DRI Issues Show Cause Notice To Pakistan Based Bank For Importing Dual-Use Nuclear Equipment

Mumbai: The Directorate of Revenue Intelligence (DRI) has issued a show cause notice under Section 124 of the Customs Act, 1962, to Allied Bank Limited, based in Lahore, Pakistan. The bank is alleged to be the guarantor and importer of dual-use nuclear equipment and machinery which was seized at the Nhava Sheva port in January, 2024. The notice was issued through the ministry of external affairs recently. The seized machine is known as Nuclear Dual Computer Numerical Controlled (CNC) machine at Nhava Sheva Port in January. The machine was en route from China to Karachi, and following a sensitive tip-off, it was offloaded at Nhava Sheva Port for further investigation..

The CNC machine is capable of serving both civilian and potentially military purposes, including in Pakistan’s nuclear and ballistic missile programs. The Defense Research and Development Organization (DRDO) filed a report confirming the dual-use (both civil and military) nature of the consignment, which led to its seizure. According to DRDO findings, the possibility of the equipment being used for Pakistan’s nuclear program could not be ruled out.

According to sources, the investigation revealed that Allied Bank Limited, a Pakistani commercial bank based in Lahore, Punjab, has allegedly been identified as the guarantor and consignee of the nuclear dual CNC machine. The bank allegedly presented that the consignment was for Pakistan Wings Private Limited, a company based in Sialkot, Pakistan, identified as a leading sea and air freight consolidator and third-party logistics provider, according to its corporate profile. The initial investigation by the nodal agency found that several documents were masked with a web of companies that did not appear to be substantially linked to the import of CNC machines. In 2020, Allied Bank Limited was named among the global banks flagged by the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) for money laundering.

The nodal agency is seeking an explanation regarding the nature and intended use of an imported CNC machine. The notice compels to Allied Bank Limited, and Pakistan Wings Private Limited to clarify the purpose of importing this specific machine.

According to sources, initial documents indicated that Shanghai JXE Global Logistics Co. Ltd was the consignor, with the consignment delivered to Pakistan Wings Pvt Ltd in Sialkot, and Allied Bank Limited recognized as the guarantor and consignee. However, deeper investigation revealed that the CNC consignment was actually shipped by Taiyuan Mining Import and Export Co Ltd, located in Shanxi province of China. and this consignment was intended for Cosmos Engineering, a defence supplier in Pakistan.

The show cause notice was issued as suspicion intensified due to several factors. The CNC machine, seized by Indian authorities on January 23 and suspected of having potential use in nuclear weapons, has not been claimed by the importer company Pakistan Wings Private Limited and the guarantor Allied Bank Limited to date. Additionally, the documents, bills, and paperwork showed that identities were masked, and there was involvement of Cosmos Engineering, a Pakistan defense supplier which came under the radar of security agencies in 2022 as well when Indian authorities intercepted a shipment of Italian-made thermoelectric instruments at the Nhava Sheva port.

The Dual Machine Computer Numerical Controlled (CNC) is currently held in the Customs Container Freight Station (CFS) area under tight security. The CNC machine controlled by super computer to produce a scale of efficiency, consistency and accuracy not possible manually for achieving critical nuclear fusion is a dual-use military-grade equipment.

The CNC machine, allegedly used by North Korea in its nuclear program, is considered a critical component and would be useful in manufacturing critical parts for Pakistan’s nuclear missile development program.

In the Show Cause Notice, the nodal authority provided details of the investigation. Based on intelligence input, customs authorities intercepted a Malta-flagged merchant ship named CMA CGM Attila at the port en route to Karachi on January 23rd. They inspected a consignment weighing 22,180 kilograms, which contained a CNC machine. During the inspection conducted by officials from the DRI and Customs, sensitive cargo was discovered. Subsequently, these officials informed the Defense Research and Development Organization (DRDO) to examine the cargo and determine its exact nature. After conducting its analysis, the DRDO filed a report confirming the dual-use (both civil and military) nature of the consignment, which led to its seizure. According to the sources DRDO findings said the possibility of the equipment being used for Pakistan’s nuclear program could not be ruled out.

Since 1996, CNC machines have been covered under the Wassenaar Arrangement, which is an international agreement aimed at controlling the transfer of dual-use goods and technologies that can be used for both civilian and military purposes. India is one of the 42 member countries involved in this arrangement, where information on transfers of such items is shared to prevent their proliferation.

(With Inputs From Agencies)