Is illicit tobacco trade increasing in Australia?

It is a straightforward order that proprietors of tobacco shops must follow from organized crime syndicates in order to sell their illicit products. If they do not comply, the fire will be set in their place of business. Before the firebombings begin, you will be given the ultimatum: “Earn or burn.”

This standover behavior has been observed all over the country, but it appears to be most frequent in the state of Victoria, where there have been 27 fires at similar enterprises in fewer than seven months.

When the Victoria police began their investigation into the fires, they discovered something that was a little bit unsettling about their intelligence: nobody knew exactly how many stores in the state sold tobacco. This was a gap in their knowledge.

This is due to the fact that unlike establishments that sell alcohol or even lottery tickets, there is neither a register nor a licensing scheme for businesses that sell tobacco.

After discovering that there were over 800 stores of this kind, investigators now have reason to believe that “a large portion of the tobacco industry has been infiltrated by serious and organized crime,” as Detective Superintendent Jason Kelly stated to reporters earlier this week.

He claimed that the potential revenues were immense, citing the fact that raids conducted on 33 tobacco firms only this week alone resulted in the seizure of 36,639 electronic cigarettes with a value of more than $1 million and roughly 525,000 cigarettes with a value of approximately $400,000 each.

These operations were also carried out in collaboration with the Australian Taxation Office, the Australian Border Force, and the Therapeutic Goods Administration, all of which have overlapping roles within the industry, including the monitoring of unlawful imports and the collection of applicable taxes.

Most of the time, the cigarettes that are sold illegally are either authentic overseas brands like Double Happiness, Manchester, or Marlboro that have been illegally imported, or they are counterfeit cigarettes that have been packaged to look as if they are legitimate brands of cigarettes. The United Arab Emirates, China, or south-east Asia are the most common places of origin for them.

Kelly stated that there were genuine business owners of tobacco shops; but, some of the businesses were run by organized crime syndicates, and other firms were in the wallets of these syndicates.

The firebombings are not always deemed to be attacks against legal enterprises because some of those establishments refuse to sell illegal products and give the earnings back to the gangs who are responsible for the crime. There are larger disagreements going on between the syndicates on a daily basis.

Robert Issa, who was shot dead in Craigieburn this month, and Mohammed Akbar Keshtiar, who was assassinated in South Yarra in August, were both victims of execution-style killings in the state of Victoria. Both men were suspected of having connections to the illegal tobacco trade.

Kelly stated once more this week that individuals who used violence to maintain the existing quo were progressively dominating the underground tobacco sector, despite the fact that the homicide squad did not believe either man was killed because of their involvement in the illegal tobacco trade.

“They’re asking legitimate businesses to pay money on a weekly basis,” Kelly said. “We have a number of syndicates involved in conflict over the illicit market trade here in Victoria, and effectively we’ve seen extortions.” “We have a number of syndicates involved in conflict over the illicit market trade here in Victoria.”

The tobacco industry has been brought to light as a result of the arsonists’ actions, which has transpired.

“The arsons, the extortions, and the incidents related to firearms, what I suspect is that this has been going on for quite a number of years and has now escalated in terms of the conflict between organized crime groups,” the author writes. “The conflict between organized crime groups has now become more intense.”

In one instance, the police allege that four individuals who extorted a tobacco shop in Melbourne’s north were also tied to a motorcycle gang that operates illegally in the area.

Kelly acknowledged that it had been difficult to put together the full picture of the extent to which the criminal underworld had infiltrated a sector of the economy that was largely unregulated.

“In terms of looking into an industry that is unregulated in this sense, it is certainly a challenge to do so,” the speaker said. According to the data we’ve compiled, there has been an increase in the number of tobacco stores in more recent times… There are now more establishments springing up in the neighborhood strips.

“That most likely demonstrates that it is such a lucrative industry, to make money, and that is the reason why we are observing an increase in the number of these stores.”

A report and certain recommendations that were made by the previous commissioner for improved regulation, Anna Cronin, are being taken into consideration, according to a spokeswoman for the Victorian government.

“The report is currently being used to inform work that will strengthen the Tobacco Act in order to curb the trade of illicit tobacco,” the spokeswoman stated.

Since the report was presented, a number of significant changes have taken place, one of which being the imposition of a ban by the government of the commonwealth on the importation of vaping devices that do not require a prescription.

“We will work closely with Victoria police and other relevant agencies on these issues and the recommendations, and we will provide a response in the early part of next year.”

The spokesman was unable to provide any additional information regarding when the report, which had been commissioned in 2021, was sent to the government, the substance of the recommendations, or whether the report would be made public.

Kelly, however, stated that the state of Queensland was experiencing challenges that were comparable to those that were encountered in Victoria, and that other arsons had previously been reported in the state of Western Australia.

There were multiple arson incidents in Gympie and the Noosa region earlier this year, in addition to the two tobacco shops that were allegedly targeted in May in the southern part of Brisbane.

Despite the fact that there is a regulatory maze that dictates how cigarettes and electronic cigarettes are imported and sold as well as who is responsible for their enforcement, each state and territory essentially has its own laws that impact retailers, while the federal government is in charge of taxation, border enforcement, and health policy.

This week, Llew O’Brien, a federal member of parliament for Wide Bay in the south-east of Queensland, moved a motion in parliament that called for stricter penalties for the supply of illegal tobacco and vapes, as well as an increase in the resources available to a taskforce that deals with illicit tobacco.

He stated that the success of the illegal tobacco industry was due, in part, to the fact that the price of legally sold cigarettes had skyrocketed as a result of federal health measures, which meant that smokers looked for alternatives that were more affordable.

Cost of a legal packet of cigarettes might be up to two times higher than the cost of an illicit packet.

“When generally law-abiding smokers quit legal tobacco to purchase from the black market, they believe the only victim is a greedy federal or state government missing out on $4.2 billion of tobacco excise and $400 million in GST,” O’Brien said in parliament. “However, illicit tobacco is often the cashflow arm for sophisticated criminal syndicates dealing in the worst of the black market, including human trafficking, sex slavery, and drugs,” O’Brien added.

The motion highlighted the difficulties that the government is having in both the area of health and law enforcement, which created an unusual synergy between the two. O’Brien is a retired member of the police force, while Pat Conaghan, another member of parliament who commented on the motion, also has experience working in law enforcement. Michelle Ananda-Rajah and Mike Freelander, both of whom are members of parliament and hold medical degrees, also spoke on the issue.

While O’Brien was advocating for further action on the side of the Albanese government, there was also an acknowledgment coming from both of the major parties that problems with illegal tobacco had spiraled out of control.

In the previous fiscal year, the Australian Border Force was successful in seizing more than 1.77 billion cigarettes and 867 metric tons of illegal tobacco. They anticipate that those numbers will be surpassed in the current year.

Even Dan Repacholi, the Labor member for Hunter, acknowledged that the type of raids that Kelly and the Australian Border Force have been advocating for, such as the one that took place in Melbourne this week, are not the answer.

Repacholi stated that operational authorities have emphasized that targeting illegal tobacconists at the local level will not solve these challenges since these organized crime groups are highly adaptable.

No matter what the solution is – whether it be users themselves giving up cheap cigarettes or a large increase in resources to federal authorities that may discover more illicit importations – Kelly made it clear that in his opinion, the violence was not even close to being over.

“As we’ve seen this year, these organized crime syndicates have very little regard for the harm that they are inflicting on the community as part of their battle for the illegal profits that tobacco sales bring in,”

“We’ve seen a significant number of arson attacks, along with several incidents involving firearms, and the only reason that no one has been killed is because of pure luck,” said the police chief.

 

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