The woman with $2m cash in her boot and the violent trade as ‘lucrative as drugs’

The woman had no business having such an astonishing amount of cash, police say.

A seemingly ordinary person, living in modest circumstances on the western fringe of Sydney, she was driving a small hatchback when investigators pulled her over on a frigid winter’s night.

Police say the woman, who cannot be named for legal reasons, had $2 million in the boot of her car that was allegedly the proceeds of illegal tobacco.

‘A bit of pressure’

Illicit tobacco is thriving in Australia. It’s well established in Melbourne, and the burgeoning scene in Sydney has changed streetscapes, undone years of public health victories and opened another fault line in the city’s underworld.

Nationwide, the Tax Office says the illicit tobacco market has skyrocketed from $980 million in 2016-17 to more than $6 billion in 2022-23.

“It’s obvious that in an economy where people are having difficulties affording the necessities of life, that discretionary spending on things like cigarettes, there’s a bit of pressure on it,” the NSW Crime Commission’s Darren Bennett told the Herald.

The Crime Commission is one of the many government agencies involved in the state’s battle against illegal tobacco, which also includes NSW Police, NSW Health, Australian Border Force and the Australian Federal Police.

Much of the illicit loose tobacco in Australia is home-grown, while most illegal cigarettes come from China. Those cigarettes are either counterfeits of cigarettes sold here or brands not available in Australia. Because they are smuggled in through Australia’s porous border, importers do not pay the tobacco excise – currently $1.40 per cigarette – and lack the barcode, plain packaging and health messaging on their legal counterparts.

They are also significantly cheaper, sold through the convenience stores that have become ubiquitous in Sydney.

Estimates have the cost price of a packet of illegal smokes as low as $2, providing both a significant profit for the importers and a cheaper product for the consumer.

“Organised crime are filling some of that void. They’re able to provide cigarettes between $10 and $25 a packet rather than between $40 and $65 a packet,” Bennett said.

NSW Premier Chris Minns in June came out swinging at the Commonwealth tobacco excise – which is indexed and also being increased by 5 per cent each year for a three-year period starting in 2023 – saying it should be reconsidered.

On Wednesday, the state government introduced what it describes as “tough new laws” to parliament. The sweeping new legislation is designed to penalise selling illegal tobacco, and would allow evictions of retailers selling illegal tobacco, business shutdowns and fines of up to $1.5 million.

‘As lucrative as illegal drugs’

Sydney’s criminal milieu has long been keen to meet the city’s ravenous appetite for illicit drugs; anecdotal evidence suggests that major players such as the Alameddine crime family can earn up to $1 million a week in profit.

Despite these eye-watering profits, criminal groups are increasingly looking to illegal tobacco, says Bennett.

A briefing to Police Minister Yasmin Catley, seen by this masthead, suggests players “responsible for violence in Victoria” have moved into NSW and aligned themselves with “known actors”. Asian and Middle Eastern organised crime groups have also become involved in the illicit tobacco trade, the briefing says.

There are two reasons for this – illegal tobacco has a much larger potential market than illicit drugs, and the penalties for importing or selling illicit smokes are considerably lighter than for drugs.

“Large organised crime groups that have traditionally been involved in drug trafficking, extortion, kidnapping and ransom, they’ve all got an offshoot in illegal tobacco,” Bennett said.

“From what I can see, it’s easily as lucrative as illegal drugs.

“We’re certainly seeing that sort of traditional organised crime tactics around eliminating competition and establishing an area where you can do business.”

Arson attacks, which have authorities particularly concerned because of the proximity of many tobacconists to residential dwellings, have been used in NSW, says the briefing to the police minister. Legitimate retailers have also been targeted by organised crime, who are forced to sell illicit products on behalf of the crime group then are extorted for protection money.

In a matter before the courts, a man allegedly planned to steal almost $1 million in cash from the home of a NSW tobacconist in November last year.

Documents seen by the Herald allege the man used a device to track multiple cars and was heard on a phone tap discussing kidnapping people, dressing up as a police officer to orchestrate a vehicle stop or breaking into storage sheds.

Police tracking the man and his co-accused stymied the alleged plot before the money – which police say is profits from illegal tobacco – could be stolen.

He cannot be identified for legal reasons.

In a separate case, an alleged tobacco runner had his big toe partially severed; in another instance last year, a tobacconist business was burnt to the ground.

Bennett said it could be difficult to discern if this extreme violence was born of illegal drugs or tobacco, but “more frequently we’re finding from our intelligence base and from talking to the police, and talking to victims and talking to offenders, that the motivation is illegal tobacco”.

The business of illicit tobacco has ensnared a huge number of seemingly everyday people – such as the Sydney woman with $2 million in the boot, now before the courts on two counts of dealing with the proceeds of crime – whose alleged role is to move huge volumes of cash, cigarettes and tobacco up and down the eastern seaboard.

In January, a truck driver was caught in one of the north shore’s most moneyed suburbs, allegedly with $1 million in the back of his truck.

The money was seized by the Crime Commission and he remains before the courts on proceeds of crime offences.

That man, too, cannot be identified.

Bennett said the NSW Police have been “very active, very busy” both in vehicle stops of the type that allegedly both foiled the truck driver and the Sydney woman, and in their ongoing fight against organised crime.

“On a local [police station] level is where you get that short-term information based around storage sheds or vehicle movements,” which have led to “quite a few” seizures north of $1 million, Bennett said.

Police are heavily involved in stopping illegal tobacco, but debate has raged over exactly who should regulate it.

While NSW Health is the lead agency, it is ill equipped to take on the underworld. Minns has said he doesn’t want police taken away from the fight against domestic violence and organised crime.

Commercial implications

Then there is the question of the place of illegal tobacconists in the commercial landscape.

On Penrith’s main street, there are four within a 50-metre radius. Dozens more feature along the suburb’s main strip. On the other side of the city, tourists alighting from the famous Manly ferry pass three as they walk the 450 metres down the Corso to the beach.

“There’s a massive capital investment going into illegal tobacco sales,” Bennett said, something that has alarmed many communities.

Independent MP for Pittwater Jacqui Scruby has been agitating for more action on illegal tobacconists, and says there is “real fear” in the community because of tobacconists’ links to organised crime.

She says legitimate businesses are being pushed out, neighbouring business owners have seen an increase in insurance premiums because of the risk of firebombs, and people living near or above those shops are concerned about being caught in the crossfire.

Scruby has made a number of submissions to a parliamentary inquiry, including buffer zones to prohibit businesses around schools and playgrounds, tougher penalties and moving the responsibility for enforcement to a “better resourced” interagency taskforce.

But with illegal tobacco being sold in plain sight, issues with regulation and the sheer volume of illicit smokes for sale, the problem for government remains diabolical.

“Everyone’s got a stake in stopping this and that’s got to start with people not buying it,” Bennett says firmly.

“But whether Joe Average is willing to pay double or triple what they can pay to mitigate the organised crime aspect of it remains to be seen.”

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