Tag / smuggling

by Mike Poverello

Operation “Warehouse” – Joint Customs Operation prevents losses to the EU States

OLAFAlmost 45 million smuggled cigarettes, nearly 140.000 litres of diesel fuel and about 14.000 litres of vodka were seized during a major Joint Customs Operation (JCO). The Operation code-named “Warehouse” was carried-out in October 2013 by the Lithuanian Customs Service and the Lithuanian Tax Inspectorate in close cooperation with the European Anti-Fraud Office (OLAF), and with the participation of all 28 EU member states. As a result of Operation “Warehouse”, a significant potential loss to the budgets of the European Union and its Member States was prevented. According to preliminary estimates, this would have amounted to about € 9 million in the form of evaded customs duties and taxes. The final results of the Operation were discussed by the participants last week at a debriefing meeting in Vilnius and were made public today across Europe.

Algirdas Šemeta, Commissioner for taxation, customs, anti-fraud and audit, welcomed the very good results of the operation. “The fight against the smuggling of excise goods is one of our political priorities and we have launched a number of initiatives to better equip Europe against such harmful practices being run by organised criminal networks. JCO Warehouse is a good example of how the EU and Member States’ authorities can cooperate effectively to protect their revenue. Joint Customs Operations safeguard the EU’s financial interests and also protect our citizens and legitimate businesses”, he said. “Such Operations also highlight the added-value of OLAF in helping facilitate the exchange of information between our partners across Europe and in providing effective operational support.”

Operation “Warehouse” focused on cargo movement by road transport. It targeted the smuggling and other forms of illegal trade of excise goods such as mineral oil, tobacco products and alcohol throughout Europe. By using several complex scenarios in multiple EU Member States, fraudsters lawfully import goods into the EU but request a VAT and excise exemption by declaring the goods as subject to tax and duty exemption regimes (e.g. declaring the goods to be in transit). The trace of the goods is then lost through the fictitious disappearance of the traders or through a fictitious export. Fraudsters avoid paying VAT and excise duties, but the goods remain in the internal market, causing a substantial loss to the EU’s and Member States’ revenues.

JCO “Warehouse” was the first Operation carried-out in close cooperation with tax authorities to target excise and VAT fraud specifically, besides customs fraud. For the first time, customs and tax authorities cooperated on a European scale in a JCO. This is a significant achievement since the different competences and legal regimes applicable at national and EU level make it difficult to address complex fraud schemes with uniform measures. In this Operation, customs and tax authorities joined their expertise, resources and shared intelligence to prevent losses to the EU’s and Member States’ budget.

Eight seizures were made during the Operation. Among these, authorities seized 6.617.400 cigarettes in Sweden and Lithuania; 135.831 litres of diesel in Poland and the United Kingdom, and 14.025,6 litres of vodka in United Kingdom alone. Overall, 44.957.160 cigarettes were seized.

During the entire Operation “Warehouse”, OLAF provided organisational, logistical, financial and technical support to allow for an exchange of information and intelligence in real-time. This was coordinated from the Physical Operational Coordination Unit (P-OCU) at the OLAF premises in Brussels which facilitated direct communication with the national contact points. A group of liaison officers from some Member States representing all the participating 28 EU countries, worked from here during the Operation and experts from the Commission’s Directorate-General for Taxation and Customs Union provided support.

EUROPOL participated as an observer in the Operation. A representative of the office was present at the P-OCU during the operational phase of the operation. It was also possible to make direct cross-checks of suspect individuals and companies appearing during the JCO with EUROPOL via a secure internet connection. Source: EU Commission

by Mike Poverello

UN launches global campaign targeting the criminal counterfeit trade

UNODC Anti-Counterfeit ImageThe World Customs Organization (WCO) welcomes the new global campaign launched by the United Nations (UN), under the auspices of the UN Office on Drugs and Crime (UNODC), to raise awareness among consumers on the dangers of counterfeit goods and their link to organized crime.

The campaign – ‘Counterfeit: Don’t buy into organized crime’ – is centred around a Public Service Announcement, entitled ‘Look Behind’ (click hyperlink to view), which will be shown on the NASDAQ screen in New York’s Times Square and will be aired on several international television stations, starting from 14 January.

With the aim of urging consumers to consider who and what lie behind the production of counterfeit goods, the campaign is a bid to boost understanding of the multi-faceted repercussions of this illicit trade, which according to the UNODC is worth 250 billion US dollars a year.

UNODC Executive Director, Yury Fedotov, noted that, “In comparison to other crimes such as drug trafficking, the production and distribution of counterfeit goods present a low-risk/high-profit opportunity for criminals.”

Fedotov further noted that, “Counterfeiting feeds money laundering activities and encourages corruption, and there is also evidence of some involvement or overlap with drug trafficking and other serious crimes.”

Counterfeiting is a crime that affects us all, from exploited labour being used to produce counterfeits, through to the harmful and potentially deadly dangers attached to these goods, and the links that these illicit goods have in potentially funding cross-border criminal and organized crime activities.

“With a long history of fighting counterfeiting and piracy at the national, regional and international level, the global Customs community is ready to support its United Nations partners in their efforts to raise awareness about this illicit trade activity,” said WCO Secretary General, Kunio Mikuriya.

Mikuriya further stressed that, “The WCO is firmly committed to countering the relentless attack on consumers by criminals involved in counterfeiting, as their illicit and even dangerous goods which are flooding markets across the globe pose a huge risk to public health and safety.”

Fraudulent medicines also present a serious health risk to consumers, as criminal activity in this area is big business, with the UNODC reporting that the sale of fraudulent medicines from East Asia and the Pacific to South-East Asia and Africa alone amounts to some 5 billion US dollars per year.

Criminals use similar routes and modi operandi to move counterfeit goods as they do to smuggle illicit drugs, firearms and people; in 2013, the joint UNODC/WCO Container Control Programme detected counterfeit goods in more than one-third of all seized maritime containers.

The WCO expends enormous resources on combating the counterfeit trade using a variety of means, including the organization of global enforcement operations and the introduction of IPM, a WCO tool which promotes cooperation and the sharing of information between Customs and rights holders.

Of particular relevance to the campaign is the WCO’s theme for 2014 which highlights the importance of communication and the sharing of information for better cooperation, which is highly instrumental in the fight against counterfeits in tandem with the Organization’s public and private sector partners.

Concluding, Secretary General Mikuriya took the opportunity to commend the UNODC on its latest initiative, offered his full support for the UN campaign, and urged WCO Members and Customs’ stakeholders to continue raising awareness about the perils of buying and trading counterfeit goods. For more information visit the WCO Website. Source: WCO

by Mike Poverello

Mugabe family linked to illicit SA cigarette trade

Pacific Blue_SnapseedRelatives of President Robert Mugabe are being linked to illegal tobacco smuggling networks suspected of bringing more than $48 million in contraband through South Africa’s borders, reports NewZimbabwe.com.

Harare-based Savanna Tobacco is owned by a prominent Zimbabwean businessman, Adam Molai, who is married to Sandra Mugabe, one of Mugabe’s nieces. Molai has previously worked with Sandra as co-director of the Zimbabwe Tobacco Growing Company. Savanna has allegedly moved tons of illegal tobacco into South Africa.

The company’s main brand, Pacific cigarettes, has been found in concealed consignments by police in South Africa and abroad, according to two private investigators who track tobacco busts and work for the industry to counter the trade in illicit tobacco. The products have been linked to a huge tobacco smuggling operation whose base in South Africa was shut down in 2010 by the South African Revenue Service (SARS), which is engaged in a crackdown on the country’s illegal tobacco markets.

Images taken at the scene of two busts in South Africa and one in Zimbabwe show the extent of the smuggling operation. SARS has refused to confirm or deny whether it is investigating Savanna, citing the confidentiality requirements of the Tax Administration Act.

The frequency of the busts, the methods used and the quantities of illegal Pacific cigarettes found have led sources close to the investigations to claim that Savanna has been centrally involved for at least four years. It also increases suspicions that Zimbabwe is using smuggling to keep its economy afloat. Mugabe has openly supported Savanna. A year ago, he accused rival British American Tobacco (BAT) of spying on Savanna and hijacking its trucks. “If this is what you are doing in order to kill competition and you do it in a bad way, somebody will answer for it,” Mugabe warned.

Boxes of cigarettes that can be made for as little as R1.50 are easy to slip into the local market to avoid the R13 tax a box. Whereas popular brands of cigarettes can retail at R35 a pack, illegal cigarettes sell for between R4 and R12 a pack. With margins approaching 1000%, the illicit trade has become one of the largest elements in organised crime in South Africa.

According to research commissioned by the Tobacco Institute of South Africa, which is predominantly funded by BAT, 9.5billion illegal cigarettes with a street value of about R4-billion were smoked locally last year.

Savanna has captured almost 10% of this market, according to the institute, with about 700 million of its illegal cigarettes smoked last year. Pacific’s illegal cigarettes are sold mostly on the streets of Cape Town.

In one of the biggest busts in October, 1.6million Pacific cigarettes were found hidden on a train in Plumtree. Pacific cigarettes have also been seized at the Beitbridge border post near Musina and in Boksburg, on the East Rand, during busts in November. Trucks were found carrying Pacific cigarettes in concealed compartments.

This month, a consignment of Pacific cigarettes was found hidden behind electronic goods on a truck in the Western Cape. Similar busts have been made in Mozambique and at a border post between Zambia and Namibia, according to private investigators.

Evidence from the Plumtree train bust showed that the smuggling route had its origin as Savanna’s factory in Zimbabwe and South Africa’s black market as its destination. In the Plumtree bust on October 12, Zimbabwean police confiscated 40 tons of illicit Pacific cigarettes that had come from Bulawayo. The train was said to be carrying gum poles.

Records reveal that between September 2012 and August 2013 at least 23 shipments with 44 wagons of “gum poles” had followed the same route. A number of these consignments appear to have arrived at the South African business PFC Integration. According to an investigator who has studied the operation, PFC is “not into the gum pole business at all”.

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by Mike Poverello

Massive Ivory Stash Seized In Malaysia

 

Malaysian Customs officers uncovered illegal ivory concealed within secret compartments in a shipment. (Getty Images)

Malaysian Customs officers uncovered illegal ivory concealed within secret compartments in a shipment. (Getty Images)

The Royal Malaysian Customs has received congratulatory messages from South Africa and the World Customs Organisation after thwarting one of the biggest ivory smuggling operations in recent memory. On Monday, Selangor Customs had seized 24 tonnes of elephant tusks and ivory worth US$20 million (RM60 million) in Port Klang from a China-bound ship that is believed to have sailed from Togo.

It is estimated that 750 elephants were killed to produce the quantum of tusks and ivory that was seized. To date, this is the biggest seizure of its kind in Malaysia. Confirming the seizure, Selangor Customs corporate communications chief Mohd Zhafri Johari explained:  “In the China market, ivory could fetch a price of approximately US$25,000 per kilogramme”.

Those arrested will be charged in court under Section 133(1)(a) of the Customs Act 1967 for false declaration and under the Convention for International Trade in Endangered Species of Wild Fauna and Flora. This international treaty was drawn up in 1973 to protect wildlife against over-exploitation and to prevent international profiteering which involved threatening of species.

Zhafri also noted that the smuggling of ivory through Port Klang was a rare occurrence prior to 2011. Since then, however, customs have made at least three major seizures. The seized ivory is now considered government property and will be destroyed upon completion of investigation and prosecution of the suspected parties. The 1,500-odd tusks were found in two containers. Although shipping documents listed the containers’ final destination as Port Klang, customs intelligence said the containers were planned to be sent to China. Source: Thesundaily.com

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by Mike Poverello

Durban – Harbour mafia busted!

A 3-year covert investigation into a multi-billion rand racket at the Durban harbour has exposed an international mafia, allegedly bribing customs and police officials to allow in container-loads of contraband.

This week, a former Sars customs official was taken by surprise when Hawks and Sars investigators swooped on his Umbilo home and arrested him on 80 counts of alleged corruption. Etienne Kellerman, 47, a former Sars anti-corruption task team member, appeared in the Durban Regional Court on Tuesday. He was released on R100 000 bail and the matter was adjourned to next week. Kellerman is suspected of receiving substantial benefits for allowing contraband through. It is alleged that Sars lost millions of rand in revenue as a result. He resigned from Sars three years ago, days after he was quizzed by Sars investigators about his alleged role in the racket. His job had been to profile and identify high risk companies and containers entering the country.

A further seven Sars officials from Durban and Johannesburg were suspended for their alleged roles in the smuggling racket. Hawks investigator and project manager of this undercover operation, Colonel Brian Dafel, said that in coming weeks they would swoop on 100 more suspects in the country, including Sars officials, police and syndicate members, on charges ranging from racketeering, corruption, money laundering, extortion, murder and attempted murder.

Warrant Officer - Johan NortjeHe said the investigation was triggered by informers who tipped them off about the alleged crooked activities and racketeering at the harbour. The undercover investigation was a joint operation by the Hawks, Sars, independent law enforcement agencies and other key role players, Dafel said. He said they were also closing in on suspects believed to have ordered the hit on Warrant Officer Johan Nortjé, an officer in the police’s protection security service. He was responsible for investigating smuggling of goods and drugs through Durban harbour. A hit was allegedly ordered on his life days after he made a R100m counterfeit bust at the harbour. Nortjé was gunned down outside his Montclair home on January 17 last year, 10 days after he had made the bust.

“Nortjé was one of the few honest cops. He was aware of the container racket and was determined to expose it. He was killed because he was hampering the operation of the syndicate members,” Dafel said.

“This is a very dangerous investigation that involves extremely high levels of corruption. “Durban harbour is the biggest port authority that handles 40 percent of the containers nationally. In the past two years, during this investigation, we have seized over R1 billion worth of counterfeit goods and contraband.” He said that several witnesses had been placed in witness protection programmes as they feared for their lives. “People’s lives have been threatened and hits have been ordered. But, none of this will deter this investigation.

Dafel told the Daily News that investigations had revealed that certain SARS and police officials were working in teams between KZN and Gauteng. “This could not be done alone. They worked in groups, including those who cleared the documentation to those who inspected the containers and gave them the final clearance.

Thousands of containers pass through the harbour daily and it is impossible to check each and every one. That is how the counterfeit goods and contraband got through so easily. The syndicate members also communicate through cellphones making it a very smooth operation. He said every member of the syndicate was paid for his or her role in allowing the illegal goods through. The potential value of the illegal commodities was between R10 and R20 million for each container. The international mafia pays bribes of up to R30 000 per container that is allowed to pass through customs undetected. It is reported that one of the biggest problems is the clearing agents who work in cahoots with the police and syndicate members.

Dafel said many of the SARS and SAPS officials who were being investigated stood accused of allowing counterfeit goods or contraband to enter the country illegally, or under-evaluating containers. Since the investigation started, much stricter measures are in place at the harbour making it difficult to smuggle goods into the country. “We have closed the gap significantly for any form of corruption to take place. Also, staff know that they will be arrested and charged if they break the law,” Dafel said.

He said they were also working closely with people abroad and international law enforcement agencies to close in on the racketeers. “There are big name international companies, mainly from China, that are also being investigated. In fact, the goods imported from China are the biggest problem.” Source: Daily News E-edition

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