Organised crime gangs swapping illicit drug trafficking for tobacco in Australia

Organised crime gangs are making so much more money selling cheap cigarettes compared to illicit drugs that some have quit the drug trade all together, instead choosing to smuggle and grow tobacco on Victorian farms.

Organised crime gangs are making so much money from Australian smokers’ desire for cheap cigarettes that some of them have quit the drug trade to focus their efforts on smuggling and cultivating tobacco.

The Herald Sun can reveal the boom in illegal tobacco smuggling has seen authorities make 19 major seizures in the past three months compared to 16 for the whole of last year.

Criminal groups have been drawn to the illegal tobacco trade by a combination of massive profits and, if caught, lighter penalties than are imposed for drug offences.

Most tobacco smuggled into Australia comes from either China or United Arab Emirates but such is the insatiable demand for the product, there is an increasing trend by criminals to grow their own on farms across regional Victoria, boosting profits even further.

This year alone there have been big farm busts north of Shepparton; in Bunbartha, Nathalia and Katunga.

An anonymous tip-off led to a raid where officers discovered tobacco crops over 36 acres wide in Nathalia with an excise value of more than $25 million. Source: ATO

There have been huge busts across regional Victoria, including this one at Broadford. Source: ATO

A law enforcement source – who could not be identified as they are directly involved in the investigation of 27 firebombings linked to the illicit tobacco trade in the past six months – said Victoria was a popular target for gangs, who leased land from farm owners to provide them anonymity.

“Tobacco is recognised as a golden opportunity for serious organised crime groups to make a lot of money and growing it here increases that profit, puts them in charge of the supply chain and reduces the risk of being picked up by authorities,” he said.

“If they buy the land, they need identification documents and their name is tied to it. What we are seeing is crime gangs leasing land from unsuspecting farmers.

“It started as Covid hit and supply chains were affected but has come on leaps and bounds since then.”

He added criminals were known to approach real estate agents, landowners and farmers directly as well as respond to adverts for land for sale in online and local newspaper adverts.

They are particularly seeking land near waterways, such as rivers or creeks, and where it is hidden from view from local roads.

Other raids on tobacco farms have happened at Broadford, Bylands, Beverford, Landsborough, Lake Bolac, Nhill, Patho and Vinifera in recent years.

There have only been 20 convictions for illicit tobacco since July 2018.

The maximum penalty for cultivating tobacco is 10 years in prison compared to life for trafficking drugs, such as heroin.

The other arm of the big syndicate rackets are imported tobacco, both in loose and stick form, which is sold at massive mark-ups in their vast network of shops.

It is suspected Mohammed “Afghan Ali” Keshtiar was killed due to conflict over the illicit tobacco market share.

Conflict over market share is suspected of being linked to the murder at South Yarra in August of veteran underworld identity Mohammed “Afghan Ali” Keshtiar.

The gangs are happy to accept occasional losses of shipments to law enforcement because the others that do make it keep them well into the black.

Australia’s most powerful illicit tobacco gang has actively corrupted key supply chain figures to wave through massive shipments.

The Herald Sun has found the syndicate infiltrated a number of freight depots, helping it reap colossal profits from the outlaw trade.

Sources estimate the syndicate has made, at a minimum, hundreds of millions of dollars over the years.

It is the same model used by major drug syndicates.

They will recruit trusted insiders in a method known as “The Door” to ensure their product makes its way to them for distribution.

Players from the big syndicate have a long history of corrupting public officials.

They have in the past used VicRoads officials to help with vehicle crime activity.

It has been illegal to grow tobacco in Australia for more than a decade and no one has had a licence to do so since 2006. However, the latest data from the Australian Taxation Office said evaded tax in one year from illicit tobacco stood at $1.9 billion.

Authorities said it was so hard to track because almost a third of all Australian farmers leased some part of their land.

“The onus is on the farmer or landowner making sure they know the real identity of the person leasing their land and what they want it for,” the source said.

“If it can be proved they were knowingly involved in the illicit tobacco growing operation, they can face criminal charges themselves.

Officers located a tobacco farm spanning 29.3 acres in Beverford in March 2021 before destroying 183 tonnes of illicit tobacco crops and 140 kilograms of processed tobacco bales, which had a potential excise value of more than $36.3 million. Source: ATO

A 7.8 acre farm found by officers at Landsborough in March 2020. The crop had a weight of 4,600 kilograms and was worth $6 million in lost excise. Source: ATO

“These gangs often hire foreign workers who are also offered no protection if something goes wrong.”

The peak growing season for tobacco is between November to February with harvesting between February and May.

“This intense labour production in a few short months is why a lot of our raids happen in the early part of the year,” he said.

“People notice unusual farm works, earthworks along creeks or riverbeds and large leafy plants that resemble cabbage – but have pink flowers and it is the wrong time of year to be harvesting cabbage.

“We rely on community reports that could indicate the production of illicit tobacco and urge anyone with any suspicion to report that activity.”

It is stated one in ten packets of cigarettes now sold are illegal.

Due to the huge excise dollars being lost, the Australian Taxation Office spearheads the fight against illicit tobacco grown in Australia while the Australian Border Force leads investigations into illicit tobacco imported into the country.

Authorities do this to stop organised crime syndicates gaining a price advantage over legitimate retailers and boosting their profits so they can fund other illegal activities.

Both organisations work together in the Illicit Tobacco Taskforce (ITTF), which in turn collaborates with state and territory law enforcement agencies such as Victoria Police.

“Growing or selling illicit tobacco is a serious offence and contributes to the shadow economy,” an ATO spokesman said.

“The ATO is committed to removing funds that are gained from criminal activities, including growing illicit tobacco, to ensure the proceeds are not used to fund more insidious criminal activity.

“However, organised crime syndicates continue to orchestrate these growing operations, sometimes by targeting unsuspecting landowners, attempting to lease land to grow illicit tobacco.”

He added: “Organised criminals who deal in illicit tobacco rob the Australian community of valuable revenue to fund their lavish lifestyles and engage in criminal behaviour.

“The revenue could have been used to fund vital community services such as health, education or infrastructure.

“Every crop we seize burns another hole in the illicit tobacco trade.”