BANGKOK (Reuters) - Thai police have arrested a New Zealander, two Hong Kong citizens and a Thai for trafficking around 88 pounds of heroin, a crime which carries a possible death penalty.

The heroin, which had an estimated street value of $4 million, was originally smuggled into Thailand from the notorious Golden Triangle drug-producing region of western Myanmar and northern Laos.

Police said the Hong Kong duo, aged 42 and 21, took the heroin in late October to the southwestern resort island of Phuket, where it was handed over to Kerry Graeme Mitchell, a 49-year-old New Zealander who ultimately intended to sell it in Australia.

Mitchell's 38-year-old Thai wife was also arrested.

"Four of them have confessed they had the heroin in their possession for commercial sale," said Police Major General Suwat Chanitthikul, Deputy Commissioner at the Narcotics Suppression Bureau.

"They will be charged with smuggling and attempts to sell abroad. They could be jailed for life," he said.

Mitchell, who owned a yacht in Phuket, had served time in jail in Taiwan for heroin trafficking before moving to Bangkok a few years ago, Suwat said.

He was also traveling on a stolen British passport under the name of Ian James Newton, police and diplomats said.

"We assume his passport might have been stolen but we do not know any other details," Suwat said. "Police are investigating further to try and find the whole network and the mastermind behind the smuggling operation in Hong Kong and Australia."

A spokesman for the New Zealand embassy in Bangkok said consular officials were visiting Mitchell on Monday and that the investigation was in the hands of the Thai police.

Several New Zealanders have been convicted of drug offences in Thailand, the official said, although none has received the death penalty.

Source: REUTERS