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Cigarette Smuggling

Philippines’ Illicit Tobacco Trade Hits Lowest Level in Five Years

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Where there’s smoke: Embattled MP’s brother caught selling smuggled Chinese ciggies

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S&D calls for traceability of tobacco in Europe

An independent traceability system for tobacco products is urgently needed, according to the Socialists & Democrats (S&D) Group in the European Parliament.

https://www.neweurope.eu/article/sd-calls-traceability-tobacco-europe/

But some members of the European Parliament’s health and environment committee raised objections that would have delayed the adoption of the traceability system – something that would benefit the tobacco industry.

S&D wants to guarantee full implementation by 2019.

“We have no time to waste. Nearly 10% of the global cigarette trade is illicit,” said S&D spokesperson on this issue, Gilles Pargneaux MEP. “This poses severe risks to public health due to increased accessibility and affordability. Moreover, illicit tobacco trade evades revenue collection estimated at €10bn annually in Europe.

Tobacco is one of the most smuggled commodities in the world and the profits from illicit trade feed terrorism and international and local crime, including money laundering.

“Europe will have the first regional system to trace tobacco products and will set an example for other countries to follow. Countries like Turkey and Kenya already have such a system and they have had very good results. The credibility of the EU is at stake: we have to deliver and implement an efficient system that fights illicit trade and protects public health,” said Pargneaux.

In turn, S&D spokesperson on health, Miriam Dalli MEP, explained that the track and trace system adopted by the European Union is not the perfect solution but it works well. “Objecting to only end up without a system is not an option for us. We would only be playing into the hands of those within the tobacco industry who want to gain time and delay any transparent traceability measure. We can never accept this. It is vital to have a traceability system that is fully independent from the tobacco lobby.”

cigarettes through the post – ‘brazen and sustained attack on the UK taxpayer’

Smuggling gang from Crook, Durham and Washington, posted cigarettes through the post – ‘brazen and sustained attack on the UK taxpayer’ says customs chiefs

http://www.thenorthernecho.co.uk/news/local/northdurham/durham/15558793.Illicit_cigarette_smuggling_gang_jailed/

THE ringleaders of a tobacco smuggling gang, who hid illicit cigarettes in lighting units and laptop adapters in an attempt to smuggle them into North-East through the post, have been jailed for a total of 76 months.

Guo Shan Zhang, 34, of Donnini Place, Durham, and his accomplice Shan Jing Su, 31, of The Riggs, Durham, led a nine strong gang in smuggling non-duty paid tobacco products from China, Singapore and Hong Kong.

The pair arranged for parcels containing the hidden cigarettes and hand rolling tobacco to be sent to addresses across the region where they would be collected from their accomplices.

The other members were convicted of conspiracy to evade excise duty:

Keith Peacock, 63, of Crawford Close, Durham, sentenced to 16 months, suspended for 24 months
Kwai Chan, 53, of Wood Vue, Durham, sentenced to 12 months, suspended for 24 months, and 200 hours unpaid work
Harry Marwick, 47, of Ripon Drive, Durham, sentenced to 10 months, suspended for 24 months, 200 hours unpaid work and 20 days rehabilitation
Min Gao, 34, of Boystones Court, Washington, sentenced to 6 months, suspended for 24 months, and 200 hours unpaid work
Trevor Walker, 59, of Elm Gardens, Durham, sentenced to 6 months, suspended for 18 months
Lewis Zalick, 22, of Derwent Avenue, Durham, sentenced to 14 weeks, suspended for 18 months, and 200 hours unpaid work
Joseph Dukes, 50, of Moorland Close, Sunnybrow, Crook, was jailed for 18 months for his involvement in the conspiracy and similar related offences.

All were sentenced at Newcastle Crown Court.

HM Revenue and Customs (HMRC) uncovered the fraud after about 500 parcels containing more than 1.8million cigarettes and 100kg of hand rolling tobacco worth an excise duty loss of £472,452 were stopped as they entered the UK.

Denis Kerr, assistant director of the Fraud Investigation Service at HMRC, said: “This was a brazen and sustained attack on the UK taxpayer by a highly organised criminal gang. Zhang and Su thought they had come up with a clever way to beat the system – they were very wrong.

“Disrupting criminal trade is at the heart of our strategy to clamp down on the illicit tobacco market, which costs the taxpayer around £2 billion a year.

“We will not allow hardworking, honest retailers to be harmed by criminal gangs selling illegal goods and we are determined to ensure there is a level playing field.”

The packages were often mis-described as green tea, children’s toys and clothes. In some instances large quantities of cigarettes and tobacco were hidden in LED lighting units, which had been sealed shut, and single packets were even hidden inside laptop adaptors.

At an earlier hearing Catherine Dillon Lee, 70, and her husband Robert Lee, 72, of Hall Lane Estate, in Willington, were sentenced to 12 months in prison suspended for two years after earlier pleading guilty to conspiracy to sell and distribute counterfeit cigarettes which posed a risk to public health.

Hasten passing of tobacco laws tobacco control

MALAYSIA became party to the WHO Framework Convention on Tobacco Control (FCTC) in 2003. FCTC Article 15 enumerates in detail measures to tackle illicit trade in tobacco products.

http://www.thestar.com.my/opinion/letters/2017/09/25/hasten-passing-of-tobacco-laws-tobacco-control/

Although the relevant authorities have been discussing the illicit trade in tobacco products, including preparation for the ratification of the Protocol to Eliminate Illicit Trade in Tobacco Products (ITP) by Malaysia, there seems to be lack of or even absence of serious and effective measures to stop the reportedly growing illicit trade in tobacco products so far.

Article 15.7 of the FCTC calls for licensing to control or regulate the production and distribution of tobacco products in order to prevent illicit trade.

The National Kenaf and Tobacco Board Act 2009 amendment in 2010 stipulates licensing of tobacco and tobacco products.

Licensing of Tobacco and Tobacco Products Regulation 2011 has yet to be implemented amid continued opposition by the tobacco industry.

We must be reminded that the provision on the ban of kiddie packs under The Control of Tobacco Product Regulations 2004 was also delayed for over six years due to interference by the tobacco industry.

Again, this is in contravention to Article 5 General obligations of the WHO FCTC, which states in 5.3: “In setting and implementing their public health policies with respect to tobacco control, Parties shall act to protect these policies from commercial and other vested interests of the tobacco industry in accordance with national law.”

With such blatant disregard to legal provisions and international treaty obligations, the tobacco industry’s typical threats of loss of employment, loss to tobacco farmers, increasing illicit cigarettes and now the increased use of illicit cigarettes by young smokers become the emotive justification by the industry and the front groups in chorus to blind and blinker all the public healthcare professionals’ expert recommendations.

Cigarette retailers and the cigarette companies are not a stakeholder in deciding public health policies. They have vested interest in the sale and promotion of tobacco products.

WHO reports link direct and indirect involvement of the tobacco industry in the smuggling and illicit trade of tobacco products. As such, they have no credibility and their proposal aims only to guarantee benefits to them.

Instead of entertaining regressive ideas and proposals, all related parties should be tightening the tobacco products supply chain under the Blue Ocean Strategy.

For a start, immediately institute a ban on sale of tobacco products at places other than permanent premises.

This measure was successfully used to tackle pirated CD/DVD sale by local governments before.

Hasten the implementation of licensing of tobacco and tobacco products by National Kenaf and Tobacco Board.

MUHAMMAD SHA’ANI ABDULLAH

Co-ordinator,
Tobacco Control @ Smoke Free Malaysia Initiative
Federation of Malaysia Consumers Association

British American Tobacco’s lab has been used by Australian Border Force to test evidence in black market cases

Australian Border Force (ABF) and Commonwealth prosecutors have been relying on evidence provided by Australia’s biggest tobacco company to charge black market traders.

http://www.abc.net.au/news/2017-08-31/tobacco-giants-testing-evidence-for-border-force-cases/8856834

ABF has handed seized tobacco to British American Tobacco (BAT) to be tested in its laboratory, an ABC investigation has revealed.

BAT has analysed the product and then provided documentary or expert evidence which has then been produced in court.

It raises questions about independence and integrity and potentially breaches a major global agreement.

The World Health Organisation treaty limits tobacco companies’ involvement with law enforcement to only what is strictly necessary.

Tobacco companies argue they are being good corporate citizens by helping in the fight against the black market trade, but anti-smoking advocates say they are just protecting their bottom line.

Earlier this week, the ABC revealed big tobacco companies were propping up law enforcement by providing high-level intelligence and paying for surveillance technology.

There is a government agency called the National Measurement Institute that provides analysis for law enforcement.

A spokesperson for ABF said it used the agency “where possible”, but conceded there were times it had relied on the tobacco companies.

“There are instances in which tobacco companies have provided assistance in identifying counterfeit or illicit tobacco and have supplied statements for court proceedings,” the spokesperson said.

The Commonwealth Director of Public Prosecutions represents the agency in most court matters and, in a statement, said it “relies on evidence obtained from investigative agencies”.

“The identification of suitable experts is normally a matter for the relevant investigative agency … [and] is fully disclosed during the course of any prosecution.”

BAT confirms laboratory services loaned to ABF and others

When contacted by the ABC, BAT confirmed it had loaned its facilities to more than one law enforcement agency.

“That was about establishing whether the products were tobacco products, which is important to know before they can proceed with prosecution,” BAT spokesman Josh Fett said.

“We were pretty happy to help out, because the tobacco black market is huge.”

He said BAT approached law enforcement with the offer, and did not charge them for the service.

“I certainly don’t think there’s any conflict … it’s up to law enforcement agencies whose service they use and in these cases it was us,” he said.

“We have a clear interest in combating and assisting anyone that’s willing to fight criminals selling illicit tobacco in Australia, we don’t have any issue with helping anyone we can.”

Tobacco company ‘drafts warrant request’

The ABC has obtained more documents showing the level of the tobacco giants’ involvement in police operations.

An Imperial Tobacco PowerPoint presentation boasted its company and Philip Morris “assisted NSW Police to conduct raids” at six locations in Sydney in 2015.

PHOTO: The raids purportedly seized $60,000 worth of black market tobacco. (ABC News)

“Our role … provide a brief of evidence to police,” it read.

“Draft warrant request.

“Store seized product.”

PHOTO: Imperial Tobacco analysed the product for police. (ABC News)

PHOTO: Imperial Tobacco analysed the product for police. (ABC News)

Imperial Tobacco emailed the presentation to New South Wales Labor MP Paul Lynch in October 2015.

“I was astonished I must say, I had no idea that the cooperation between a large tobacco company and the police was as intense as it is,” he said.

“This is a relationship that’s way too close.”

He said NSW police needed to own up about the level of cooperation they had with the tobacco companies.

“The police have to be entirely transparent about what exactly they’re doing and upfront about the reality that tobacco companies are making profit out of their activities,” he said.

“Police need to behave as the police and conduct their own investigations, prepare their own briefs and execute their own warrants.

“That’s not a function of the state that should be farmed out to private corporations.”

Police, Imperial Tobacco decline to answer questions

New South Wales police declined to answer the ABC’s questions about the cooperation and declined to specifically comment on the tobacco industry.

They sent a statement saying they regularly worked with many industries.

“Their involvement is non-operational,” the said.

“Just as a member of the community may provide information to law enforcement about crime impacting the community, so too will industry.”

Imperial Tobacco Australia also declined to answer the ABC’s specific questions.

It also sent a statement, in which it says [the industry] will continue to provide intelligence on the black market.

“Imperial Tobacco Australia makes available to relevant enforcement and prosecuting authorities our personnel who hold expert knowledge in respect of tobacco products.

“It is our view that the cooperation of our industry with enforcement and prosecuting personnel is vital to combatting serious and organised crime that is responsible for much of the trade in illicit tobacco.

“The documents you refer to were designed to give transparency and shine a light on this alarming issue.”

Bulk tobacco smuggling increases, worrying OLAF and Commission

Illegal sale of cut tobacco is on the rise in Eastern and Southeastern Europe, depriving state budgets of millions of euros in unpaid taxes.

https://www.euractiv.com/section/agriculture-food/news/bulk-tobacco-smuggling-increases-worrying-olaf-and-commission/

The EU’s anti-fraud office OLAF says the reasons for the increase are not currently clear, while the Commission is considering extending the excise system to raw tobacco to address the situation.

‘Bulk’ or ‘loose’ tobacco is a type of tobacco usually sold in non-branded packs or bags on the black market. It can be used in the counterfeit cigarette production but also legally in ‘Roll Your Own’ (RYO) cigarettes.

According to a study published last December by Crime & Tech, a spin-off company of the Università Cattolica del Sacro Cuore and Transcrime, the trend of illicit trade in bulk tobacco is on the rise. In the whole of Europe, more than 48% of the total volume of cut tobacco in 2015 was consumed illegally.

In the EU alone, the amount of illegally sold bulk tobacco consumed in eight member states accounted for 32.2% of the total cut tobacco consumption.

In at least nine European countries, seven of which are in the Balkans, where tobacco growing is a tradition, illegal bulk tobacco accounts for more than half of the total amount of cut tobacco consumed. The countries are Montenegro, Serbia, Bosnia and Herzegovina, Poland, Croatia, Slovakia, Albania, Kosovo and Bulgaria.

Massive tax losses

In addition, the study estimates that the illegal trade of bulk tobacco generates a shortfall of nearly €1 billion in tax income for the member states.

Poland has already been severely hit by illicit trade in cigarettes and bulk tobacco further worsened the situation.

In Croatia, the newest EU member, the potential revenue loss is estimated at €88.9 million with bulk tobacco representing a whopping 84.9% of the share of fine cut tobacco consumption.

OLAF: The situation is unclear

Contacted by EURACTIV, OLAF’s press office stressed it was aware of the results of the study and the increase of bulk tobacco seizures in Europe.

“However, the reason for that increase is not currently clear,” OLAF said in a written reply. It has yet to be clarified whether this is mainly a domestic problem concerning tobacco growers in some EU member states or if there are wider implications involving illegal imports from third countries, it added.

“According to our information, the main countries affected in the EU were identified as Poland, Greece, Croatia, Bulgaria, Hungary, Romania, Slovakia and Slovenia,” OLAF emphasised.

Extending the excise system?

The EU’s Budget Commissioner Günther Oettinger recently replied to a parliamentary question on the issue by recognising that smuggling of bulk tobacco was a “growing and worrying phenomenon”.

In an effort to address the situation, the Commission is carrying out a review of its directive on the excise duty applied to manufactured tobacco, he said.

“One of the issues the Commission is looking at in that context is whether to extend the excise system to raw tobacco, which is currently exonerated from excise duties,” Oettinger noted.

A Commission spokesperson told EURACTIV that EU member states have instructed the executive to review the current rules governing excise duty on tobacco. A public consultation to gather views on the possible options for a revision of the rules has now finished.

“But before taking any decisions, we also need to carry out an impact assessment and a lot more technical work,” the spokesperson stressed, underlining that it was too early to predict the conclusions of this review.

“The Commission will carefully listen to EU governments and fully consider their requests and views […] we would also recall that any proposal would need the unanimous support of all 28 EU governments for it to be approved,” the EU official added.

Sources familiar with the issue have told EURACTIV that adding a particular product to the excise system does not necessarily mean putting an extra tax on them but simply makes them easier to track.

‘Extending the excise system’ refers to the Excise Movement and Control System (EMCS) which monitors the movements of excise goods within the EU until the duties are paid or the goods are exported.

The idea to extend the excise system to raw tobacco would provide more information on the movement of raw tobacco and help the fight against illicit trade.

In practice, this would mean that raw tobacco would become an excise good with a zero rate, EURACTIV has been informed.

The same sources explained that this option is just one of the ideas but the benefits of enhanced control on one hand and administrative burden and compliance cost on the other would need to be weighed carefully.

Call for increased resources to tackle tobacco smuggling

An organisation which represents more than 3,000 retailers is demanding that the Government provides increased resources to Customs units to crack down on cigarette smuggling, and also support a bill which provides on-the-spot fines for those who purchase illicit tobacco, alcohol, and solid fuel.

http://www.irishexaminer.com/ireland/call-for-increased-resources-to-tackle-tobacco-smuggling-457886.html

Retailers Against Smuggling (RAS), representing small and medium-sized retailers nationwide, says the Government should not increase excise on tobacco products in the forthcoming budget, as it would only lead to further smuggling.

RAS spokesman Benny Gilsenan, who runs a shop in Dublin, also urged the Government to support a Fianna Fáil-proposed Sale of Illicit Goods Bill which provides for on-the-spot fines for purchasers of illicit products.

He said that, with Brexit looming, the Government has to provide increasing resources to the Revenue Commissioners to tackle the potential for even more cross-border alcohol, tobacco, and solid fuel smuggling.

It is estimated, by Grant Thornton, the illicit trade in tobacco products cost the Irish exchequer €2.4bn in lost revenue between 2010 and 2015.

A standard pack of cigarettes in a legitimate shop costs around €11.50, whereas a smuggled pack costs approximately €5 to the buyer.

Ireland is 189% more expensive for tobacco products than the average European price, and 175% higher for alcohol.

Legitimate cigarettes in some parts of Europe can be bought for as little €3 a pack, even with excise duty in the country of origin paid.

However, major smugglers have been turning to fake cigarettes, known as illegal whites, which are made in sweatshops in Asia, Eastern Europe, and the United Arab Emirates.

The packets come with fictional brand names such as Excellence, Palace, President, CK, Gin, Ling, and M&G and cost as little as 20c a packet to manufacture.

They have been found to contain asbestos, lead, arsenic, traces of rat poison, and human excrement.

“The Revenue Commissioners stated in the recent Tax Strategy Group papers that we must ‘remain vigilant that reductions [of seizures] may be due to changes in smuggling activity’,” said Mr Gilsenan.

“This is a great concern to retailers, especially as Minister [Simon] Coveney recently warned of the increased danger of smuggling with an unresolved border situation.”

He pointed out that the legitimate trade of alcohol, tobacco, and solid fuel accounts for up to 50% of a retailer’s business turnover.

“The ever-increasing excise applied to tobacco products is undermining our ability to do business whilst making life considerably easier for criminal engaged in smuggling,” he added.

The Sale of Illicit Goods Bill proposed by Deputy Declan Breathnach provides for on-the-spot fines.

How to measure the black market for cigarettes

Popular methods include surveys, statistical analysis and rooting through rubbish

http://www.economist.com/blogs/economist-explains/2017/06/economist-explains-4

LAST month Britain joined a growing number of countries in which cigarettes can only be sold in plain packs. Tobacco companies claim that the move will boost the sales of contraband cigarettes by making them trickier to spot. There is one way to tell whether this actually happens: track how black-market sales change. But how can such sales be measured?

There are about a dozen ways to do it, of which three are the most commonly used, says Hana Ross of the University of Cape Town. The first is a comparison of the number of cigarettes sold legally (from records on cigarette taxes paid) with the number of cigarettes consumed (which is calculated from surveys asking people how much they smoke). The gap between the two figures is the estimated share of the black market. The second commonly used method is to ask smokers where they have bought cigarettes and how much they have paid; smokers might also be asked to show the most recent pack they have bought. A price lower than that of legally sold brands suggests a contraband sale; some smokers openly admit that they have bought contraband cigarettes, or show a telltale pack.

The third method is to look at discarded cigarette packs and count up each that looks like a black-market purchase, for instance by missing its tax sticker or displaying a brand that is not officially registered. Discarded packs can be collected from vendors who sell cigarettes by the stick, from litter in the streets, or by rummaging through rubbish bins or the hauls of refuse-collection trucks. (“We dress them as if they are going into space”, says Ms Ross about the recruits who rummage through the heaps.)

Each of these methods has its weakness. Smokers may, for example, be reluctant to mention purchases of cigarettes they know to be contraband. They may also claim to smoke less than they actually do (especially if researchers come round soon after a major anti-smoking campaign). Ideally, multiple methods should be applied to get a better estimate of the total black-market sales. And trends over time are best measured by applying the same method. Such studies are conducted in a growing number of countries. Just because a sale occurs in the shadows does not mean it is impossible to cast a smouldering light on it.

Hong Kong Customs seizes suspected illicit cigarettes

Hong Kong Customs yesterday (June 2) seized about 1.5 million suspected illicit cigarettes with an estimated market value of about $4.1 million and a duty potential of about $2.9 million at Man Kam To Control Point.

http://www.info.gov.hk/gia/general/201706/03/P2017060200961.htm

Customs officers intercepted an incoming truck declared to contain cloth at Man Kam To Control Point yesterday. After inspection, Customs officers found about 1.5 million suspected illicit cigarettes inside 156 carton boxes. A male driver, aged 52, was arrested and the truck has been detained for further investigation. Investigation is ongoing.

Smuggling is a serious offence. Under the Import and Export Ordinance, any person found guilty of importing or exporting unmanifested cargo is liable to a maximum fine of $2 million and imprisonment for seven years.

Members of the public may report any suspected illicit cigarette activities to the Customs 24-hour hotline 2545 6182.

Ends/Saturday, June 3, 2017
Issued at HKT 15:30