The tobacco black market is becoming increasingly violent as hard core criminals move in

Illegal growth supports crime: Former AFP and ABF officer Rohan Pike says illegal tobacco is not just about avoiding paying taxes; it supports violent crime.
Illegal growth supports crime: Former AFP and ABF officer Rohan Pike says illegal tobacco is not just about avoiding paying taxes; it supports violent crime.

A former Australian Federal Police (AFP) officer and leader of the Australian Border Force (ABF) tobacco strike team says Ballarat is typical of a number of Victorian country towns that are now flooded with illegal tobacco, both home-grown and imported; a flood that is supporting organised crime.

Rohan Pike worked for the AFP for almost 25 years before heading the ABF strike team. He now works as an illicit trade adviser and freelance consultant into fraud, corruption and bribery, and has provided guidance to retailers in Australia and Papua New Guinea.

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He spoke to The Courier following the arrest of two men after a raid on an illegal tobacco plantation in Dunnstown on March 1 uncovered 4.2 tonnes of tobacco leaf and equipment used to process it, as well as unregistered firearms.

Almost five hectares of tobacco under crop was destroyed in the joint Australian Tax Office (ATO) and Victoria Police operation. Mr Pike says illegal tobacco production has been allowed to flourish since the abolition of the Tax Office’s tobacco unit after the 2012 suspension of growing licences.

Victoria remains the centre of illegally grown tobacco in Australia. The volumes have escaped attention because no one has really been looking.

Rohan Pike

“Prior to that time, the ATO, who have responsibility for Excise Act offences, had a large and active tobacco unit patrolling regional Victoria looking for diverted legal tobacco,” said Mr Pike.

“At the cessation of licences, the ATO saw no further need for the tobacco team and disbanded it leaving the regional areas unregulated.”

This has allowed a flourishing black market in the regions to grow, and with the illegal product now fetching around $900 a kilogram, it was inevitable an increasingly violent and widespread involvement of organised crime would follow, Mr Pike says.

“The price and lack of enforcement has incentivised criminals and perhaps other previously law-abiding farmers to try their hand at growing a crop,” he says.

Mr Pike provided a damning submission to a parliamentary inquiry into illicit tobacco late last year, saying both the ABF and ATO understate losses in duty due to the trade, which Mr Pike estimates to be near $4 billion. At the inquiry, Mr Pike intimated the federal government was focussed on penalising the legal tobacco industry through higher taxes.

At the same time the agencies were ignoring organised crime moving into the growing black market for the product, Mr Pike said in his submission.

The ATO also downplayed the level of homegrown illicit tobacco involved in the trade, preferring to blame importations as the primary culprit. 

The price and lack of enforcement has incentivised criminals and perhaps other previously law-abiding farmers to try their hand at growing a crop

Rohan Pike

“This view was not supported by the facts which saw the prevalence of chop-chop continue to expand,” says Mr Pike.

“Victoria remains the centre of illegally-grown tobacco in Australia. The volumes have escaped attention because no one has really been looking.

“One of the reasons why the ATO may consider this issue a low priority was because the Excise Act only provides for a 2-year penalty for cultivation, and therefore even if the growers were caught, they would not be facing much of a penalty.

“Although a new law has entered Federal parliament to increase that to a 10-year penalty, that has come too late to be relevant to the crop found this week.”

Mr Pike says the Dunstown raid may be an indication that the ATO and Victoria Police have recently stepped up their efforts to investigate domestically-cultivated tobacco. 

“This may have come about as a result of several parliamentary inquiries that have taken place over the past year (and are soon to report). It may also be due to the increased in associated crimes, like guns and drugs, that the Victoria Police have traditionally been focussed on.”

Victoria Police declined to comment on the Dunnstown raid.

Earlier:

Ballarat councillor Des Hudson is concerned at the rise in black market tobacco availability. He’s requested a council officer report into the sale of ‘chop chop’ and illegal cigarettes by retailers in the city.

He says while it appears the policing of the trade is a joint federal-state jurisdiction, he believes there is provision under the Victorian Tobacco Act 1987 for council to appoint an inspector with powers of entry, search and seizure.

There are definitely outfits in Ballarat selling improperly marked packets of cigarettes, and individual cigarettes to children, that he is aware of, Mr Hudson told The Courier.

Mr Hudson has asked council to look into the feasibility of appointing such an inspector, and expects a response in near forthcoming council meetings.