I will cooperate with the investigation agency and explain whatever they want to know,” he said, apparently alluding to how Swapna was appointed at the Space Park.