Source: (1) Australian, The (Australia) Contact: http://www.theaustralian.com.au/ Source: (2) Herald Sun (Australia) Contact: 11 Sep 1998 Author: Keith Moor SMOKY DEALS BLACK marketeers are running a flourishing multi-million-dollar illegal tobacco trade in Victoria. Cheap tax-free tobacco is readily available at many Victorian tobacconists, milk bars, markets, factory car parks and other outlets. Buyers of the illegal product can make up a pack of 25 cigarettes for 75 cents, more than $5 cheaper than a legal pack. The Herald Sun was easily able to buy materials to make a carton of 200 filter-tipped cigarettes for $6, compared to the retail price of about $45. An INSIGHT investigation has discovered: BLACK marketeers have swamped the market in the past year and are turning over about $45 million a year in cash sales. THE tobacco industry has been told organised crime gangs, including bikies and Asian and Lebanese syndicates, are behind much of the racket. FEDERAL and state governments are being defrauded of more than $150 million a year in lost tobacco revenue. THE tobacco industry has estimated the size of the illegal trade at 750 tonnes a year. ILLEGAL tobacco sales cost legitimate tobacco and cigarette retailers about $34million a year in missed sales. AN Australian Customs taskforce has been established to crack down on the racket. CUSTOMS investigators are using criminal intelligence databases, and other sources, to establish the level of organised crime involvement in the tobacco black market. MEMBERS of the Myrtleford-based Tobacco Co-operative of Victoria this week met Customs and tobacco industry representatives to discuss the illegal trade. All legal tobacco commercially sold in Victoria is grown in the Myrtleford region and Customs sources said it appeared most of the state's illegal product was also coming out of the area. It is attractive for growers to sell to the illegal market because they get only $1.80 to $7.35 a kilo from Rothmans, Wills and Philip Morris, the three legitimate tobacco manufactures in Australia. Black marketeers pay growers about $20 a kilo cash in hand. Customs investigators say the illegal tobacco trade is becoming increasingly sophisticated. "It's certainly a very organised racket, we just haven't established yet who the organisers are," a Customs source said. "They have an organised structure where they buy it in on a regular basis and have many established retail outlets to ensure quick turnover of the product," a Customs source said. It is illegal to buy and possess tax-free tobacco, as well as illegal to sell it. Federal Customs Minister Warren Truss has been briefed on the size of the black market problem and has vowed to provide resources to counter it. He recently congratulated Customs investigators after they seized tonnes of illegal tobacco and closed down an unlicensed tobacco packing and cutting factory in Springvale. The gang operating it had evaded at least $5million in federal excise duty. Customs found evidence that at least 31 tonnes of illegal tobacco had been processed through the operation, which was elaborately disguised as a plastics moulding factory. Mr Truss said many legitimate businesses were being harmed by such illegal operations. "By avoiding tax, these shonky operators can sell their product significantly cheaper than companies which are legitimate traders that abide by the law," he said. "The effect of these cheaper prices is to eat into the market share, profits and even employee numbers of legitimate operations. "It's unfair that employees of legitimate companies are put at risk by these tax-evading rackets that operate out of shady premises down back lanes with little or no attention to normal manufacturing standards." - --- Checked-by: Pat Dolan