When 12 kilograms of gold was found behind the mirror in the lavatory of a flight from Dubai to Dhaka, you might have said that lavatory was a pot of gold.
I never realized that Boeing 777s had that much space behind the mirrors, but lavatories are a common hiding place for smugglers who do not want to use their own body cavities.
A man running a gold smuggling ring out of Singapore has pled guilty to corruption after airline check-in counter staff flipped on the operation. Apparently he wasn’t just shipping his gold as checked luggage, he was too cheap to pay the excess baggage fees (or thought overweight bags would raise more suspicion) and bribed counter staff to understate the weight of the bags on Tigerair flights to Chennai.
“(He) would … look for passengers travelling to Chennai – whether his friends or strangers – and ask if they were willing to carry gold to Chennai to pass to his relatives there.
“The accused’s relatives would then give these passengers a sum of money. The accused would go to Changi Airport between 15 and 20 times a month to look for passengers who were willing to carry gold for him to Chennai.”
Several airport employees – working for Sats and for UBTS – have been arrested in recent months and sentenced to seven to nine weeks of jail and fined between SG$500 and SG$800. If the smuggler hadn’t bribed check-in staff to understate the weight of his bags, he might not have been caught.
Smuggling gold in Asia and the Mideast is incredibly common. Spot prices can be high in India and Bangladesh (so there’s arbitrage) and it’s a way to smuggle illicit funds as we learned when a North Korean diplomat was discovered trying to bring $1.4 million in gold into Dhaka.
I don’t understand what you mean by arbitrage. Generally arbitrage means simultaneously buying and selling an asset to make a guaranteed profit. If the trader needs to smuggle the asset into another country, and ends up in jail, then that is neither simultaneous nor guaranteed.
@Mitch Cumstein: you are reading too much into the simultaneous part of the definition. An arbitrage opportunity arises whenever the price for the same comodity is different in different places at the same time. Your ability to take advantage of the opportunity depends on how quickly you can actually buy and sell in those two markets. And there is no guarantee of profitability in an arbitrage opportunity.
Further, simultaneous doesn’t mean “same nanosecond”. It means “close enough in time that you can take advantage of the price differential”. If you have to smuggle, then it just means the price differential has to last longer for you to take advantage of it.