//Namit Verma : Dope on dope

Namit Verma : Dope on dope

Heroin has a mesmerising influence on politics, cricket and other seemingly innocent activities that no one even remotely associates with the drug nexus.

Namit Verma Delhi, Hard News Media.COM July 2006

FM Pierce, a chemist at Owens College Manchester and the first analyst of the effects of heroin, had reported to its inventor CR Alder Wright in 1874: "Doses … were subcutaneously injected into young dogs and rabbits … with the following general results … great prostration, fear, and sleepiness speedily following the administration, the eyes being sensitive, and pupils dilated, considerable salivation being produced in dogs and slight tendency to vomiting… Respiration was at first quickened, but subsequently reduced, and the heart's action was diminished, and rendered irregular.” Rahul Mahajan was admitted into Apollo Hospital with remarkably similar symptoms. Bibek Moitra was reported to have suffered identical symptoms before his death. Every expert in town knew it was a heroin death, but the doctors at Apollo and a large section of the media kept talking cocaine for the first few days. There was something amiss and the entire nation was agog to know every detail of how the political class would rescue one of their own from the clutches of the Narcotic Drugs and Psychotropic Substances (NDPS) Act, 1985.

Heroin is big money. Pharmaceuticals have always been big money, rogue pharmaceuticals even more so. Since its inception as a non-addictive morphine substitute and paediatric cough medication marketed by Bayer towards the end of the nineteenth century, heroin has been a money-spinner. Once the truth of the addictive nature of heroin came out, Bayer withdrew the medicine shortly before the First World War; but by then Europe's first generation of heroin addicts was roaming the world; and the war itself became the depressive cause as well as the medium of propagation of the heroin habit globally.

Two decades later when IG Farben on the German side of the war swallowed up Bayer, the allies made their own deal with heroin. US military intelligence made a deal with mafia boss Lucky Luciano and released him from prison, giving him a free run of Sicily to establish heroin hegemony, in return for neutralising Axis and Communist forces in southern Europe. Luciano set up heroin factories in Sicily. His financiers included corrupt Nazi generals and sinister bankers desperate to get their gold across to safer havens. The global law enforcement crackdown against heroin had to wait until the Single Convention on Narcotics in 1964.

This was substantially strengthened by the 1972 Protocol Amending the Single Convention on Narcotic Drugs and the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances of 1988.

Beginning 1964, this new regime of narcotics controls and bans saw the termination of the system of opium sales through auctioned government vends in India. This was a major setback for many Indian business houses which had a large presence in the opium growing and brokerage businesses.

Once the exclusive preserve of the European traders and the great seafaring Boston Brahmin families, the opium brokerage business saw the advent of Indian brokers led by Jugal Kishore Birla and Sir Sarupchand Hukumchand in the first decade of the twentieth century. Next, senior nationalist leader Pandit Madan Mohan Malviya presided over the cartelisation of the Indian brokers and the Indian growers, amongst them many of the dominant royal families in the vast opium growing areas from Gwalior and Indore in Madhya Pradesh to Chittor in Rajasthan. The opium cartel returned the favour by contributing generous grants for Malviya's dream project, the Benaras Hindu University. In a curious incident, an American lady visiting Benaras asked Malviya if he did not shudder at knowing the source of funding for his beloved temple of knowledge. Malviya pointed to Harvard and Yale with their Cabot and Russel endowments and asked her if she was unhappy with the results.

Much of America's railroad system, textiles and banking industry have roots in what was discretely called the Canton trade.

 The Forbes, Russel, Perkins and Cabot families had a finger in the opium trade at one time or another. Similarly, export profits and surpluses from the opium trade provided investment for the sudden and rapid industrialisation of India in the first half of the twentieth century. The Single Convention on Narcotics in 1964 ended that happy state of affairs.

The more enlightened Indian business families, notably the Parsi families from western India, gave up the opium business altogether, once it became a declared criminal activity. Yet many others continued: the risks of dealing in illegal opium and heroin only increased the profit margins. In 1910 Sir Sarupchand had bought opium for Rs 25 lakh and sold it for Rs 2 crore, a seven-fold profit; in 1966 the illegal heroin trade offered 30-fold profit. With this came the real explosion of the hawala system of money transfer. Business groups which claimed to be bothered only about shareholder satisfaction and not care about customer satisfaction, became stronger instead of perishing: obviously their businesses were little more than money-laundering operations for their illegal opium business. Soon there was a class of new cash rich industrial houses as opposed to the debt-driven houses.

The 1960s and the 1970s, when the white powder established its hold over the US Army, with a reported 15 per cent heroin addiction rate amongst GIs in Vietnam, saw US government expenditures on health care shoot up to unimaginable levels. The US government reacted by trying to attack the financial roots of this malaise. They passed the Bank Secrecy Act in 1970 and moved to intervene globally with the 1972 Protocol Amending the Single Convention on Narcotic Drugs. The US government got into agreements with various other governments, including the Indian government, to post Drug Enforcement Administration Agents at source countries to check the heroin trade at the very starting stages.

The application of the Bank Secrecy Act 1970 resulted in the immediate flight of the investible hawala capital away from the US instead of into that economy. Undoubtedly, this factor played its part, however small, in forcing the demise of the gold standard in August 1971. The transformation of the US dollar from a mercantile value of money into a more fuzzy wealth of nation denominated fiat currency marked the arrival of the heroin economy together with its cousin, the cocaine economy; so much so that even the US Administration, notably the CIA took to operating through the drug money-launderers. Funding to Dr Manuel Artimes, a one-time political adviser during the Bay of Pigs fiasco and a sustained anti-Castro activist, is a case in point.

As money-laundering through the old routes of printing receipts for non-existent pizza sales and other tax-free items ran into trouble with the compulsions of filing Currency Transaction Reports (CTRs) and transferring cash across the US border came under scrutiny of the Customs Form 4790, better known as the CMIR regime, the heroin cartels took a leaf out of an earlier failed experiment by the Columbian cocaine mafia: laundering through declared gambling incomes. Hernan Botero first tried this method in the 1960s when he acquired control of the Atletico Nacional professional soccer team. After Botero acquired Atletico, its fortunes changed overnight and it became a very successful team. Since Atletico Nacional was a Columbian team, it offered the perfect excuse for the movement of gambling transactions between the United States and Columbia. While neither match-fixing by Botero on behalf of Atletico, nor the movement of drug monies as gambling transactions were ever established, thi
s method met a hasty end with the arrest of Botero in the United States and his subsequent conviction and sentencing for 30 years.

Delhi-based heroin mafias have successfully duplicated this method since the 1980s. Surinder Mehta, the first kingpin of the cricket match-fixing saga never tired of boasting how he was a better nationalist than any politician, that he had done more for India than any leader ever could, when he purchased the Prudential Cup for the country in 1983. At first, this uneducated, twice convicted heroin trafficker, appeared to be making an empty boast. But the sight of many a Indian and Pakistani national team cricket players at Mehta's parties vying with each other to fetch the old man a drink would make any real cricket fan sick.

Mehta was believed to be a transnational transport underboss for the dominant Indian heroin cartel headed by a major politician, a former royal who also dabbled in cricket affairs. Since Mehta always took the fall himself and spent long years in prison without ever squealing on his bosses, he rose in their esteem; and this man with no formal education was asked to preside over one of the most complex money-laundering operations the world has ever known.

The problem faced by the cartel was that they had way too much cash which they needed to get into the legitimate banking channels if they were to be able to fully utilise these resources. By the 1970s and 1980s, banks had become wary of accepting monies unless they were certified to be of clean non-criminal origin. The Bank of Credit Commerce International investigations had put the fear of god into a recalcitrant and fickle banking industry. Greedy bankers still wanted a part of the illegal narcotics money-laundering action, but they wanted no part of the criminal taint. Bankers now insisted that the monies had to be certified to be of "clean non-criminal origin" before they routed them through.

Cricket match-fixing and illegal betting went hand in hand. Since gambling was illegal in India, these monies were routed through Nepal into the international banking system. The American and British governments were prone to selective law enforcement: they went after crime in their own countries but often encouraged it elsewhere. Thus gambling money routed through hawala was acceptable to the American banking industry.

All that was required, was a token certification of the monies having originated in gambling and of their being of clean and non-criminal origin. Since gambling was legal in several American states, gambling money was welcome into their banking system even if it originated in a country where it constituted a crime. For a small fee, the royal family of Nepal, a sovereign authority, arranged this certification.

Mehta's bosses in India whose cartel's activities spanned the sub-continent as well as the neighbouring Golden Triangle and the Golden Crescent, also used the services of the Nepali royals. Family ties amongst the two families helped turn a blind eye as Nepal offered a "clean, non-criminal gambling money" certification to heroin monies, albeit for a small consideration.
This intricate weave of money-laundering almost came unstuck in the mid-1990s when the cricket match-fixing scandal hit the front pages. When former test cricketer Manoj Prabhakar was roped in by the anti-establishment Congress (T), it appeared that this would become a poll issue and destroy the entire cartel. But the Congress (T) entered into an electoral alliance in Madhya Pradesh with former BCCI chief Madhavrao Scindia's Madhya Pradesh Vikas Congress and the Manoj Prabhakar campaign was dumped after that.

Former Revenue Secretary MR Sivaraman challenged Scindia's averment of no prior knowledge of the match-fixing saga. Sivaraman confirmed to the media that he had personally informed Scindia of the murky financials of match-fixing on the basis of his department's intelligence gathering. Despite this entire storm, there was cross-party agreement on burying the entire matter as soon as public memory would permit.

Cross-party interaction on opium policy was once again in evidence in 1996 when the Deve Gowda government's finance minister P Chidambaram travelled into the Rajasthan hinterland of Chittor, to address a rally of opium growers jointly with the Bharatiya Janata Party’s (BJP) Jaswant Singh. Here, Chidambaram had announced an illegal Government of India notification giving reprieve to opium growers who had diverted their crops to the heroin market, indirectly suspending the provisions of the Narcotics Drugs and Psychotropic Substances (NDPS) Act on several counts for one year.

The Government of India's opium-friendly notification of 1996 proved to be a watershed in the narcotics infiltration of the Indian establishment.

Assured of co-operation from the powers that be in India, the trade exploded to achieve new unbelievable volumes while the political class was often found partaking of the proceeds. At best, they kept their distance, knowing that they could not challenge this all-pervasive economic reality which has become an integral part of the Indian economy.