Cigarette Smuggling
Fuel laundering, tobacco smuggling costing €1bn annually
http://www.irishtimes.com/news/ireland/irish-news/fuel-laundering-tobacco-smuggling-costing-1bn-annually-1.2114673
Criminal gangs operating out of south Armagh and along Border difficult to tackle
It’s hard to get your head around how big the problem of fuel laundering and tobacco smuggling in Ireland is – much of it concentrated along the Border.
It certainly could be up to €1 billion annually.
It also seems difficult to comprehend why so few people have been charged and convicted for it. However, there is one explanation.
Accountants Grant Thornton reckon the Irish exchequer loses €140 million to €260 million from fuel fraud each year.
They estimate that, in 2013, the tax loss in Ireland from tobacco fraud was between €240 million to €575 million.
The wide range of the estimates is itself an indicator of how challenging it is for the authorities to get a grip on these rackets.
Laundering diesel in Northern Ireland is believed to cost about £80 million (€109 million) each year in lost tax. Additionally, it has cost the Northern authorities almost £1 million since 2012 to clean up the toxic sludge from laundering. It’s reasonable to assume there are similar, if not higher, disposal costs accruing here.
Her Majesty’s Revenue and Customs (HMRC) believes UK tobacco smuggling amounted to £2 billion in 2012- 2013, up from £1.6 billion in 2011-2012. It hasn’t separated out the cost for Northern Ireland, but let’s take a guesstimate of €56 million for the North, which isn’t unreasonable and probably is an underestimate.
Add up those estimates and the cost of fuel fraud and tobacco smuggling on the island of Ireland comes to €1 billion each year. Even if it is just half that figure, it’s still huge.
Public imagination
Criminal gangs operating along the Border, therefore, are making staggering fortunes while they pollute land and the water supplies by illegally disposing of the diesel sludge. It’s an issue that hasn’t grabbed the public imagination, although there is now an attempt to convey to people that here is a level of crime that would impress most mafia dons.
“You can see where some of the money is going with some of the diesel mansions along the Border and with their driveways choked with four-wheel drives,” said one local source.
The Garda, PSNI, the Revenue Commissioners, HMRC, the Criminal Assets Bureau and the new British National Crime Agency have been having some successes. But it is relative – there is absolutely no sense of the diesel godfathers being brought to book.
South of the Border, 35 diesel fuel-laundering operations have been shut since 2010, with more than three million litres of fuel seized. Sixteen of these plants were in Co Monaghan, 11 in Louth, two in Meath and one each in counties Cavan, Donegal, Dublin Laois, Offaly and Waterford. In the Republic, 137 petrol stations have been closed for breaches of licensing conditions, including fuel laundering, since 2011.
More than 200 fuel-laundering plants have been raided in Northern Ireland over the past 10 years. According to HMRC, there were nine fuel fraud convictions in 2012-2013 and nine in 2013-2014. Here the conviction rate also seems low.
But there is one explanation.
“It’s a difficult area in which to maintain evidential integrity and it’s also a difficult area in which to protect officers,” as one senior PSNI officer recently told The Irish Times with a degree of understatement.
In other words, it may be feasible for the revenue investigators supported by Garda and PSNI officers to pounce on fuel- laundering plants, but along the Border and particularly in south Armagh it is plain dangerous to engage in time-consuming, painstaking investigations. That is a fact of life. The dissidents are a serious threat.
Remember too this is the land of omerta, hard to breach, notwithstanding the British- Irish Parliamentary Assembly’s call for a multidisciplinary attack on this crime.
Recent weeks have seen some allegations and plenty of suspicions that the Provisional IRA is implicated. This is vehemently rejected by Sinn Féin. Moreover, the Garda and the PSNI are making no such claims.
Anecdotal
You will hear some local comment that the “dissidents run the tobacco and the old Provos hang on to the diesel”, but so far, officially, you won’t hear anything that goes much beyond such anecdotal remarks.
Certainly, there is strong structure and organisation behind this crime – a form of organisation that it is probably safe to say has its origins in how the Provisional IRA ran its operations along the Border.
But throughout the peace process it was always a given that the Provisional IRA going out of business didn’t mean an end to Border criminality.
It’s a simple truth that as long as the Border can make profits for criminals there will be criminals, whatever their origins, to make those mind-boggling profits.
Available Evidence Suggests That Possible Regulation of Cigarettes Not Likely to Significantly Change U.S. Illicit Tobacco Market
http://www8.nationalacademies.org/onpinews/newsitem.aspx
WASHINGTON — Although there is insufficient evidence to draw firm conclusions about how the U.S. illicit tobacco market would respond to any new regulations that modify cigarettes—for example, by lowering nicotine content—limited evidence suggests that demand for illicit versions of conventional cigarettes would be modest, says a new congressionally mandated report from the National Research Council and Institute of Medicine.
Tobacco use has declined in the past few decades due to measures such as high taxes on tobacco products and bans on advertising, though there are still more than 1 billion people worldwide who regularly use tobacco, including many who purchase their products illicitly. Illicit tobacco markets can undermine public health efforts to reduce tobacco use, while depriving governments of revenue. In the United States, the revenue losses are borne mostly by the states.
As the U.S. Food and Drug Administration considers possible regulations for tobacco products, the agency asked the National Research Council and the Institute of Medicine to examine the U.S. and international markets for illicit cigarettes and the evidence on how illicit markets react to various policies and regulations.
Currently, the U.S. illicit tobacco market primarily consists of bootlegging from Native American reservations and low-tax states, such as Virginia, to high-tax states, such as New York. Bootlegging is the legal purchase of cigarettes in one jurisdiction and their consumption or resale in another, without the payment of applicable taxes or duties in the jurisdictions where they are resold. Large-scale international smuggling, counterfeit cigarettes, and “illicit whites” — cigarettes legally produced under unique brand names or no brand name — which are prevalent in many other countries, are largely absent from the U.S. market, the report says.
The portion of the total U.S. tobacco market represented by illicit sales is between 8.5 percent and 21 percent, or 1.24 billion to 2.91 billion packs of cigarettes annually, concluded the committee that conducted the study. This share has nearly tripled over the past two decades.
The illicit tobacco market is not evenly distributed across states: it may constitute as much as 45 percent of all tobacco sales in high-tax states, such as New York, while it is low in many other states. The committee classified 22 states and the District of Columbia as net exporters, and 28 states as net importers. In 2011 the net importing states lost an estimated $2.95 billion in state and local cigarette excise taxes, with New York accounting for nearly half of this total. The net exporting states gained an estimated $0.82 billion.
The people involved in the segments of the distribution process of illicit tobacco generally do not have serious criminal records, and this market is not associated with violence, either abroad or in the United States, the report says. Although many claims have been made regarding the relationship between illicit tobacco trade and terrorism, the link between the U.S. illicit tobacco market and terrorism appears to be minor, and there is also no evidence of sustained links between the global illicit tobacco trade and terrorism.
Enforcement efforts are challenged by the changing nature of illicit tobacco markets, the need to coordinate across various agencies and levels of government, and the fact that illicit tobacco trade has been a low priority. Law enforcement efforts to investigate the illicit trade tend to be weak and uneven, and criminal prosecution of those involved is a low priority for prosecutors. Although the committee was able to obtain only limited information on enforcement activity and successes by agencies, it concluded that the risks of detection and prosecution for tobacco smugglers are small.
Comprehensive interventions adopted by several countries show that it is possible to reduce the size of the illicit tobacco market through tobacco-specific enforcement resources and collaboration across jurisdictions. For example, Spain reduced the illicit share of its market from 15 percent in 1995 to 2 percent in 2001 through licensing and control measures, enforcement efforts, and legal agreements. The United Kingdom used stamping and marking requirements on cigarettes, agreements with tobacco manufacturers, enhanced enforcement efforts, and public education campaigns to reduce the size of its illicit market from 21 percent in 2000 to 9 percent in 2013.
“In the future, non-price regulation of cigarettes – such as product design, formulation, and packaging – could, in principle, contribute to the development of new types of illicit tobacco markets if incentives for such illicit trade are not controlled or mitigated,” said Peter Reuter, committee chair and professor in the school of public policy and department of criminology at University of Maryland. “However, based on the limited available evidence we reviewed, if new regulations were introduced, any increase in the demand for illicit tobacco may only be modest.”
In trying to assess the possible effects of regulations on the illicit market, the committee examined experimental studies on how modifying cigarettes might affect their product appeal for consumers. Such modifications as reducing ignition capacity–requiring that cigarettes extinguish when not actively puffed–and decreasing filter ventilation have shown only modest impact on product appeal when considered in isolation from other product features. Reducing nicotine levels or mentholation has been shown in experimental studies to have a stronger effect on reducing product appeal. Behavioral responses to reduced nicotine or mentholation have been mixed in short-term studies, with some smokers indicating that they intend to quit while others are able to tolerate product changes with little to no change in individual cigarette consumption.
Cigarette packs with large graphic warning labels or in plain packaging have also been shown to reduce product appeal. In countries that have implemented regulations on packaging, some smokers have been observed to use stickers or branded containers to conceal graphic health warnings – strategies that subvert the intent of the law to reduce tobacco use, but which are an alternative to purchasing illicit products.
In order to better understand the nature of existing illicit tobacco markets and the ways they may evolve in the future, additional research and data are needed across a broad range of areas, including deeper knowledge on the individual and criminal networks that traffic in illicit tobacco in the U.S., an examination of how smokers respond to the permanent loss of specific product features they previously found desirable, and the relationship between e-cigarette use and the use of conventional tobacco products.
The study was sponsored by the U.S. Food and Drug Administration. The National Academy of Sciences, National Academy of Engineering, Institute of Medicine, and National Research Council make up the National Academies. They are private, independent nonprofit institutions that provide science, technology, and health policy advice under a congressional charter granted in 1863. The National Research Council is the principal operating arm of the National Academy of Sciences and the National Academy of Engineering. For more information, visit www.national-academies.org. A committee roster follows.
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MPs vote on plain packaging signals industry defeat – but there may be a sting in the tale
http://theconversation.com/mps-vote-on-plain-packaging-signals-industry-defeat-but-there-may-be-a-sting-in-the-tale-36622
The government’s decision to allow MPs to vote on standardised packaging before the general election will finally bring to an end the tobacco industry’s three-year campaign to prevent regulation of cigarette…
Put you off? That’s the point. Ella Pickover/PA
The government’s decision to allow MPs to vote on standardised packaging before the general election will finally bring to an end the tobacco industry’s three-year campaign to prevent regulation of cigarette packs in the UK. A campaign, our research shows, in which they used misleading evidence on both the illicit tobacco trade and the health benefits of standardised packaging as a tool to delay legislation.
That MPs will have the opportunity to vote on standardised packaging has been widely welcomed by health advocates and the medical community – and strongly criticised by tobacco industry-supported organisations such as Forest and the Institute of Economic Affairs, which said it was a “gross infringement of the right of companies to use their trademarks and design their own packaging”.
But a wealth of evidence from the independent review by Sir Cyril Chantler, indicates that that this important measure is likely to help reduce the number of children and young people taking up smoking. It is hoped that this will reduce the number of deaths from smoking-related diseases, which currently stands at around 100,000 a year in the UK.
If introduced, standardised packaging regulations will prohibit all on-pack branding, except the name and brand variant, printed in a standard font. In place of branding, packs will feature written and graphic health warnings, covering a minimum of 65% of the pack, in line with the new EU Tobacco Products Directive.
The vote
The decision to allow a parliamentary vote before the election is hugely important. Despite broad cross-party support for the measure, there would inevitably have been a significant delay before standardised packaging made it back on to the parliamentary agenda – whether the government had changed after the election or not – if this decision hadn’t happened now.
It seems likely that standardised cigarette packaging will now be passed by parliament without any further delay. In a whipped vote last year, MPs showed their support for the idea in principle, with only 24 MPs not voting for the measure. The House of Lords has also shown its support by tabling the amendment to the Children and Families Bill in 2013 which allowed the first vote to take place.
The tobacco industry’s response
This decision signals the death knell to the tobacco industry’s campaign but it may yet mark the start of a new battle if tobacco companies take the issue to the courts.
In addition to their arguments about a rise in illicit trade and the questioning of health benefits, tobacco companies have also claimed that it is an infringement of their intellectual property. They have funded front groups, such as Forest and Hands Off Our Packs, using them as a vehicle to promote these arguments to the general public. And they have commissioned research of their own in a bid to undermine the evidence base for standardised packaging.
But research conducted by myself and colleagues at the University of Bath and the UK Centre for Tobacco and Alcohol Studies last year exposed the misleading nature of tobacco industry evidence on both the illicit trade and the health impacts of standardised packaging.
The government’s decision to progress standardised packaging to a vote in the House of Commons seems to show that while the legislative process may have been protracted by tobacco industry opposition, it has not ultimately been undermined by it.
The vote’s significance
If – or, as seems likely, when – MPs vote for standardised packaging, the UK will be one of the first countries to implement the measure in Europe – Ireland is also progressing legislation – and only the second or third globally, following in Australia’s footsteps. This ground-breaking innovation in tobacco control legislation illustrates the UK’s commitment to the health of its population and of its children: every year more than 200,000 11 to 15-year-olds start smoking in the UK (around 170,000 in England).
It is to be hoped that the devolved assemblies will also follow Westminster in introducing the measure and that the UK, like Australia, will stand firm against any legal action the tobacco companies may now undertake. This important measure will be worth defending: it will contribute to a reduction in the impact of smoking on our – and our children’s – health.
Customs detects suspected illicit cigarette smuggling case
http://7thspace.com/headlines/502787/customs_detects_suspected_illicit_cigarette_smuggling_case.html
Hong Kong (HKSAR) – Hong Kong Customs yesterday (January 20) mounted a special operation at Lok Ma Chau Control Point to combat cigarette smuggling. During the operation, about 600 000 sticks of illicit cigarettes were seized from an incoming cross-boundary lorry. The market value of the cigarettes was about $1.6 million with a duty potential of about $1.1 million.
A 28-year-old male driver was arrested and the vehicle used for conveying the illicit cigarettes was detained.
Customs officers yesterday intercepted an incoming cross-boundary lorry, declared to have 243 boxes of printer parts and six boxes of packing cardboard, at Lok Ma Chau Control Point. After X-ray examination and thorough inspection by Customs officers, about 600 000 sticks of illicit cigarettes were found in six hollow stacks of carton paper boxes. The cigarettes were sorted and packed in batches according to orders placed with a view for quick delivery to buyers.
A Customs spokesman said today (January 21), “The operation showed the effectiveness of the enforcement strategy, especially the escalated enforcement actions against smuggling activities at source.
Customs will continue to carry out stringent enforcement action against all illicit cigarette activities.”
Under the Import and Export Ordinance, smuggling is a serious offence. The maximum penalty is a fine of $2 million and imprisonment for seven years.
Members of the public are urged to report any suspected illicit cigarette activities to the Customs hotline at 2545 6182.