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Cigarette Smuggling

Commission calls on EU to ratify FCTC illicit trade protocol

May 7th, 2015
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http://www.tobaccojournal.com/Commission_calls_on_EU_to_ratify_FCTC_illicit_trade_protocol.52990.0.html

The European Commission called on the European Union to follow through on a commitment made more than two years ago to ratify the illicit tobacco trade protocol of the Framework Convention on Tobacco Control (FCTC).

Only seven countries, including EU members Spain and Austria, have ratified the Protocol to Eliminate Illicit Trade in Tobacco Products since it was approved at an FCTC meeting in Seoul, Korea, in November, 2012. Forty ratifications are necessary for the protocol to take effect, the Commission noted in its statement. Ratification by the 26 member countries that have not done so and the EU as a ratifying body would add raise the number of approving parties to 34.

FCTC is the first international treaty operating under the auspices of the World Health Organisation.

Civil society action in India to prevent tobacco industry interference

May 4th, 2015
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http://apps.who.int/fctc/implementation/database/groups/civil-society-action-india-prevent-tobacco-industry-interference

The International Tax and Investment Center (ITIC) is organizing the 12th Asia Pacific Regional Forum in New Delhi, India from 5-7 May.

ITIC has a number of tobacco companies as part of its board of directors and has produced many publications on several areas related to taxes and prices, investment and illicit trade in tobacco products.

The event website originally listed the Indian Minister of Finance (State) as the confirmed Chief Guest of its Opening ceremony, along with officials from his ministry, former Indian Minister of Finance and state government officials.

The Institute of Public Health (IPH), a Bengaluru based organization, wrote to the Union Minister of Finance requesting him to withdraw participation of his State Minister and ministry officials from the event and we followed up the issue in the media.

Subsequently, the State Minister’s name was removed from the event website and programme agenda.

Further, IPH wrote to the President of the World Bank requesting the Bank to withdraw its sponsorship of the event. The World Bank has today announced withdrawal of its participation and funding of the event.

The World Bank is an intergovernmental organization that is accredited as observer to the Conference of the Parties (COP) of the WHO FCTC and the FCTC Secretariat has concluded a cooperation framework with the Bank on several areas of work related to implementation of the Convention by the Parties. See para 18 of this document: http://apps.who.int/gb/fctc/PDF/cop6/FCTC_COP6_18-en.pdf

The timely action by members of the Framework Convention Alliance in different countries in the Asia-Pacific in response to an alert from HealthBridge Foundation has prompted several speakers and delegates to reportedly pull out of the event.

Still, the website of the ITIC-event says “Government and Parliamentary Delegations from the following countries have confirmed their participation: Australia, Bangladesh, Cambodia, Chinese Taipei, India, Indonesia, Korea, Laos, Malaysia, Myanmar, Pakistan, Philippines, Solomon Islands, Tajikistan, and Thailand.” Most of these countries are Parties to the WHO FCTC and are obligated to protect their tobacco control policies from the influence of tobacco industry. http://www.iticnet.org/aptf2015

The civil society will continue to work with Governments to put in place long term deterrent policies to avert such conflict of interests in the future.
Additional information

Earlier, before the sixth session of the Conference of the Parties, it has been brought to the attention of the Convention Secretariat that ITIC, in cooperation with the Eurasian Economic Commission, is organizing a briefing on tobacco excise taxation in Moscow on 12 October 2014, one day before the opening of the COP, and inviting tax officials from Parties and WHO Member States that are observers to the COP to participate. The Convention Secretariat responded rapidly, by bringing to the attention of the Parties that ITIC has a number of tobacco companies as part of its board of directors; the Secretariat also advised Parties and accredited observers to the Convention not to participate at the event in the light of their obligations under Article 5.3 of the WHO FCTC and its guidelines.

Black market tobacco now 14.5 per cent of all consumption, Illicit Tobacco in Australia report shows

May 4th, 2015
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http://www.heraldsun.com.au/news/law-order/black-market-tobacco-now-145-per-cent-of-all-consumption-illicit-tobacco-in-australia-report-shows/story-fni0fee2-1227334216624

THE BILLION dollar illicit tobacco black market has hit a record high as Australian smokers baulk at the price of legal cigarettes.

Criminals are exploiting the high price of legal smokes to make massive profits by smuggling in cheap tobacco from overseas.

Last year 14.5 per cent of all tobacco consumed was illegal, according to a new report.

The Illicit Tobacco in Australia 2014 report states nearly 2.6 million kilograms of illegal tobacco was consumed last year alone with the tobacco black market rocketing by 30 per cent since 2013.

The report by KPMG, commissioned by the world’s biggest tobacco companies, concludes the black market costs the Federal Government $1.35 billion in lost taxes.

The black market boomed during a period when the government increased tobacco excise by 25 per cent.

Legal cigarettes in Australia are among the most expensive in the Asia Pacific region, costing about seven times more than in countries such as China or South Korea.

John Gledhill, managing director of tobacco giant Philip Morris Limited, said: “The government’s excessive tobacco regulations are providing incentives for the black market.

“As cigarette smuggling continues to grow in Australia the government must enforce the law and prosecute people caught selling illicit tobacco.”

The Australian Customs and Border Protection Service said tobacco smuggling is one of its “key strategic priorities”.

“The Service uses a combination of well-trained and highly skilled staff, intelligence analysis and state of the art technology to detect the movement of prohibited imports, including undeclared tobacco, into Australia,” spokeswoman Sophia Dickinson said.

Since last July Customs has detected illicit tobacco 61 times in sea cargo, which consisted of 91.5 tonnes of loose tobacco and $21.4 million worth of cigarettes.

“There have been two successful prosecutions for tobacco smuggling related offences (since last July),” Ms Dickinson said.

“These cases resulted in the handing down of three custodial sentences.”

The biggest factor in the growth of the illicit tobacco black market is the increase in the consumption of ‘chop chop’ — unbranded loose leaf tobacco.

‘Chop chop’ is sold as loose leaf tobacco in 250 gram to half kilogram amounts or in boxes of 100 pre-rolled tubes with no labelling or health warning.

A packet of illegal cigarettes is about $10 cheaper than a legal product, according to the KPMG report.

Retailers can be fined up to $340,000 for selling tobacco products that breach plain packaging laws but as yet the Department of Health has not prosecuted anyone.

Commission proposes EU joins international agreement fighting tobacco smuggling

May 4th, 2015
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Canine teams fight cigarette smuggling at customs Romania

Apr 27th, 2015
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http://www.dailybusiness.ro/stiri-companii/cate-echipe-canine-lupta-impotriva-contrabandei-cu-tigarete-in-vamile-romaniei-106983/

Fiscal policy officials and representatives of law enforcement authorities in ten European and Asian countries met in Bucharest last weekend for two days to determine future strategies to halt the loss of billions of dollars due to illegal trade, counterfeit products and other aspects of the black economy.

“We are talking about a dangerous problem and growing, which is not only a fiscal matter. Apart caused substantial losses in state budgets, illegal restricts economic development, raise barriers and increase costs of international trade, produce significant health risks and presents many challenges for the authorities – from intellectual property infringement, to money laundering and organized crime, “said Daniel Witt, President, International Tax and Investment Center (ITIC). Some experts gathered to addressing the connection between the underground economy, tax evasion and illegal trade, there were experienced officials from the Organization for Economic Cooperation and Development, World Customs Organization, INTERPOL and EUROPOL and private sector specialists and university professors . “One of the main issues related to the underground economy is illicit trade in tobacco products because it is linked to organized crime. In this context, cooperation between companies and authorities can help to achieve better results in combating black market cigarettes. This conference represents a unique opportunity to understand the latest trends in illegal trade and techniques to combat it. Officials attending the event will be better equipped in order to implement the strategies discussed in Bucharest in local context and will use the contacts established at the conference, sharing information in order to more widely in the future, “said Cristina Vasiloiu, CEO Euromonitor Business Consulting Services. “Given that cigarettes are excisable goods, smuggling of tobacco products, by significant losses due to budget represents a very serious problem. As I said, we need a new national strategy to combat illegal trade in cigarettes, nationwide, for the period 2015-2018, aimed at improving the regulatory framework and concrete measures to be implemented in concert by all institutions responsible. General Customs Department continues to implement firm measures to reduce smuggling. At the moment, are active in customs, supported by cigarette manufacturers, 33 canine teams specialized in detecting cigarettes and 11 canine teams with double capability – screening drugs and cigarettes.

Cooperation protocols were signed between NAFA and the major manufacturers of cigarettes, between DGV and the Customs Administration of Moldova and Serbia, in order to combat illegal trafficking. A similar document will be agreed with Ukraine. Also, since analyzes Customs, and Novel study reveals an increase in black market in the northern, western and northeast, as soon as the administrative capacity will allow, will be reintroduced at the border customs offices Sighet, Halmeu and Siret small border traffic monitoring certain products “, said Claudiu Ardeleanu, director general of the General Customs Directorate. “Simplify the legal framework which prevents illegal. It is necessary to develop an integrated strategy to combat illegal trafficking of goods and customs fraud in the EU’s eastern borders. Members of the Working Group which will develop and coordinate this strategy should come from OLAF, WCO, EUROPOL, INTERPOL, FRONTEX, SELECTION, EUBAM, the EU countries in the region and representatives of companies and authorities in member countries of the Eastern Partnership . An additional recommendation is the active involvement of EU member states, in order to create the necessary framework for business development and ensuring good conditions in countries bordering the European Union, “said Dorel Fronea, former head of the National Customs Authority of Romania and Mission was expert in the European Union Advice and Public Policy in Moldova. “International Conference on economy and taxes” was organized by the International Tax and Investment Center (iticnet.org) nonprofit research and education oriented on fiscal reform and public-private initiatives to improve the investment climate, and Euromonitor Business Consulting Services, provider of consulting policies and strategies for business development in Central and Eastern Europe

SA economy losing billions due to illegal cigarettes trade

Apr 24th, 2015
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http://ewn.co.za/2015/04/24/SA-economy-losing-billions-due-to-illegal-cigarettes-trade

There have been allegations of licensed companies involved in manufacturing counterfeits cigarettes.

CAPE TOWN – The Tobacco Institute of Southern Africa says 23 percent of the local cigarette manufacturing and distribution trade is made up of illegal products.

Officials from the institute briefed Parliament’s Trade and Industry portfolio committee today on issues affecting the industry.

The institute’s Francois van der Merwe told members of Parliament the country’s economy has lost R22 billion to the illicit trade in cigarettes since 2010.

Van der Merwe adds there have been allegations that licensed companies are also involved in the manufacturing of counterfeit cigarettes.

On Thursday, Eyewitness News revealed former South African Revenue Service (Sars) spokesperson Adrian Lackay claims evidence has emerged that British American Tobacco (BAT), a private investigation firm, and State Security Agency officials have been involved in cigarette smuggling. BAT has denied involvement in any illegal activity.

Parliamentarians questioned why this continues unabated when there are numerous agencies tasked with cracking down on the trade.

They raised concerns the country will continue to lose money if the problem is not adequately dealt with.

The British American Tobacco smuggling scam goes international

Apr 23rd, 2015
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http://www.capetalk.co.za/articles/2595/the-british-american-tobacco-smuggling-scam-goes-international

The British American Tobacco smuggling scam

EWN reports from this morning note that a document has been submitted to Parliament claiming there is evidence that British American Tobacco (BAT) has been involved in what looks like cigarette smuggling. The claim comes from the former Sars spokesperson Adrian Lackey, where he says that evidence that he was made aware of shows that both BAT South Africa and BAT UK were working with current and former State Security officials in “…a range of illegal activities which had cost the fiscus hundreds of millions of rand…”:

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Lackey resigned from Sars as part of the fallout from claims of a rogue spy unit within the organization. Executive Director at the National Council Against Smoking, Dr Yussuf Saloojee:

The claim is based on reasonably good international evidence which shows that there has been secret smuggling around the world. Why would they do this? To increase their profits. When prices of cigarettes go up, the response is that smokers stop smoking, so cigarettes are smuggled (away from formal market channels of distribution) so that smokers can buy lower priced cigarettes. Smuggling doesn’t cost cigarette companies any money at all. Sars needs to look at this very closely because there have been claims of relations between Sars employees and those of the BAT and beyond that, this is a national health issue.

The statement in response from the British American Tobacco South Africa

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Hong Kong Customs to work with Guangdong counterparts to crack down on cigarette smuggling

Apr 17th, 2015
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A consignment of illegal cigarettes seized by Hong Kong customs earlier this year. Photo: ISD

A consignment of illegal cigarettes seized by Hong Kong customs earlier this year. Photo: ISD

Hong Kong Customs will seek help from their mainland counterparts to investigate a cross-border syndicate after making their biggest seizure of smuggled cigarettes this year.

The HK$4.9 million haul of untaxed cigarettes was discovered hidden in two shipping containers which arrived from Guangdong by sea on Thursday.

“The containers were declared to have carried electronic parts and LED lights but its shipper is not involved in such business. This aroused our officers’ suspicions,” Superintendent Cecilia Yeung Kai-fei, deputy head of the Customs’ revenue and general investigation bureau, said.

The two containers were taken to a Customs cargo examination plant in Tuen Mun for inspection.

Under an X-ray examination, suspicious images were found at the back of the containers. A total 122 boxes of illicit cigarettes were uncovered after the two containers were opened for inspection. No one was arrested.

“Our investigation indicates that consignment was for local consumption,” Yeung said.

She said it was the fourth major seizure of contraband cigarettes this year but “this is the biggest”.

“We believe there is a cross-border syndicate behind the shipment because it involved such large quantity of illicit cigarettes,” she said.

“We will ask our Guangdong counterparts for help in our follow-up investigation.”

In the previous three cases detected in the first quarter of this year, in total 2.4 million cigarettes, worth about HK$6.3 million, were smuggled into Hong Kong from the mainland by land or by sea.

“Syndicates use different methods of smuggling in an attempt to evade our detection,” Yeung said, adding that the latest seizure showed the effectiveness of enforcement strategy.

She said Hong Kong Customs would continue to carry out stringent enforcement actions against such illegal activities.

Last year, customs officers confiscated 14 millions of illicit cigarettes worth HK$37.8 million in seven major seizures.

Under the import and export ordinance, smuggling is a serious offence that carries a maximum penalty of a HK$2 million fine and seven years of imprisonment.

Source URL (modified on Apr 17th 2015, 7:18pm): http://www.scmp.com/news/hong-kong/article/1768761/customs-work-guangdong-counterparts-crack-down-cigarette-smuggling

Undercover investigators highlight illicit tobacco trade in Gateshead

Apr 13th, 2015
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Homes, pubs, shops and businesses targeted by test purchasers in effort to raise awareness among public and law makers

Illegal cigarettes seized as part of a raid on Tyneside could contain human faeces, rat droppings or dead flies.

A team of undercover investigators uncovered “widespread” trade in illicit tobacco on a two-day visit to Gateshead.

Former Scotland Yard Detective Chief Inspector Will O’Reilly led the test purchase operation on Tuesday and Wednesday across the borough.

Since November 2011, Will has been conducting the research on behalf of Philip Morris International (PMI) – the global cigarette and tobacco company, which includes Marlboro among its products – to check on new counterfeits and to raise economic and health issues related to the black market.

His team of former police officers from around Europe, whose identities cannot be revealed, visit pubs, homes and a range of shops and businesses in an effort to make buys, before passing their information on to local Trading Standards teams.

In Gateshead, the team made successful buys at more than 20 locations across the two days, acquiring hundreds of cigarettes and tobacco pouches.

Will said: “Since I started I have carried out visits to 80 or 90 parliamentary constituencies around the country, and since the beginning of the year we have done about 12.

“The North East is no different from any other area in that there is widespread sales of illicit tobacco, but there seems to be a lot more sales advertised on social media sites and buyers going to people’s homes here.”

There are three types of illicit tobacco that the investigators look out for.

The first are ‘diverted products’ sold only in foreign countries at a cheaper price and then smuggled into the UK to be sold, while the second are counterfeit versions of familiar brands.

But it is the last group, known as ‘illicit whites’, which are cigarettes manufactured for the sole purpose of being smuggled into the UK and sold illegally but buyers have no idea what is in them. Tests have revealed traces of arsenic, rat droppings, human faeces, dead flies and more.

Will said: “We are able to buy these from car washes, pet shops, furniture warehouses, houses, pubs, corner shops and more. It is more prevalent is more deprived areas where there are more smokers but less disposable income.

“The HMRC say at least £2.1bn is lost to the treasury each year from the illicit market and the trade helps to fund organised crime and even terrorism. Health risks also include the fact that many of the illicit cigarettes lack fire retardant and have been found to be responsible for house fires.”

Peter Wright, Gateshead Council’s Environmental Health and Trading Standards Manager, said his officers’ work to tackle illegal tobacco is just part of overall efforts to reduce smoking.

He added: “Gateshead’s Trading Standards team regularly uses intelligence to target illegal tobacco suppliers. However, we don’t believe that counterfeit tobacco is a growing problem, particularly as HMRC has suggested that the smuggling of counterfeit tobacco products has declined in recent years.

“The bottom line is that all tobacco, whether counterfeit or not, will kill around 480 Gateshead residents this year alone and take up 42,000 GP appointments in the town.

“Around half of all long term smokers can expect to die as a result of their habit.”

One in ten of all cigarettes sold in Burton is illegal

Apr 8th, 2015
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http://www.burtonmail.co.uk/10-cigarettes-sold-Burton-illegal/story-26297465-detail/story.html

A MAJOR investigation has revealed that the streets of Burton are being blighted by the sale of illegal cigarettes.

Council bosses now believe that one in 10 of all cigarettes sold in the town are illegal.

Figures have also revealed that 28 per cent of smokers in East Staffordshire buy illegal or counterfeit cigarettes.

People in the area buy their tobacco regularly from ‘non-shop’ sources such as pubs, car boot sales and market stalls, which offer much lower prices than high street shops.

The shocking facts and figures means the continuation of efforts by Staffordshire Police, Staffordshire County Council and HM Revenue and Customs (HMRC) to try to crackdown on the problem.

A county council spokesman said: “These products are widely available at low cost and this undermines efforts to discourage smoking through higher pricing of legitimate tobacco.

“The county council has worked hard to combat the sale of illicit alcohol and tobacco in recent years.

“We have received a great deal of information from local people on shops and individuals suspected of selling illicit tobacco products which plays a big part in our operations.”

The majority of the tobacco and cigarettes being sold is either counterfeit or fabricated brands manufactured with no quality control.

Stuart Taylor, HMRC assistant director, criminal investigation, revealed that raids had uncovered illegal goods stored behind cupboards and even in stashed drinks cartons.

He said: “Some of the hiding places used by retailers to conceal these goods in Burton were very sophisticated.”

Shaid Hussain, who runs Good News, in High Street, said those who chose to sell illicit goods were taking custom away from genuine stores.

But he raised concerns that the irresponsible actions of some shop owners could damage the perception of all off-licences in the town centre.

Mr Hussain said: “If these people continue to sell these cigarettes it is taking business away from shops like us – our margin is five per cent on cigarettes.

“Someone buying counterfeit cigarettes doesn’t know what is in them.”

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