Over the past four years the Tax and Customs Board (MTA) has managed to reduce the market share of contraband cigarettes by half. The success of their work is based on large-scale operations, confiscating millions of cigarettes that if sold would benefit not the state, but organized crime. The following is an account of one of their most successful operations—involving a contraband cigarette factory in Tartu County.
On the hunt for contraband cigarettes
Contraband cigarettes have been keeping MTA's officers busy for years. Though the amount sold on the street and on markets has gone down noticeably compared to previous decades, they still make up 18 to 21 percent of all the cigarettes consumed in Estonia. Last year alone, Estonians smoked 380 million cigarettes that were sold without the state earning a cent - reports err.ee.
“Altogether 11.5 million contraband cigarettes were confiscated in 2016. But unfortunately this amount represents just 7 percent of the total volume of the black market, a large number remain,” Tiit Kõluvere of MTA's customs department told ERR.
On top of selling them on the Estonian black market, contraband tobacco products are also brought out of the country. One of the more notable incidences took place in spring two years ago, when officers of MTA as well as the Police and Border Guard Board (PPA) checked trucks in Paldiski harbor that were about to be loaded on a ferry headed to Sweden. They noticed a white Volvo truck that according to its papers was loaded with disposable knives and forks made of plastic.
According to Siim Rudissaar of MTA's investigative division, officers did find knives and forks—though only on the first two pallets. “The rest of the trailer was filled with 7,768,000 contraband 'Ducal' cigarettes with health warnings in Spanish,” Rudissaar said.
The goods weren't destined for the Estonian market. Typically the country of origin of contraband cigarettes is either Russia or Belarus, from where smugglers try to get them across the external border of the European Union using hiding places on trucks. Measured by Estonian excise duties, the tax value of the load discovered in Paldiski was €1.3 million.
Cigarettes of domestic Estonian production
But this load seemed different to the customs and police officers, as it seemed rather old-fashioned. In cooperation with the South police prefecture, MTA was able to determine that the cigarettes had not been brought in from Russia, but that they had been produced in a hidden factory in the vicinity of Tartu. “Tobacco, filters, and other necessary materials were brought in from somewhere else, and the products were made and packed right there,” Rudissaar said.
The last time a comparable facility was discovered was in 2005, when on Sept. 8 of that year MTA carried out a raid in the village of Rummu. They found a factory as well as ten million contraband cigarettes with a market value of at the time 8 million kroons (about half a million in today's money). “In that sense, this is a pretty rare case,” Rudissaar said.
The factory discovered in Tartu County two years ago managed to produce five shipments of cigarettes that were brought out of Estonia in the guise of disposable cutlery. Still, the factory was in operation for only a comparably short time, Rudissaar said, as MTA was able to prove that the shipments left the factory between January and March 2015. Two individuals were eventually found guilty in the case in April this year, both were given two-year conditional prison sentences, he added.
According to Kõluvere, contraband cigarettes are typically moved by 31 to 50-year-old men with secondary or trade education who either have no legal income, or then an income of less than €3,000. “They are usually repeat offenders, and as professionals they have connections to leaders of organized crime in Estonia at different levels,” Kõluvere added.
Usually individuals connected to organized crime groups financed the purchase of the illicit goods abroad, and the importers were then responsible for getting them across the border. “A large part of our work fighting against contraband cigarettes is directed at discovering the contraband goods before they are moved across the Estonian border and reach the resellers,” Kõluvere explained.
MTA has been successful, as it has been able to reduce the amount of contraband cigarettes that make it to the Estonian market by half. According to Kõluvere, repeatedly apprehending experienced smugglers helped: “Before anything else, to identify the transport of illicit goods across the border a risk analysis helps. Then we use x-rays and tobacco dogs, but the most important thing is still the professional customs officer,” Kõluvere said.
Consumers can keep black market in check
As he stressed, those best equipped to limit the black market were its potential customers themselves. “This is why MTA is investing in its cooperation with local constables, local governments, and apartment as well as garage cooperatives to inform as many people as possible about the dangers involved and prevent negative consequences,” Kõluvere said.
He added that it certainly didn't make sense to remain quiet when there were signs of illicit business going on. “Often people don't think about the fact that the consumption of contraband cigarettes and other illicit goods threatens their own security as well as that of those close to them. Dealing in contraband goods is often connected with organized crime, and to those people there is no difference between dealing in contraband cigarettes, illicit alcohol, or drugs,” Kõluvere added.
Data of the Estonian Institute of Economic Research shows that in 2016 some 16 percent of all smokers consciously bought contraband products. This is an increase compared to the previous year, up from 11 percent. According to Kõluvere, several different factors influence this, among others the fact that the price difference between legal and illegal tobacco products has increased. “This in turn makes buying contraband goods more attractive, and we have to increase our efforts to make the life of those who sell them as difficult as we can.”
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