Smuggling needs to be stubbed out

Howard Pugh, project manager, criminal finances department, Europol
Howard Pugh, project manager, criminal finances department, Europol

The Retailers Against Smuggling (RAS) annual conference held in Dublin last month, examined how cigarette smuggling harms society.

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22 July 2011

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Illegal cigarette smuggling is costing both legitimate tobacco retailers and our government dearly at a time when neither can afford to lose out. In fact, the Exchequer is losing €250 million in taxes and duties every year as a result of the black market in cigarettes, according to senior Revenue official Tom Talbot.

Speaking at the RAS annual conference, chaired by Joe Barrett of Applegreen, he revealed that Revenue had introduced a major investigation into cigarette smuggling. He said that this year it planned to carry out at least six “national blitzes”, which would each involve periods of up to six days of intense raids and search operations on suspected smugglers and their premises.

Blitz operations

A further 100 blitz operations would go ahead this year at airports around the country. What’s more, another 200 regional blitz operations would also be conducted by the end of this year at locations such as open air markets.

While this is undoubtedly encouraging news, several retailers at the conference naturally still had many questions about national hotspots, such as Dublin’s Moore Street and Drogheda market. Boosted by the easy gains to be made, the criminals selling illegal tobacco products at these locations appear to remain undeterred.

In fact, as chairman Joe Barrett had already pointed out, the criminals involved were only being fined in the region of €200 or €300 for selling cigarettes in their thousands. “The government has imposed the correct fines but the judiciary aren’t passing these on,” he said.

Howard Pugh, project manager, criminal finances department, Europol

Howard Pugh, project manager, criminal finances department, Europol

The conference also revealed another significant trend that is on the rise in Ireland and the UK; the growing prevalence of ‘cheap whites’ or ‘illicit whites’ as they are alternatively known. These are defined as “legal products intended for an illegal market.” In other words brands such as Jin Ling, Raquel and Richman, which are legally made in places such as China, the Middle East, Ukraine, Russia and Belarus, and then illegally exported into international markets.

Cheap whites evade law

Unlike counterfeit operations, it is entirely legal for these products to be made, and according to Diane Scarlett, head of operations in the European anti-fraud office, OLAF’s cigarettes task group, once the first lorryload leaves the factory, the manufacturers’ set-up costs are paid.

Even when the cigarettes leave their country of origin, “no offence has taken place.”  While Customs can often trace the products up to a certain stage; when the cigarettes reach free trading zones, they are frequently shifted into different containers. This means that their paperwork has changed from that of their original containers. It subsequently becomes very difficult to trace their origin, especially when it’s considered that their entire journey can often last between eight to 12 months.
Cheap prices are making “illicit whites” increasingly popular with smokers and their quality can actually be good. In fact, Scarlett notes that Jin Ling’s quality is actually “much better than counterfeit Marlboro from China.”

Courting crime

Conference chairman, Joe Barrett of Applegreen

Conference chairman, Joe Barrett of Applegreen

A significant problem is that consumers believe buying cheap whites and counterfeit cigarettes are a “victimless crime,” and perceive their choice as merely getting one up on the tax man. This is the verdict of Peter Astley, MBE and head of public protection at Warrington Borough Council.

He reported that a study conducted in the UK, found that 64% of people agreed “illicit tobacco makes it possible to smoke when they could not afford it otherwise.” Furthermore, 63% of people agree with the statement that “illicit tobacco brings crime into our communities.” Indeed, cigarette hawkers are “middle-ranking criminals who will be involved in any other criminality that they can,” said Astley.

Significantly, 87% of respondents agreed that “illicit tobacco is a danger to our children”. While appealing to people to remember the taxman therefore will often not work, highlighting the potential dangers posed to children will have a much more significant impact.

Astley added that groups such as RAS should also try to convince health professionals to become involved in their campaign, although he recognized that often they decline to partake in such initiatives.

William Hanley, RAS executive council member

William Hanley, RAS executive council member

Paltry fines

Next, RAS executive council member and owner of SuperValu Clondalkin in Dublin, William Hanley, outlined how smuggling was severely affecting legitimate retailers such as himself. He said that due to declining sales, at least one job would be lost, more likely two.

One individual was selling illegal tobacco and prosecuted three times, Hanley noted. Yet he was only fined €150. “What’s the point if fines are so paltry?” he asked.

In his view, this situation cannot be allowed to remain unchallenged. Hanley said of retailers: “We have to abide by the law. The advantage has to be given back to retailers.” 

Peter Astley, MBE and head of public protection at Warrington Borough Council

Peter Astley, MBE and head of public protection at Warrington Borough Council

Vincent Jennings, chief executive of the Convenience Stores and Newsagents Association (CSNA) was present at the conference and posed the question: “How radical an idea would it be to pursue the purchasers? While this could prove logistically difficult, the question does highlight the need for the public to realise that buying these products is far from a “victimless crime.” In working towards this goal, ShelfLife commends the excellent work being done by the RAS group to raise awareness of the multiple threats involved.

For more on how ShelfLife is playing a role in supporting retailers in their goal to stamp out smuggling, see ShelfLife publisher John McDonald’s editorial on pg.4.
 

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