Linz customs officers uncover illegal cigarette production in Lower Austrian district of Bruck an der Leitha
2.4 tonnes of tobacco and machinery for the production of 15,000 cartons; tax losses of around EUR 700,000 averted
Vienna (OTS) - Following the identification of illegal cigarette production in the Viennese district of Floridsdorf in November 2020, the Customs Administration has now achieved a further success in its fight against the organized international cigarette mafia. In two rented warehouses in the Lower-Austrian district of Bruck an der Leitha, customs officers from Linz seized 2.4 tonnes of tobacco as well as tobacco manufacturing machinery.
"The scale of the seizure shows that we have dealt a further major blow to the international cigarette mafia, thanks to the outstanding work undertaken by the Customs Administration," declared Finance Minister Gernot Blümel, delighted at this further success on the part of customs, at the same time issuing this warning: "Illegal cigarette production inflicts economic damage on legitimate business operators as a result of tax evasion at the expense of taxpayers, and for consumers it means products which are particularly harmful to health."
Cigarettes disguised as biscuits
It was information communicated by the French customs authorities in September 2018 that paved the way for the latest seizure, revealing that a truck travelling from Upper Austria had undergone a control, with three pallets of contraband cigarettes confiscated. The Linz customs investigation team then launched a preliminary investigation that ultimately turned out to be extremely costly and time intensive, not least due to the international dimension and complexity of the case. The meticulous investigations revealed that a Hungarian firm based in Vienna had sent several contraband shipments of cigarettes to the UK, disguised as consignments of biscuits. These shipments were spread across up to seven different freight forwarders, which made the task of tracing substantially more difficult.
Coronavirus put a stop to illegal production
The investigation and surveillance measures undertaken by Linz customs investigators ultimately led to the two rented warehouses on the edge of the industrial district of Bruck an der Leitha, which underwent a customs control in September 2020 based on a search warrant. 2.4 tonnes of tobacco, as well as machinery used for processing tobacco prior to subsequent cigarette production, were confiscated in the process. The materials present would have been sufficient to produce 3 million cigarettes, or 15,000 cartons. Experts from a tobacco company who were consulted confirmed that the confiscated machinery consisted of key elements of a cigarette production line. The machinery, from Poland, had a production capacity enabling them to process 200 kg tobacco an hour. Accordingly, everything pointed to the fact that, while cigarette production had been commenced in the two warehouses, the procurement of goods and personnel, as well as other logistics, had been substantially disrupted due to the impact of the COVID-19 pandemic. As a result, the Illegal cigarette production had come to a standstill before it had even properly got under way.
The same gang sold 21 million cigarettes in the UK
As a result of these findings, international cooperation between customs authorities gained further momentum. When comparing the investigation conclusions of Linz customs investigators, their colleagues in the UK noted similarities with one of their investigations. In the UK, seizures had also been undertaken by the relevant authorities, and a quantity of approximately 3 million contraband cigarettes plus tobacco had been confiscated. In total, a quantity of 21 million cigarettes is in circulation, having been smuggled into the UK by the cigarette smugglers. It is now clear that the case in Austria forms a part of this large-scale international network. The criminal set-up handles the production and sale to the UK of contraband cigarettes. In terms of legal cigarette consumption, the UK has some of the highest cigarette prices in the whole of Europe.
In Austria, tax-offence proceedings are ongoing against two defendants from the Hungarian firm. They are suspected, in addition to the illegal production in the warehouses, of having brought a quantity of at least 2.7 million cigarettes from Hungary via Austria into the UK. The resulting loss of tax revenues amounts to around EUR 540,000. In addition, they are charged with engaging in the prohibited manufacture of tobacco goods.
Maximum penalty: a fine of EUR 1.7 million and up to four years in prison
The defendants face payment of tax arrears totalling EUR 540,000, as well as court proceedings, with a maximum penalty totalling approximately EUR 1.3 million in fines, around EUR 400,000 in value confiscation penalties, plus a custodial sentence of up to four years. The confiscated tobacco and machinery for the cigarette production line are considered from a legal perspective to have been forfeited, and will be destroyed under official supervision.
"The assiduous investigations undertaken by customs investigators have not only saved the Republic of Austria and the European Union a further loss of tax payments totalling around EUR 700,000 but, in addition, consumers have been safeguarded against a substantial health hazard arising from improper production conditions and the unknown content of illegally produced tobacco goods," added Finance Minister Gernot Blümel.