How criminal gangs are 'piggybacking' on legitimate businesses to flood Australia with illegal tobacco
Customs brokers have blown the whistle on multimillion-dollar tobacco smuggling schemes using legitimate business names, with fears some officials may be turning a blind eye.
Criminal gangs are fraudulently using legitimate small businesses to smuggle tonnes of illegal tobacco into the country, with customs brokers warning that authorities and freight companies could be turning a blind eye to the multimillion-dollar schemes through ignorance or being paid off.
Documents obtained by The Australian in an investigation at the Sydney and Melbourne port precincts, reveal dozens of legitimate small business names have been fraudulently used in attempts to smuggle up to three tonnes of tobacco at a time, disguised as manufactured goods, with a street value of up to $1m each, in a process called “piggybacking”.
The attempts are being frequently missed by freight forwarders and customs officials, allowing smugglers to avoid prosecution and the payment of tax, costing the government billions in revenue, sparking violent turf wars and only encouraging the brazen actions to continue.
Owners of the legitimate businesses say they are stunned their names are being used, while freight forwarders have gone to ground or admit they are missing opportunities to catch the fraudulent importers.
Authorities have defended their integrity. Customs brokers who have the power to process imports say piggybacking is on the rise but that they are nervous about reporting the attempts because they think the authorities “can’t be trusted”, leaving Australia in a situation akin to “America’s prohibition” era of the 1930s.
Documents show how the piggybacking process works.
Separate attempts by Malaysian, Vietnamese and Chinese tobacco exporters, some as recently as last month, have used the names of trusted Australian traders that have clean importation records such as Harcor Security, and Beyond Packaging. Their owners were shocked to hear their names being exploited when contacted by The Australian.
“Crikey, dick!” said Melbourne-based Beyond Packaging founder Ray Joy when notified that his company name and a fake email purporting to belong to Beyond Packaging were used in attempts to obtain a customs clearance for two tonnes of goods he didn’t know had arrived at port. “I’m angry the authorities didn’t let me know this was happening,” Mr Joy said. “It’s important that if (the piggybackers) are using our name that we are told because it reflects badly on us. The illegal tobacco is really quite, quite terrifying.”
Customs brokers contacted by fake representatives are frequently clearing the importation without checking the authenticity of the purported representative. This effectively gives illegal tobacco importers clearance to pick up the import and piggyback on the reputation of the trusted trader.
Harcor Security boss Phil Belford had no idea his company name was being fraudulently used by illegal tobacco importers and said he hoped the authorities caught those who had made the attempt. The company named as the delivery agent for the piggybacked Beyond Packaging attempt, Global Consolidation Services, admitted to The Australian that it had sent delivery documents to the false email address giving the fraudulent importers valuable information about access to the goods.
Global Consolidation Services’s Justin Wuan claimed that it was “hard for us” to notice false emails, saying, “it’s something which is out of our control”.
There is no suggestion Mr Wuan has broken the law but missing the fake emails is part of why Australia is being flooded with cheap tobacco.
Customs brokers and freight forwarders are the front line of illicit tobacco in Australia. Their detection of fake importers and subsequent notification to the ABF have been crucial in attempts to stem the flow of illegal imports. Several customs brokers would not speak on the record due to safety concerns, but many were fed up with freight forwarders and other customs brokers turning a blind eye.
Peter Thorburn is one customs broker who isn’t afraid to speak on the record. Threats or bribes from fraudulent importers for him to clear parcels will be knocked back and reported.
The trained marksman, who points to trophies for shooting in his office at Caringbah and has recently been diagnosed with cancer, says he wants greater awareness around the mechanism that allows so much illegal tobacco to pass through.
“It’ll just get worse. Customs and quarantine have pushed everything off on to us because we’re the eyes and ears. You get no thanks. They don’t tell you whether they’ve had a prosecution, and all they do is turn around and increase the fines on brokers,” he said.
Mr Thorburn gives four reasons customs brokers and freight forwarders might not report illicit activity. “They might be nervous about reporting it to a customs officer, because they don’t know if the customs officer is dodgy,” he said. “They themselves could be part of a criminal enterprise, so they let it go. They want the commission and don’t want the paperwork of having to report it. Or they might just not pick up on it like old guys like us do.”
Other customs officers are more angry about it. “People are aiding and abetting in the freight forwarding game,” says one unnamed customs broker. “I really believe there are more insiders in customs now than ever before.”
On the wall in this customs broker’s depot hangs an Australian Border Force poster with a hotline number on it for reporting fraudulent imports.
“You don’t ring that number,’ the broker said. “If you do you’re a deadset f..king dickhead. You might as well say, ‘Mate, I want page one of tomorrow’s Telegraph, put my name and picture on it and tell them what I’m doing’. I’ve been offered money. I got offered $100,000 but I said f..k off. I know people have ended up in Silverwater (prison).”
The ABF admits piggybacking is an area where the floodgates have opened and it’s hard to catch the culprits, but it defends the integrity of its personnel.
“(ABF) officers are bound by a strict Integrity and Professional Standards Framework and work tirelessly to uncover trusted insiders who use their position in the supply chain to import illicit goods,” an ABF spokesman said.
“They hold their position at the border with the highest level of accountability to protect the community and maintain public trust. Any allegations of inappropriate behaviour are taken seriously and subject to thorough internal investigation and by external partners.”
Some custom brokers are perplexed by the lack of prosecutions. “I’ve never seen, or known of a customs officer or freight forwarder that’s been prosecuted for knowingly, recklessly or otherwise, for making a false declaration, but some of these freight forwarders would be knowingly involved,” one broker said.
“There must be some reason why you’re continually doing it, and there would be people there that are doing it every week or every month.”
The ABF pushes back on the lack of prosecutions. “Criminal entities distance themselves from illicit consignments making it difficult to gain evidence to support a prosecution,” the ABF spokesman said. “The ABF works with partner agencies and industry to detect and disrupt illicit consignments, with outcomes determined on a case-by-case basis.”
Asked whether the ABF had charged or prosecuted any of half a dozen examples of piggybacking investigated by The Australian, it said it could not comment.
“As a matter of practice, the ABF does not comment on matters that may be subject to ongoing investigation,” the spokesman said.
Logistics provider UPS says it attempts to identify fraudulent importation attempts but prefers to keep its investigation methods secret. “UPS implements a number of security measures to prevent unauthorised shipments from entering our system,” a spokeswoman said.
“We also work with law enforcement authorities to prevent the illegal transportation of items in our network. Our security methods are kept confidential to maintain their effectiveness. “
Former customs officer Paul Zalai, now director of Freight & Trade Alliance, says there is a rapidly increasing trend of criminal groups using piggyback techniques and that while there could be some integrity issues, it’s the systems used to identify the mechanisms that need updating.
“Customs brokers are a highly regulated profession and overwhelmingly operate with the highest integrity. The same applies to customs officers, who face rigorous integrity checks to ensure accountability,” Mr Zalai said. “While no system is completely immune from corruption, I would stress that the bigger issue is not individual misconduct, but the outdated technology that industry and the Australian Border Force are forced to rely on. We are trying to combat 21st-century organised crime with 20-year-old systems. That’s where the real vulnerability lies.”
ABF Assistant Commissioner Tony Smith said piggybacking remained a persistent challenge for enforcement agencies, was not unique to Australia and reflected a broader international trend where organised crime syndicates exploit weaknesses in global logistics systems.
“It’s not something that sounds unfamiliar to our international partners,” he told The Australian. “We certainly have been working to tackle that methodology for a long time and we’re very very good at it.”
While he would not comment on specific cases, Mr Smith said the ABF was successfully identifying culprits along the supply chain, though organised criminals remained adept at concealing the real players behind operations.
“It’s not hard to be able to identify culprits along the way. I think when it comes to anything to do with organised crime and certainly serious organised crime, these people are incredibly good at being able to disguise their finances, the people that are actually pulling the strings in relation to decision-making, whether that’s border control drugs or illicit tobacco,” he said.
Mr Smith said the ABF’s new Illicit Tobacco National Disruption Group would strengthen collaboration with domestic and international agencies to “make the environment hostile” for those involved in the illicit trade.
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