Before the firebombings comes the warning: “Earn or burn.”
It is a simple directive from organised crime syndicates to tobacco shop owners, to sell their illegal products. If they refuse their business will be torched.
Such standover behaviour has been seen across the country, but it is most prevalent in Victoria, where there have been 27 fires at such businesses in less than seven months.
When Victoria police started investigating the blazes they came across a somewhat alarming gap in their intelligence: nobody knew, exactly, how many shops there were selling tobacco in the state.
That is because unlike alcohol retailers, or even places that sell Lotto tickets, there is no register or licensing regime of tobacco sellers.
Detectives discovered there were more than 800 such shops, and now suspect “a large portion of the tobacco industry has been infiltrated by serious and organised crime”, as Det Supt Jason Kelly told reporters this week.
He said the potential profits were enormous, with raids on 33 tobacco businesses this week alone netting 36,639 e-cigarettes, worth more than $1m, and almost 525,000 cigarettes worth about $400,000.
Those raids were also conducted with the Australian Taxation Office, Australian Border Force and the Therapeutic Goods Administration, who all have overlapping responsibilities within the sector, including to detect illegal imports, and collect relevant taxes.
The illegal cigarettes that are sold are typically either legitimate overseas brands such as Double Happiness, Manchester or Marlboro, which are imported illicitly, or counterfeit cigarettes packaged to appear as if they’re legitimate. They typically originate from China, south-east Asia or the United Arab Emirates.
Kelly said that while there were legitimate tobacco shop owners, some businesses were operated by organised crime syndicates, while others were in their pockets.
The firebombings are not all considered attacks against legitimate businesses who refuse to sell illegal products and pass the profits back to these syndicates. There are broader conflicts between the syndicates themselves.
Two execution-style shootings in Victoria involved victims with suspected links to the illegal tobacco trade – Robert Issa, who was gunned down in Craigieburn this month, and Mohammed Akbar Keshtiar, killed in South Yarra in August.
While the homicide squad does not suspect either man was murdered because of the underground tobacco business, Kelly reiterated this week that the trade was being increasingly dominated by those who used violence to enforce the status quo.
“We have a number of syndicates involved in conflict over the illicit market trade here in Victoria and effectively we’ve seen extortions, they’re asking legitimate businesses to pay money on a weekly basis,” Kelly said.
“What has occurred is that the arsons have shone a light on the tobacco trade.
“The arsons, the extortions, the firearms-related incidents, what I suspect is that this has been going on for quite a number of years and has now escalated in terms of the conflict between organised crime groups.”
In one instance, police allege that four people who extorted a tobacco shop in Melbourne’s north were also linked to an outlaw motorcycle gang.
Kelly agreed it had been complex to piece together the scale of underworld infiltration into an industry that was largely unregulated.
“It’s certainly a challenge in terms of looking into an industry that’s unregulated in this sense. Our information is that there’s been an increase in tobacco stores in more recent times … you see more popping up in your local strips.
“That probably indicates that it’s such a lucrative industry, to make money, and that’s why we’re seeing more of these stores.”
A Victorian government spokesperson said it was considering a report and recommendations made by the former commissioner for better regulation Anna Cronin.
“The report is currently being used to inform work that will strengthen the Tobacco Act to curb the trade of illicit tobacco,” the spokesperson said.
“There have a number of significant changes since the report was provided, including the commonwealth government’s ban on the importation of vaping products without a prescription.
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“We will continue to work closely with Victoria police and other relevant agencies on these issues and the recommendations and provide a response early next year.”
The spokesperson was unable to clarify when the government received the report, which was commissioned in 2021, the nature of the recommendations, or whether the report would be released publicly.
But Kelly said similar issues to those in Victoria were being experienced in Queensland, and other arsons had previously been reported in Western Australia.
There were two tobacco shops allegedly targeted in Brisbane’s south in May, and other arson attacks in Gympie and the Noosa region earlier this year.
Regulatory thicket
Although there is a regulatory thicket governing how cigarettes and e-cigarettes are imported and sold, and who is responsible for enforcement, each state and territory essentially has its own laws which impact retailers, while the federal government oversees taxation, border enforcement and health policy.
Llew O’Brien, the federal MP for Wide Bay in Queensland’s south-east, moved a motion in parliament this week that called for tougher penalties for supplying illegal tobacco and vapes, and an increase in resources to an illicit tobacco taskforce.
He suggested that the underground tobacco market had thrived in part because the price of legal cigarettes had ballooned because of federal health policies, meaning smokers sought out cheaper illegal products.
The price of a legal packet of cigarettes can be twice as much as an illegal packet, Guardian Australia understands.
“When generally law-abiding smokers quit legal tobacco to purchase from the black market they believe the only victim is a greedy federal or state government missing out on $4.2bn of tobacco excise and $400m in GST, but illicit tobacco is often the cashflow arm for sophisticated criminal syndicates dealing in the worst of the black market, including human trafficking, sex slavery and drugs,” O’Brien said in parliament.
There was an interesting synergy to the motion that underlined the health and law enforcement issues the government is grappling with. O’Brien is a former police officer, and another of the MPs who spoke on the motion, Pat Conaghan, also served as a police officer. Two MPs who are doctors, Michelle Ananda-Rajah and Mike Freelander, also spoke about the problem.
While O’Brien was calling for more action by the Albanese government, there was also an acknowledgment from both major parties that problems with illegal tobacco had spiralled out of control.
There were more than 1.77bn cigarettes and 867 tonnes of illegal tobacco seized last financial year, with Australian Border Force expecting those figures to be surpassed this year.
Dan Repacholi, the Labor member for Hunter, even said the sort of raids championed by Kelly and Australian Border Force in Melbourne this week were not the answer.
“Operational agencies have emphasised that raiding illicit tobacconists at local level won’t solve these issues, as these organised crime groups are highly adaptive,” Repacholi said.
Whatever the answer – from smokers themselves giving up cheap cigarettes, to a significant increase in resources to federal authorities that could detect more illegal importations – Kelly made clear he felt the violence was far from over.
“As we’ve seen this year, these organised crime syndicates have very little regard for the harm they are inflicting on the community as part of their battle for illicit tobacco profits.
“We’ve seen a significant number of arson attacks, along with several firearms incidents, and it’s only through sheer luck that no one has been killed.”
