A mother of three exploited a loophole in New Zealand's border control to commit an "almost perfect" crime of smuggling 250kg of drugs into the country, a court has been told.

The trial of Yixin Gan, 35, on three charges of importing a class-B drug and possession for supply started in the High Court at Auckland yesterday. It follows an 18-month police investigation.

The case is about pseudoephedrine, once the active ingredient in New Zealanders' favourite cold and flu medicines, but now banned as it's the main ingredient needed to cook methamphetamine.

Pseudoephedrine can be extracted from a medicine widely available in China called ContacNT. A packet costs just a "few dollars" but a "set" of 223g of pink granules sells for around $9000 on the black market in New Zealand.


Gan has denied all charges.

Crown prosecutor Scott McColgan told the court Gan had "cottoned on to an almost perfect" method of smuggling the drugs into the country.

She ran a legitimate business shipping food from China to the Pacific Islands, with a short stop in New Zealand.

But because the shipments were shown as goods in transit - and therefore not technically coming through the border - the consignments were not inspected by Customs.

Instead, the shipments were sent to the secure Customs-controlled area at Auckland Airport until they were freighted to the final destination.

"But what if you had an inside man in the Customs-controlled area?" was the question Mr McColgan posed to the jury.

The "inside man" for Gan, according to the Crown, was Mosese Uele, who ran a freight-forwarding company called Ezi World Cargo.

In one such shipment, at least 250kg of ContacNT was disguised as potato starch.


Inside the Ezi World Cargo premises, Uele switched the ContacNT with legitimate potato starch to be sent to Tonga. The boxes of drugs were put in a van and driven to a car park in Auckland - all while being followed by police.

"It was almost the perfect scam," said Mr McColgan, "but for Gan's involvement with two people, who unfortunately for her, were under surveillance by police. Otherwise it is very unlikely this scam would have ever come to light."

Following the end of the police operation, codenamed Ghost, in December 2013, financial analysts turned their focus to the bank accounts of Gan, her husband and their business.

"There are vast amounts of cash deposits coinciding with other shipments from China, through Uele, onwards to Tonga," said Mr McColgan, which he alleged were consistent with earlier importations of pseudoephedrine.

In response, defence barrister Graeme Newell made some brief opening remarks on behalf of Gan.

His client was born in China, moved to Tonga and came to New Zealand 16 years ago. She is married with three children and runs a money exchange business, as well as the food shipping company.

She was a regular visitor to a "number of casinos", said Mr Newell, who pointed out that Gan voluntarily returned from China to face the Operation Ghost charges.

He asked the jury to pay particular attention to the inferences the Crown was asking them to make. "Inferences are important. They are logical deductions from proven facts."

Bugged phone conversations, mainly in Mandarin and Cantonese, and covert surveillance will dominate the evidence given to the jurors.

But none of that would exist if not for the double life of an undercover agent.

The officer in charge of Operation Ghost, Detective Sergeant Mike Beal, told the High Court the investigation began when police became aware of "significant quantities" of pseudoephedrine coming into Auckland, then being diverted into drug manufacturing around the country.

The decision was made to immerse an undercover agent, called Joe Arama, in the criminal underworld to build his own credibility and gain the trust of his target, Felix Lim.

They rubbed shoulders in the SkyCity casino and a friendship turned into a business arrangement.

One recorded conversation, in May 2013, played to the court showed he was successful in posing as a drug dealer.

"I'm going to see a guy, how about the pink stuff that Alan's got?" Arama asked Lim. "How much for five?"

Mr Beal said they were talking about five sets of pseudoephedrine, which it seemed was half the amount that Lim would normally sell.

The answer from Lim was $46,500.

Gan played no part in this drug transaction, Mr Beal confirmed to the court.

But by tapping Lim's phone, the police were able to identify his supplier - See Meng Hoo - and in turn his supplier, Van Thanh Tran.

Through Tran, police also listened to the conversations of Da Wen Shao, also known as "Tall Man". It was physical surveillance of these two men that led the police to Gan, who denies any role in organising the importation.

The trial is set down for two weeks.

ContacNT calculation

• A packet of the cold and flu remedy sells for around $2 in China and contains 100 pills.

• 10 packets, or 1000 pills, contains exactly 223g of the pink and yellow granules. This is known as a "set" on the New Zealand blackmarket and sells for around $9000.

• Around 90g of pseudoephedrine is extracted from each set, which in turn is "cooked" into 45-67.5g of methamphetamine.

• An ounce (28g) of methamphetamine sells for around $12,000 at wholesale level.

• P sold at street level in "point bags" (0.1g) for around $100.

• So the 250kg of ContacNT discovered in Operation Ghost could manufacture 50-75kg of methamphetamine depending on the skill of the cook.

• That is up to 750,000 "point bags" - or hits for every New Zealander.