Criminals reap huge profits by importing illegal cigarettes

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Viewed as a high-return, low-risk alternative to hard drugs, bootleggers are using shipping containers and crew from airlines to smuggle packaged and loose tobacco into Australia. The growing problem has been detailed in Customs documents released under Freedom of Information. "Tobacco smuggling is an issue of growing significance (and) ... the majority of criminal entities involved in the illicit tobacco smuggling are experienced, highly organised and extensively networked," the documents said.

"Criminal proceeds from tobacco smuggling can finance other illegal activities, for example terrorism and drug trafficking. "Because duty rates for tobacco are likely to remain relatively high while tariffs on other commodities are removed through Free Trade Agreements ... tobacco smuggling may become the focus of a broader range of criminal enterprises seeking perceived easy profits through defrauding the revenue."

Compared to hard-core drugs like heroin and cocaine, tobacco traffiking is a low-risk venture because of the relatively low penalties, which are up to five times the amount of duty evaded. Some retailers sell unbranded products from "under the counter" or sell fake cigarettes as legitimate products. Smokers are turning to illegal tobacco because it costs half the price of legal products. A Customs' "profitability scenario" said a 40-foot shipping container held more than 9 million cigarette sticks. The overseas price for 10 million sticks costs $60,000-$80,000 and on the Australian black market it sells for $3 million-$4 million - a 4900 per cent increase.

About one in 20 containers are X-rayed. As well as millions of dollars lost in Government revenue, the health risks are considerable because counterfeit cigarettes contain "dangerous contaminates and much higher levels of carcinogens than legitimate cigarettes". Most are imported from China and Indonesia. Documents said the tobacco was being smuggled into Australia by the internet, cargo ships, aircraft, the post and by travellers, including the "involvement of air crew", and "diversion from off airport duty-free shops and warehouses". In the past four financial years, Customs has seized 924 tonnes of tobacco and 322 million cigarettes. The Government has introduced legislation to enhance penalties for tobacco smuggling, including introducing jail terms of up to 10 years.