Hassan and Dib Barakat jailed after trying to dodge $1.18m in tobacco import taxes
Two brothers have been jailed after they exploited a federal loophole to try and avoid paying millions in taxes on imported tobacco. One brother stood to make $1.2m off 8.48 million cigarettes in what a judge described as a “staggering” flaw in the system.
North West
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Two brothers have been jailed after they exploited a federal loophole to try and avoid paying millions in taxes on imported tobacco.
Hassan, 32, and Dib Barakat, 37, swapped out real cigarettes for fake, look-alike replacements, which tests later revealed to be made from potatoes.
The scheme saw the goods swapped during transport from the customs-controlled cargo terminal at Melbourne Airport to a licensed warehouse in Laverton North.
Legislation at the time allowed products to be removed from customs before goods tax and GST were paid.
The brothers planned to leave the fake cigarettes in the warehouse and avoid ever having to pay the fees.
Both pleaded guilty to Commonwealth charges of intent to defraud the revenue – Hassan for importing tobacco products and Dib for conveying the goods.
The Altona pair – who own a wholesale fruit and vegetable business called the Barakat Brothers – were sentenced in the County Court on November 25 this year.
Over three attempts between December 6, 2014 and June 9, 2015, Hassan tried to avoid paying more than $3.96 million in import duties and GST on 8.48 million cigarettes.
The father-of-three, who migrated from Lebanon in the mid-2000s, stood to make an estimated profit of more than $1.2 million.
Dib, a delivery driver for the first two importations from December 6-19, attempted to dodge taxes of more than $1.18 million on 2.56 million cigarettes, with an estimated profit of $366,848.
The total weight of the three tobacco importations was almost 14 tonnes.
The loophole exploited by the pair has since been closed and all duties and taxes for tobacco must now be paid when it arrives at the border.
Judge William Stuart described the loophole as “striking”.
“That anybody, including the owner can be responsible for the transport between one bond warehouse and another is staggering,” he said during sentencing.
“I’m told as a result of the detection of these consignments that transfer can no longer take place and goods cannot be removed from the customs-operated secure facility until duties and GST are paid.”
Australian Border Force tobacco was seized on August 6 and the fake replacements on September 22, and raided the brother’s homes in Altona North and Altona.
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Judge Stuart said Hassan, a mechanical engineer graduate and “principal” of the scheme, was motivated by profit and was prepared to use false identities and trickery to achieve his aims.
He said Australians were entitled to expect that revenue wouldn’t be defrauded.
“It is the revenue which permits us to have the society and community that we have,” he said.
Hassan was sentenced to four years and three months’ jail with a non-parole period of two years and six months.
Dib, a father-of-five, was given a 20-month prison sentence to be released on a two-year recognisance order after 10 months.