Category / Contraband

by Mike Poverello

SARS – Rhino horn found in luggage at OR Tambo International Airport

Customs officers of the South African Revenue Service (SARS), in collaboration with other government departments, intercepted the luggage of a female South African passenger at OR Tambo International Airport which contained twelve (12) pieces of rhino horn weighing  30.7 kilograms.

The interception of the rhino horn came after the SARS Customs and other government officials received a tip-off regarding a passenger travelling to Dubai.

The Customs team reacted swiftly and accompanied the female passenger to the Customs area for further Customs inspection. The two luggage bags and a box were inspected by a baggage scanner that identified irregular images suspected to be rhino horn.

This led to a physical inspection of the luggage and box in which twelve (12) pieces of rhino horn, weighing 30.7kg were found. The passenger together with the rhino horn were handed to the South African Police Service after which a criminal case was opened for further investigation.

Between July 2020 and December 2021, a total of 125 pieces of rhino horn, weighing 452 kilograms, were seized at OR Tambo International Airport.

  • December 2021: Six (6) pieces of rhino horn, weighing 4kg declared as ‘Personal Effects’, bound for China.
  • December 2021: Five (5) pieces of rhino horn, weighing 10kg declared as ‘Scanners’, bound for Malaysia.
  • July 2021; Thirty-Two (32) pieces of rhino horn, weighing 160kg declared as ‘Live Plants, bound for Malaysia.
  • February 2021: eighteen (18) pieces of rhino horn, weighing 63kg declared as ‘HP Cartridges Developers’, bound for Malaysia.
  • December 2020: seventeen (17) pieces of Rhino Horn weighing 72.4kg concealed in a geyser bound for Malaysia.
  • September 2020: six (6) pieces, weighing 4.9kg declared as “Coffee Beans”, bound for Malaysia.
  • July 2020: forty-one (41) pieces, weighing 137kg declared as “Fine Arts”, bound for Malaysia via Doha.

SARS Commissioner Edward Kieswetter expressed his sincere thanks to Customs officers and their counterparts from South African Police Service for working diligently to curb the smuggling of rhino horn and many related crimes.

He said, “We will leave no stone unturned to detect and prosecute these criminal syndicates and individuals who break the law.  SARS and the law enforcement agencies will spare no efforts to ensure they are brought to book.”

For more information, contact SarsMedia@sars.gov.za

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by Mike Poverello

ICC – Controlling the zone: balancing facilitation and control to combat illicit trade in the world’s free trade zones

Photo by Noel Broda on Unsplash

Herewith a 2020 update of the ICC BASCAP report assessing the environment and highlighting trends in counterfeiting and other forms of illicit trade facilitated within free trade zones.

The Risks

Free Trade Zones (FTZs) provide significant opportunities for legitimate business and play a critical role in global trade as well as economic growth for the host nation.  However, our updated research has continued to confirm that insufficient oversight remains a major enabler of illicit activities.  Since the publication of our previous 2013 report, there have not been vast improvements in limiting criminal activities within FTZs.  In fact, the Covid-19 pandemic has increased vulnerability for abuses by criminal actors who take advantage of supply chain shortages and increased demands as well as relaxed oversight often because of such things as quarantines that have softened Customs control.

Counterfeiters use transit or transhipment of goods, through multiple, geographically diverse FTZs for no other purpose than to disguise the illicit nature of the products. Once introduced into an FTZ, counterfeit goods may undergo a series of economic operations, including assembly, manufacturing, processing, warehousing, re-packaging, and re-labelling. Once completed, the goods can be imported directly to the national territory of the hosting state or re-exported to another country for distribution or to another FTZ, where the process is repeated.

Key recommendations:

Our 2020 report promotes a set of specific policy and legislative recommendations on how to preserve and expand the benefits of FTZs for legitimate traders and protect the public and honest businesses from predatory practices. These recommendations are based on a review of the international and national legal frameworks governing FTZs, including how they are implemented and enforced.

Suggested recommendations include:

  • empowering Customs with jurisdiction over day-to-day operations within FTZs
  • strengthening relationship between Customs and FTZs
  • clarifying and declaring that FTZs remain under the jurisdiction of the national Customs authority
  • enhancing data sharing between Customs and the private sector
  • strengthening national government adherence to international conventions and implementation of international standards
  • legislatively ensuring that strict penalties are in place, including criminal sanctions where appropriate, against perpetrators of illegal activities in FTZs
  • that manufacturers and shippers recognize and use the ICC World Chambers Foundation’s International Certificates of Origin (COs) Accreditation Chain which is a program that accredits chambers of commerce issuing COs wishing to guarantee their commitment to the highest level of quality, implementing transparent and accountable issuance and verification procedures. Accredited chambers will receive a distinctive internationally recognized quality classification, reinforcing their integrity and credibility as competent trusted third parties in the issuance of COs.

Additionally, the new document also provides specific recommendations such as drawing on international agreements, lessons learned from effective and ineffective national legislation, the experience of IP rights holders, and legislative and regulatory measures to enforce intellectual property right protection in FTZs.  These specific recommendations are delineated in the report for action by the World Customs Organization, World Trade Organization, national governments, and FTZ operators. Effective implementation of the measures delineated for each of these bodies will go a long way in securing FTZs from illicit traders.

Download the Document via this hyperlink

Source: International Chamber of Commerce

by Mike Poverello

“In Vino Veritas” – In Wine there is Truth!

Italian police have broken up a network producing counterfeit Bolgheri Sassicaia, a Tuscan red wine which can sell for hundreds of euros a bottle.

The Guardia di Finanz (GDF) have arrested two people and are investigating 11 other suspects in connection with the “sophisticated and accurate” falsification of bottles of Sassicaia wines, which come from the coastal region of Tuscany.

The bottles and labels were identical to genuine articles, according to GDF officer Fario Sopranzetto, who noted that even the weight of the tissue paper used to wrap them was the same. The scam only came to light when a case of the fake wine fell off a truck last year and was discovered lying on the roadside.

In the case was a note with two mobile phone numbers, the first tangible leads in an operation that came to be known as “Bad Tuscan”.

The investigation culminated in a raid on a warehouse near Milan, which uncovered some 4,200 bottles of wine – reportedly inferior produce from Sicily – in bottles sourced from Turkey and with labels and cases originating from Bulgaria.

Some of the bottles claimed to be a rare 2015 vintage that had been classified as one of the best in the world by Wine Spectator in 2018, with others claiming to be from various years from 2010.

The counterfeiters are thought to have been producing around 700 cases a month, which would have brought in around €400,000 in sales, according to the investigators. They were being sold at a 70% discount to genuine bottles, around €500, with customers already secured in China, South Korea and Russia.

A report published by the Organization for Economic Cooperation and Development (OECD) in 2018 estimated that counterfeiting costs Italian food and drinks manufacturers €4.2bn euros in lost sales.

by Mike Poverello

Dutch Tax Authority & EUROPOL – Big illicit tobacco bust

One of the largest illegal cigarette factories ever uncovered in the Netherlands has been taken offline by law enforcement, with 13 arrests.

The Europol-supported operation – led by the investigation service of the Dutch tax authorities or FIOD – concentrated on an illegal tobacco factory in West-Betuwe, south of Utrecht. Along with the 13 arrests, 3.6m cigarettes and 32 tonnes of tobacco were seized along with packaging material, cigarette paper, filters and glue.

The tax loss prevented to the Dutch state revenue for the illegal production is estimated at €6m, according to Europol, and the Dutch authorities have estimated that the machinery could potentially produce 1m cigarettes a day.

The enforcement action comes just a few weeks after an illegal tobacco factory capable of making 10m cigarettes per week was raided in the German city of Kranenburg, revealing once again the extent of illicit cigarette production within the EU.

A recent study by KPMG  found that imports of illicit cigarettes from non-EU countries such as Ukraine and Belarus declined in 2019, with law enforcement reports suggesting there are “increasing volumes from illegal factories within the EU.”

The latest raid was somewhat unusual however in that the entire production cycle took place in one factory, whereas generally production is dispersed across multiple facilities so criminals can spread the risk.

“The production is believed to have been destined for the black market in countries where the retail price of cigarettes is high,” says Europol. “The factory is presumed to have produced 18m illegal cigarettes seized abroad in recent months.”

Illicit cigarettes typically contain even higher levels of toxic ingredients such as tar, nicotine and carbon monoxide than genuine brand-name products.

They also pose a greater fire risk as they do not include designs that ensure that a lit cigarette will self-extinguish if not actively smoked.

Source: SecuringInustry.com

by Mike Poverello

Gucci – Pokes fun at Counterfeiters with “Fake/Not” collection

Italian designer brand Gucci has been battling counterfeiting of its products for decades, and has drawn attention to the problem with a tongue-in-cheek new collection.

According to Gucci, the “Fake/Not” collection for Fall/Winter 2020 – which includes men’s and women’s wear as well as bags and shoes – “began with a print inspired by a retro appropriation of the Gucci logo featuring the bicolour stripe.”

It goes on: “Entering a new chapter, the green and red design mixes with ‘Fake/Not’—a playful commentary on the idea of imitation.”

‘Fake’ is printed in bold lettering on one side of the item – in fact, it looks a lot like the real/fake comparisons one might see in pictures online – with ‘Not’ on the other.

Source: SecuringIndustry.com

by Mike Poverello

WCO 2019 Illicit Trade Report

The WCO has issued its 2019 Illicit Trade Report (ITR), an annual publication which offers a comprehensive study of illicit trade flows through an in-depth analysis of seizure data and case studies voluntarily submitted by Member Customs administrations worldwide. 

The information captured in the ITR provides essential insight into the occurrences of illicit trade, thereby assisting Customs administrations in understanding trends and patters and making enlightened decisions to secure cross-border trade. The importance of comprehensive data analysis is indisputably a key component to support effective and efficient Customs enforcement activities. 

This year, the analysis provided in this Report is based on data collected from 137 Member administrations and the report consists of six sections: Cultural Heritage; Drugs; Environment; IPR, Health and Safety; Revenue and Security. 

For the fourth year in a row, the WCO has partnered with the Center for Advanced Defense Studies (C4ADS), a Washington, D.C.-based non-profit organization dedicated to providing data-driven analysis and evidence-based reporting, thereby enriching readers’ experience with advanced data visualization technologies and enhanced data analysis.  

Access the 2019 Illicit Trade Report here! (45MB)

Source: World Customs Organisation

by Mike Poverello

Tanzania – Electronic Tax Stamp Pushes Up Revenue By 34%

THE use of Electronic Tax Stamps (ETS) for excisable goods have contributed to a 34 percent increase in revenue collected on branded products.

Due to the increase, the Tanzania Revenue Authority (TRA) has already rolled out the second phase which saw ETS being stamped on soft and carbonated drink plus bottled water.

TRA Deputy Commissioner General, Mr Msafiri Mbibo made the remarks during the on-going 44th Dar es Salaam International Trade Fair (DITF).

Mr Mbibo said since the system was introduced it has proven success showing improvement in revenue collections in which there is an increase of 34 percent.

ETS replaces the former paper stamp system, which was cumbersome and prone to human error, allowing certain tax-related malpractices to slip through the cracks.

This is one of the government’s moves geared towards improving tax administration in the country.

“We are glad that ETS shows improvement in the collection of excise duty and Value-added Tax (VAT), in the first quarter of the 2019/20 financial year the collection rose to 35.3 per cent on domestic spirits and wines compared to the corresponding period of last year,” he noted.

The taxman garnered 25.8bn/-as excise duty and VAT from domestic spirits and wines during the first quarter of the 2018/19 fiscal year, but the amount rose to 34.96bn/- during the first quarter of the 2019/2020 financial year.

Excise duty and VAT on cigarettes rose by 5.6 percent during the first quarter of the 2019/2020 financial year compared to a similar period last year.

TRA collected 56.7bn/-as excise duty and VAT on cigarettes from July to September 2019, a 3bn/-increase from a similar period of the previous financial year.

For the soft drinks, the amount collected as excise duty and VAT during the two months of August and September 2019 was 18 percent, higher than what was garnered during a similar period in 2018.

TRA collected 16.155bn/-in excise duty and VAT on soft drinks in August and September 2018, but the amount rose to 19.05bn/-during the period between August and September 2019.

Mr Mbibo said ETS has helped to eliminate counterfeit products from the market. It is, nonetheless, a promising move by the Government, and manufacturers and intellectual property owners should have reason to smile.

Commenting on how TRA is planning to ensure the surge the tax base, Mbibo said they will continue to develop friendly tax collection mechanisms so that everyone can enjoy voluntary taxation.

ETS first phase commenced on 15 January 2019 and affected cigarettes, wines, spirits, beer and all other alcoholic beverages.

The second phase began on 1 August 2019 and applied to products such as sweetened or flavoured water and other non-alcoholic beverages, except for fruit or vegetable juice.

The Regulations require each manufacturer to install an electronic tax stamp management system.

A Swiss-based firm SICPA has been contracted by the Tanzania Revenue Authority (TRA) to install and enroll all manufacturers, producers and importers onto the system.

Source: Daily News (Tanzania), 8 July 2020

by Mike Poverello

The Illicit Tobacco Trade in Zimbabwe and South Africa

The following report (Working Paper) was issued in March 2019, a while back, but should not be considered too outdated for analysis and consideration, nevertheless.

A study was conducted to explore how the illicit trade in licit goods supports organized crime, corruption, and erodes state structures. The illicit tobacco trade in southern Africa occupies a prominent place in southern African politics, due to its prominent role in the ‘state capture’ scandals that characterized politics in South Africa between 2013 and 2018. Indeed, the illicit tobacco trade occupies a prominent place in public debate in South Africa, both about crimes that may have been committed in the last five years, and about how the current administration responds to the illicit economy right now.

The study maps the key dimensions of the illicit cigarette trade in Zimbabwe and South Africa, including the key actors, the pathways of trade and the accompanying ‘modalities’ of criminality, as well as other important dimensions of the illicit cigarette market in southern Africa. It then identifies ‘good-faith actors,’ primarily in South Africa, whose positions could be strengthened by policy and technical interventions, explores opportunities for such intervention, and assesses the practi- cal solutions that can be applied to combat illicit trade and tax evasion in the tobacco industry. The paper contributes to expanding awareness among policymakers and the public of the nexus between the illicit trade in licit goods, corruption, and organized criminal networks.

Download the Report via this link.

Source: Atlantic Council

by Mike Poverello

Illicit Cigarettes – Hong Kong customs intercepts four shipping containers

Photo: Winson Wong

Hong Kong customs has uncovered HK$85 million worth of smuggled cigarettes in the largest seizure of its kind in two decades, after authorities acted on intelligence indicating a syndicate was shipping the haul into the city in four containers.

Some 31 million cigarettes were stashed in the containers from Yokohama in Japan. They were then shipped through different ports in South Korea, Vietnam and mainland China, according to Lee Hoi-man, deputy head of the Revenue and General Investigation Bureau under customs.

He said the circuitous route was used by smugglers to avoid detection.

“The containers were shipped into three to four different ports before they came to Hong Kong,” Lee said adding that the contents listed on import documents were changed to throw off law enforcement in various jurisdictions.

Four men – one mainlander and three Hongkongers – aged between 24 and 41 were arrested in the operation on Monday. They were still being held for questioning on Tuesday evening.

Information on the containers was shared to a global database operated jointly by customs from different countries, under an anti-smuggling campaign code-named “Project Crocodile”.

A law enforcement source said the containers were left idle at another port since December, but were then suddenly moved across different countries before arriving in Hong Kong, one at a time since last Friday.

Lee said: “It is possible smugglers believed our frontline officers were tied up in dealing with the coronavirus outbreak.” He added that some of the contraband items were believed to be destined for countries in eastern Europe as some cigarette brands seized in the operation were popular there.

Hong Kong customs began investigating the syndicate in mid-December before identifying the four containers.

On Monday afternoon, officers from the Revenue and General Investigation Bureau swooped into action and seized 22 million sticks of cigarettes stashed in three containers at yards in Yuen Long, Sheung Shui and Man Kam To, arresting the four men.

At the Sheung Shui site, officers also seized 3,500 bottles of duty-not-paid liquor worth HK$2.5 million.

On Tuesday, the fourth container which had arrived from Shenzhen a day before was selected for inspection. Nine million cigarettes were found in it.

Lee said the combined haul had an estimated street value of HK$85 million, and was the biggest seizure of its kind in two decades in a single operation.

He said his team was working with overseas counterparts to determine the exact origin of the shipment and track down the ring leader and core syndicate members.

In Hong Kong, importing or exporting unmanifested cargo carries a maximum penalty of seven years in jail and a HK$2 million fine.

Source: Article by Clifford Lo, South Morning Post, 18 February 2020

by Mike Poverello

South African Customs – Recent Illicit Goods Busts

Customs teams from Durban, Cape Town, Gauteng and the Free State recently dealt a blow to non-compliant traders by busting drugs, illicit cigarettes and undeclared fuel.

Customs officers at OR Tambo International Airport (ORTIA) were responsible for several major drug busts over the past couple of weeks, including the following:

  • On 8 February, a female passenger arriving from Sao Paulo was stopped and her luggage scanned, which revealed suspicious images. After searching her luggage, officers discovered packages wrapped in black tape and containing a white powdery substance. The powder was tested and confirmed to be cocaine, valued at approximately ZAR54 284 349. Officers also searched a male passenger arriving on the same flight and discovered three body wraps on his torso, containing a white powdery substance. The contents were tested positive for cocaine, valued at about ZAR9 057 566. On the same day, officers intercepted a male passenger about to board a flight for Hong Kong and searched him. They discovered body wraps on his upper torso containing cocaine valued at about ZAR11 700 000.
  • On 2 February, a male passenger arriving from Sao Paulo was stopped by Customs officers and his luggage searched. After a luggage scan revealed irregular images, officers searched his bags and discovered packages wrapped in black tape containing cocaine, valued at about ZAR5 850 000.
  • On 27 January, in a similar incident to the above, a male passenger arriving from Sao Paulo was arrested after Customs officers discovered a false compartment in his luggage, which contained cocaine valued at about ZAR6 750 000.

In all the above incidents, the suspects and goods were handed over to the SAPS for further investigation.

In the Durban incident, officers became suspicious of two containers of goods arriving on a vessel in the Durban harbour from China.

The containers, which were declared to contain glassware and household goods, were placed for examination at a cargo depot in Durban. 

Upon inspection by Customs officers on 5 February 2020, the containers were found to contain various suspected counterfeit goods, and several cartons with tablets packed in plastic packets.

Members of the Customs detector dog unit reacted positively to the cartons, which were tested and found to contain Methaqualone (Mandrax).

There was a total of 15 cartons, each containing 20 000 Mandrax tablets with a street value of about ZAR24 million. The case has been handed over to the SAPS for further investigation.

In Cape Town, officers were responsible for a massive bust of illicit cigarettes, one of SARS’ key focus areas when it comes to illicit trade (particularly in terms of lost revenue due to the fiscus). 

After receiving an alert from the Compliance Risk and Case Selection team about a possible mis-declaration of a container on a ship arriving in South Africa, a detention notice was issued to the shipping liner and the goods were detained in December 2019.

After following the required legal processes, a Customs Branch Physical Inspection team searched the container at the Cape Town harbour on 20 January 2020.

During the inspection, the team discovered 1050 master cases of “LEGATE” cigarettes, each case containing 50 cartons of 10 packets, with an estimated street value of about ZAR3 150 000.

If the consignment of cigarettes was not detected, the potential loss of revenue would have amounted to about ZAR12 208 350 in Customs & Excise duties and VAT. 

The Western Cape Customs Branch Inspection team has handed over the case to Criminal Investigations from further investigation.

In the Free State, Customs officers dealt a blow to another key area of illicit trade, ie. ghost exports or false declarations of fuel. On 31 January 2020, officers stopped a truck coming from Lesotho through the Ficksburg border post. They had become suspicious of this particular trucking company, as they had recently changed their route to using South Africa as a transit route from Mozambique to Lesotho. 

Officers noticed that the same truck had driven through the border into Lesotho the day before, having declared the truck full with fuel they acquired in Mozambique. The following day it re-entered South Africa, with the driver claiming that the truck was empty (which could indicate a possible ghost export in which they were trying to avoid paying taxes and duties/levies).

They then asked the driver to park the truck at the depot for inspection. However, after the truck was taken to the depot, the truck driver disappeared and the truck company’s lawyer was called to attend an inspection. 

Customs officers then discovered the truck contained 26 000 litres of diesel, with the owners having failed to pay duties and taxes totalling ZAR176 000 due to the fiscus. The truck was detained for further investigation.

And in a similar incident, two trucks were stopped at the Maseru Bridge border post on 4 February for falsely declaring fuel coming from Mozambique to Lesotho. The trucks contained 39 388 litres and 39 414 litres of petroleum respectively. Both were detained for further investigation. 

Source: South African Revenue Service [SARS]

by Mike Poverello

USCBP extends secure e-commerce supply chain pilot

Customs and Border Protection (CBP) has expanded its pilot of a new, voluntary scheme to try to improve the security of low-value shipments entering US borders.

The Section 321 Data Pilot is focused in particular on e-commerce, and aims to improve data-sharing between online marketplaces, carriers, technology firms and logistics provider to help protect American consumers from illicit goods arriving by air, ocean, truck, or rail.

That includes, “illicit narcotics, unregulated prescription drugs, brand counterfeits, and unsafe food and beauty products”, according to the CBP, which plans to run the pilot until August 2021.

Nine companies have been selected to participate in the pilot, including e-commerce giants Amazon and eBay, carriers Zulily, FedEx, DHL and UPS, as well as technology firm PreClear and logistics providers XB Fulfillment and BoxC Logistics.

CBP has said that it plans to expand access to all interested and qualified participants “in early 2020.”

The participants will provide cargo origin, content, tracking, recipient and other information to CBP upfront, in addition to the information that is currently legally required for Section 321 shipments – in other words one shipment per day for eligible importers, individuals or companies with a value of $800 or less.

CBP says it wants to see whether having that additional information will enable it to perform “more effective and efficient targeted screening” of these low-value shipments.

Research published in 2018 has suggested that two-thirds of counterfeit goods intercepted by customs around the world are discovered in small parcels sent through postal or courier services.

In part because they are harder for customs officials to track and seize, and also because in many jurisdictions they have not required detailed manifests for their contents. The US stepped up the manifest requirements for Section 321 shipments from January 1, 2019.

CBP broadened the scope of the 321 Data Pilot last month, shortly after the pilot was launched in August, to include ocean shipments and international mail which weren’t included in the original plan.

“Combined with the exponential growth of the online shopping market in the US over the past five years, CBP has seen a significant increase in small, low-value packages,” said the agency in a statement.

“Today, CBP processes more than 600 million express consignment and international mail shipments a year – approximately 1.8m a day. The unprecedented growth in volume of these low-value shipments requires creative solutions to interdict illicit and dangerous products to enter the US.”

Source: article by Phil Taylor, Securityindustry.com, 20 January 2020

by Mike Poverello

WCO – Illicit Trade Report 2018

Download a copy from the WCO website

During December 2019, the World Customs Organization (WCO) issued its 2018 Illicit Trade Report, the annual publication in which the Organization endeavours to quantify and map the situation concerning illicit markets in six key areas of Customs enforcement. 

Every year since 2012, the WCO has published its Illicit Trade Report with the aim of contributing to the study of the illicit trade phenomenon through robust and in-depth data analysis based on voluntary submissions of seizure data and case studies by its Member Customs administrations around the world. 

This year, the analysis provided in this Report is based on data collected from 154 Member administrations, compared to 135 the previous year.  The Report consists of six sections: Cultural Heritage; Drugs; Environment; Intellectual Property Rights, Health and Safety; and Revenue and Security. 

For the third year in a row, the WCO has partnered with the Center for Advanced Defense Studies (C4ADS), a Washington, D.C.-based non-profit organization dedicated to providing data-driven analysis and evidence-based reporting, thereby enriching readers’ experience with advanced data visualization technologies and enhanced data analysis.

“This analysis of 2018 illicit trafficking trends and patterns around the globe is aimed not only at supporting law enforcement planning activities, but also at future-proofing countries’ borders from the multitude of threats faced on a daily basis,” stressed the WCO Secretary General, Kunio Mikuriya. He also expressed his gratitude to the Customs administrations having reported their seizure data to the WCO CEN database.

Source: WCO, 19 December 2019

by Mike Poverello

Spotting a Fake Wine – Scientifically

Researchers in France have shown that genuine Bordeaux wines can be distinguished from fakes by testing the minute quantities of lead in their composition.

Wines and indeed other foods and beverages tend to have low levels of lead, resulting from environmental contamination from natural or man-made sources that is taken up into plants.

Scientists have discovered that the amounts and ratios of elemental lead and lead isotopes can serve as a “fingerprint” that can determine the geographic origin of a wine – and be used to tell a genuine vintage from a knock-off.

Levels of lead in the atmosphere have been falling dramatically in recent decades since the use of lead as an additive in fuel has been banned. It’s been known for many years that lead isotope ratios can be used to identify the origin of wines as well as other foodstuffs such as milk powder.

The latest study puts the technique through its paces for a specific task – distinguishing genuine Bordeaux wines produced by prestigious vineyards over the last 50 years from wines bottled in China between 1998 and 2009.

The researchers took 43 authentic red and white Bordeaux wines from the winemaking estates of Médoc, Graves and Libourne, and ran a comparison with 17 red wines sourced from China, including 14 labeled as ‘Bordeaux’ as well as three genuine Chinese brands. The suspect bottles were selected because they either had spelling mistakes in the names of the known wineries or claimed to be from non-existing producers.

They found that the levels of lead in the genuine French wines reflected the reduction in environmental lead seen since 1969 – the date of the earliest bottle tested – and all fell within recognised safe levels.

The suspect wines had levels that overlapped with those from the French group, but tended to have isotopes suggesting more of the lead came from man-made sources such as leaded gasoline than natural, background sources.

Moreover, a subgroup analysis for four suspicious samples said to be produced in Pauillac in 2004, 2005, 2006 and 2007 were compared directly with genuine wines from that period and found to have different isotopic profiles.

“Despite of limited number of genuine and suspicious samples, this test give a particularly compelling example of [lead] isotopes application to authenticity issues,” write the authors.

There’s an obvious limitation to the approach of course.

“If suspicious wines … would be produced in the same region as authentic, a clear identification by lead isotopes alone may be significantly hampered or even impossible,” they note.

Source: Originally published by Securingindustry.com; Authored by Phil Taylor, 16 September 2019

by Mike Poverello

‘Flying out of Africa’, an essay on China -Africa relations

cina-africa-focac

The following article featured in BusinessLive (eEdition) on 25 July 2019. It is authored by John Grobler. The article was compiled with the financial support of Journalismfund.eu’s Money Trail grant programme. 

Chinese ‘lying money’, or fei qian, is an ancient form of value exchange. But its modern incarnation is blamed for stripping Africa of its resources.

The secret of Chinese commercial success in Africa, as suggested by an 18-month investigation into the drugs-for-abalone and rosewood trade and a major Namibian tax fraud case, is an ancient system that not only allows African countries to be robbed of taxes, but also plays a part in financing the global $270bn-a-year wildlife contraband trade.

Fei qian, or “flying money”, dates back about 1,200 years, to the Tang Dynasty in China. In its simplest modern incarnation, it is a low-cost and trusted method of remitting money, much like the Islamic hawala system. For example, a person who wants to send funds to a recipient in Africa will pay a fei qian broker in China. For a commission, the broker will arrange that a counterpart in Africa pays the recipient, again for a commission. The two fei qian brokers later settle their account through, for example, the transfer of commodities of equivalent value — but also sometimes through less salubrious methods such as transfer mispricing or invoice manipulation.

In practice, the system relies on the systematic underinvoicing of Chinese imports into Africa and a seamless chain of payments system in which accounts are settled through the transfer of high-end — and often illicit — goods such as abalone, rosewood, rhino horn and ivory. In brief: goods are undervalued on their import documentation; they are then sold for cash; and that undeclared cash is subsequently channelled into high-end commodities that are remitted to China to balance the fei qian books.

“The trick behind fei qian is that the money never actually leaves China,” says a former Singaporean finance expert, speaking on condition of anonymity. “It’s just the commodities that get moved around” as part of a longer payment chain among the Chinese diaspora.

Unlike barter trade, fei qian is not a straight swap; it is an exchange in stored value that leaves no paper trail, except in the books of the fei qian operators themselves. What makes the system even more impenetrable, the investigation has found, is that these operators mostly seem to be older, well-established women working in a closed network of mutually trusted contacts.

This nexus, and lack of paper trail, means fei qian is largely invisible. But it occasionally appears as a gaping hole in a country’s balance of payments account with China – as Namibia has discovered in an ongoing import-tax fraud investigation.

Jack Huang, a business associate of President Hage Geingob, and Laurentius Julius, a former Walvis Bay customs official and now a customs clearing agent, are among eight suspects facing 3,215 charges of fraud and money laundering in the Windhoek high court. Continue reading →

by Mike Poverello

Vietnam seizes 125-kilogram haul of trafficked rhino horn encased in plaster

Fifty-five pieces of rhino horn were found hidden inside shipments of plaster at Hanoi International Airport, Vietnam’s state media reported Saturday.

Customs officers broke open plaster molds from 14 shipments to uncover the illegally trafficked horns, which weighed 125 kilograms (275 pounds) in total, according to the Vietnam News Agency.

Vietnam has the world’s largest market for illegal rhino horn, according to the World Wildlife Fund. A single horn can fetch $100,000 in Asian countries such as China and Vietnam, where buyers believe it can cure health problems from hangovers to cancer, and use it as a lifestyle drug. The global market is thought to be worth about $500 million.

The seizure in the Vietnamese capital came after Hanoi police arrested a man accused of running a wildlife trafficking ring on July 23.

That arrest followed the discovery of seven frozen tigers in a car parked in the basement of a Hanoi skyscraper.

Source: CNN, Helen Reagan and Angus Watson, 29 July 2019