27/06/21, The Herald Sun
As cigarette prices rise, crime syndicates are making more from illegal ‘chop-chop’ tobacco than cocaine. Here’s the hot spots.
Organised crime syndicates are cashing in on Australia’s lucrative illicit tobacco market due to sky-high profits and minimal enforcement risks.
The Sunday Herald Sun can reveal criminals are raking in more than $800 million a year on illicit tobacco, with new figures revealing a whopping 2.2 million kilograms of illicit tobacco was consumed nationwide last year.
The country’s flourishing black market has become a mecca for Middle Eastern and Asian crime gangs, as the rising cost of legal tobacco drives consumers toward cheap illicit alternatives.
Industry figures have called for a national crackdown on the problem, including for federal and state police to use their powers to investigate and dismantle illicit tobacco gangs and enforce hefty fines for businesses caught selling illicit products.
A Sunday Herald Sun investigation has uncovered:
*AT least 400 stores selling illicit tobacco in Victoria.
*FOOTAGE of traders selling illicit tobacco in plain sight.
*ORGANISED crime syndicates target Australia as the illicit tobacco market offers enormous profit potential with little risk of criminal punishment.
*LINKS between the syndicates and terrorism, human trafficking, firearm offences and robberies.
Security sources have told the Sunday Herald Sun that once illicit tobacco is smuggled into the country, there is virtually no “track and trace” regime to hold them to account unlike with other drugs such as methamphetamine and cocaine.
Hundreds of retailers across the country are openly selling illicit tobacco with little fear of consequence.
Businesses go largely unchecked because health inspectors are too fearful to interfere with organised crime activity and police do not have the powers to shut stores down.
Footage obtained by the Sunday Herald Sun shows illicit cigarettes being sold at volume to undercover operatives at dodgy pop-up stores and convenience stores operating across Victoria.
Retailers have been stung selling illicit tobacco over the counter.
The high cost of tobacco in Australia has created a lucrative market for organised crime to flourish.
St Albans, Footscray, Reservoir and Epping have been identified as suburban hot spots for illegal traders, who are also saturating the regions including Geelong and Shepparton.
A new report by KPMG found 2.2 million worth of illicit tobacco was consumed in Australia in 2020, costing $2.9 billion in lost excise tax.
The rising cost of tobacco in Australia has created a lucrative market for organised crime to flourish, with a pack of cigarettes costing more than 20 times more locally than in other countries in the Asia Pacific such as Vietnam and Cambodia.
Rohan Pike, who worked at the Australian Federal Police for 25 years and founded the Australian Border Force’s Tobacco Strike Team, said enormous profits drive illicit tobacco syndicates, which face far less serious consequences for smuggling illicit tobacco compared to other drugs.
“The profits that can be made from illicit tobacco are equal or better than the profits from other drugs. For example, there is more profit to be made from illicit tobacco than cocaine but if you are caught with cocaine that can lead to decades of imprisonment as opposed to illicit tobacco which attracts a small penalty and hardly anyone goes to jail for it,” Mr Pike said.
“Crime syndicates are in the market to make money, and when you weigh up the risks, illicit tobacco is far more attractive for them.”
Crime syndicates face far less serious consequences for smuggling illicit tobacco compared to other drugs.
Mr Pike said the syndicates are incredibly dangerous and have been linked to terrorism, firearm trafficking and violent cigarette robberies at a retail level.
“Cigarettes are so expensive now it’s created a market for both stolen and counterfeit products. There are a whole heap of thefts occurring daily where legitimate products are sold on the black market,” he said.
The Illicit Tobacco Taskforce (ITT), led by the ABF, was established in 2018 to target and dismantle organised crime syndicates that deal in illicit tobacco and use the proceeds to fund other criminal activities.
The ITT has conducted six operations in the past 12 months, destroying more than 100,000 kilograms of illicit tobacco with an estimated excise value of $163 million.
Supplies of illicit tobacco seized by the Australian Border Force.
The taskforce combines the capabilities of agencies including the Australian Taxation Office and Australian Criminal Intelligence Commission but federal and state police are not formally involved.
Mr Pike said a national policing strategy was urgently required to tackle illicit tobacco before, at and beyond the border.
“At the moment the Australian Border Force is doing its part but they are limited by resources. This problem requires the level of reach of the Australian Federal Police, which can use overt and covert tools, such as telephone intercepts, surveillance and tracking devices on these syndicates,” Mr Pike said.
“It takes time, effort and resources to investigate serious crimes. We need state and federal police to use their powers. The big bosses who are running the show won’t be caught until they start using these resources.”
Australasian Association of Convenience Stores CEO Theo Foukkare said legitimate traders are desperate for action on the problem, which costs them $1.5 million in lost revenue daily.
“We have retailers questioning what is happening and where is the police enforcement around this. Every customer that walks away is diminishing profitability of legitimate retailers and hurting their ability to complete on a level playing field,” Mr Foukkare said.
A recent parliamentary inquiry into illicit tobacco made a raft of recommendations to combat illicit tobacco distribution by organised crime syndicates.
It included calls for a national strategy on tackling illicit tobacco, supported by federal, state and territory police, as well as infringement notices for point of sale enforcement for traders caught selling illicit products.
It also recommended for enforcement to be shifted from the Department of Health to the Department of Home Affairs, and that the proceeds of illicit tobacco operations are used to fund enforcement activities.
An ABF spokesman told the Sunday Herald Sun the federal government is considering the inquiry’s recommendations and will hand down its decision in the second half of 2021.
“The government is committed to combating the illicit tobacco trade, and Australia has established one of the strongest regulatory regimes for tobacco in the world,” the spokesman said.
Assistant Minister for Customs Jason Wood told the Sunday Herald Sun he supported the introduction of state based fines for traders to help stop the importation and sale of illicit tobacco.
“The sale of illicit tobacco is a serious issue in Australia, not only does it take money out of the hands of legitimate businesses but the proceeds of its sale, go on to fund the activities of organised crime groups,” Mr Wood said.
“The Government is committed to disrupting the illicit tobacco industry and dismantling those syndicates involved at all levels, from those who organise its importation or cultivate tobacco crops right down to those people who sell it under the counter.”
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