Cigarette Smuggling: Poland to Sweden

Nick Johnston, Walter Kegö and Christina Wenngren Cigarette Smuggling: Poland to Sweden by Nick Johnston, Walter Kegö and Christina Wenngren

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2 Table of contents

Front matter...... 1

Table of contents...... 2

1. Introduction...... 3

2. The Illegal Tobacco Trade...... 4-8

3. Poland - the Nexus of Trade...... 9-19

4. The Swedish Trade...... 20-23

5. Recommendations - EU Level...... 26-29 6. Recommendations - Sweden...... 30-32 7. Avenues for further Research...... 33

Acknowledgements...... 34

Appendix...... 35-41

Table of Contents 3 1. Introduction

Characterisation Outline Cigarette smuggling is a fast-growing This report is broken into four sec- criminal enterprise in the European tions. The first section will describe market. The limited legal repercus- the general nature of the illegal tobac- sions and immense profit margins co trade within the European Union make the movement of cigarettes (EU) and its impacts on government an incredibly attractive enterprise. functions. The second section will According to Lithuanian Customs explore cigarette trends in Poland reports, efficient smuggling organi- since Poland is the dominant origin sations stand to gain approximately of tobacco products within the EU. 1000% on their initial investment. The third section will focus on current This return is comparable with the trends in Sweden and examine its role narcotics industry, but with much as a transit country. The final section more lenient legal penalties if convict- will provide recommendations for all ed for involvement. levels of law enforcement, from local to international, on addressing the As more organisations become in- issue. volved in this trade, its impacts become more apparent. In Latvia, for ex- The information provided in this ample, the size of the cigarette black report is drawn from online research, market has grown by approximately discussions with informants closely 30% each year. In 2015, 650 million il- involved with cigarette smuggling, legal cigarettes were consumed in the interviews with agents from both the country, over a quarter of the entire Polish Central Bureau of Investigation tobacco market. As a result, the state (CBS) and Polish Ministry of Finance, budget in Latvia loses 50-70 million Swedish Customs and other special- euro of taxes annually to the black ists in the field. market.

Introduction 4 2. The Illegal Tobacco the industry and the cost of invest- Trade ment, this is an understandable out- come. As the market becomes more competitive, less efficient manufac- Trends turers will generally disappear in the face of a growing monopoly which Smuggling is not a new practice nor is has the capability to operate and it the most innovative. However, the manoeuvre around the existing weak unique socioeconomic environment legislation. of the EU provides opportunities to make incredible profits. Since there is a consistent market for cheap tobac- Causes co products across the EU, there is a Geographically speaking, Europe is stable demand for smugglers’ wares. unique in that it holds a very crowd- The current legislative shortfalls sim- ed distribution of states ranging from ply enable smugglers to deliver their relatively poor to very affluent. As supply. one travels westwards in the EU, the local Gross Domestic Product (GDP) The KPMG Cision report from 2011 increases significantly, meaning there identified that the market for untaxed is little distance needed to be trav- cigarettes in Sweden showed a strong elled before common goods increase correlation between the presence of greatly in comparative value, as seen organised crime and the amount of in Figure 1. illegal cigarettes in a specific region. The ideal process for an organisation Owing to the overwhelming scale of intending to smuggle cigarettes is to

Figure 1 – Average cigarette prices across the EU black market from a Lithuanian Customs Presentation

The Illegal Tobacco Trade 5 purchase the cigarettes outside the lar, officers from the Polish Ministry eastern border of the EU, such as in of Finance note the World Health Belarus, for as little as 15 euro cents Organisation’s Framework Conven- per pack. They are then imported tion on Tobacco Control. Until an through a porous section of the EU amendment in 2012, the convention border, such as in Latvia, and then only contained one article dedicat- onto a country such as Germany ed to combating the illegal industry. which increases the value of that Both officers recognised the enduring same pack of cigarettes by approxi- effects of this shortcoming. Essential- mately four to five euros. If that same ly, both the illegal and legal industries pack is smuggled to Norway, the have been merged into one uniform UK or Ireland, its value will increase entity. Naturally as a result, the per- even further to just under ten euros, ception of the legal industry has been a total increase of over sixty times the negative. original value before sundry costs are As the Polish Police commented, the considered. ‘free market’ means there will always be demand for tobacco products. The Legal Issues only effective measure that can be taken in this case is thus to limit the Normally, this drastic increase in supply of illegal products not subject price is accounted for through local to taxes and regulation. No matter tariffs enforced on licensed vendors what future regulation is enforced on who import the cigarettes. Even in the the legal industry, the illegal industry EU, individual states have the capac- will remain largely unaffected by it. ity to pursue duty and tariffs from im- Tackling the size of this unregulat- porters. However, these fees are large- ed segment is thus a priority and all ly nominal in nature and exceedingly resources should be used in counter- difficult to impose on illegal products. ing it. Despite the size of the threat Thus, smuggling can easily bypass they face, law enforcement authorities all measures of price correction as have made few formal agreements goods cross borders. With no fixed to cooperate in combatting the trade. border controls between European Instead, they predominantly rely on states, customs officers must have personal contacts and direct depart- intelligence or reasonable suspicion to mental correspondence. investigate vehicle contents. Perhaps some of the most effective However, there are also a number of joint efforts include working with more specific legislative shortfalls tobacco producers, such as Phillip that have contributed to the rise of Morris (an American global tobacco the illegal tobacco trade. In particu- company), in order to combat the il-

Cigarette Smuggling: 6 Poland to Sweden legal industry. Up to July 2016 (when The agreements themselves are also the Phillip Morris agreement expired), intended as a deterrent to the major the EU had agreements with each manufacturers from being involved of the four major global producers in the illegal market. The primary of tobacco products. It must be not- function to achieve this is a legal- ed that two of these agreements are ly binding payment of 100% of the settlements to past lawsuits (Phillip evaded taxes in case a seizure is made Morris, settled 2004 and Japan To- of genuine (not counterfeit) products bacco, settled 2007) in which the EU in quantities exceeding 50,000 pieces. asserted the producers’ compliance Fines levied as a result of these agree- in the function of the illegal trade. ments totalled just over 70 million euro These agreements provide a formal between 2004 and 2012. Although this framework in which law enforcement figure seems imposing, it is estimat- authorities could cooperate with the ed to be only around 0.08% of the manufacturers directly. However, of- estimated tax losses resulting from ficials from the Polish Ministry of Fi- the trade during these years. Thus, nance revealed that this provision has although the agreements formalising never fully been realised as there is an cooperation with major players in the overwhelmingly negative perception legal market are a positive step, they of the industry, including its legal need to be addressed in order to be side. This has deterred open coopera- more effective. tion by any government agencies lest they are seen to be ‘supporting’ the industry.

Figure 2 – Viceroy brand cigarettes hidden in soccer balls for smuggling into Poland

The Illegal Tobacco Trade 7 Raw Tobacco other locally purchased materials and send them westwards. As they are Raw tobacco is a growing issue in the produced in the EU, the cigarettes are EU. The Polish Ministry of Finance not subject to extensive customs con- commented that, despite the magni- trol. Transportation from the location tude of its trade, it has been largely of production thus carries little risk. ignored in recent years. Currently, only four countries in the EU have regulations and limitations on the Impacts import of raw tobacco products, with Poland the first to enforce such legis- The illegal trade of tobacco products lation in 2012. Other states maintain a is a multibillion dollar industry which generally unregulated market for the directly feeds off government reve- product with countries such as Ger- nue. A 2016 KPMG report estimated many and Lithuania executing very that the EU as a whole loses 11.3 bil- limited policing of the trade. lion euro in tax revenue each year as a result of this criminal activity. Poland Raw tobacco is the key ingredient for bears the brunt of this, with an annual illegal local production of cigarettes shortfall of two billion euro. As the within EU borders. Organised op- quantities of tobacco products sold on erations can take advantage of this the black market grow, this figure will loophole to legally import tobacco continue to increase. Polish Customs, products into eastern countries in the essentially the EU’s frontline against EU with limited regulation. There, illegal smuggling, have recorded they illegally produce cigarettes with

Figure 3 - Raw tobacco leaves

Cigarette Smuggling: 8 Poland to Sweden a trend of drastic increase of the tions themselves as it is the individu- amount of tobacco products seized als involved who are persecuted and each year. This rise is indicative of an they rarely associate themselves to overall increase in the overall amount a terrorist organisation. This is even of goods being moved. despite the fact that there are strong statistical links between illegal ciga- Furthermore, beyond the health rette sales and other criminal activity concerns commonly associated with in particular regions. tobacco products, illegally produced cigarettes and tobacco have been reported to contain a variety of harmful contaminants. The most complete analysis was published by the American FDA in 2011. It reported that counterfeit cigarettes have “been found to contain rat droppings, camel dung, sawdust and tobacco beetles” and even “sand and … bits of plas- tic.” The integrity of the raw tobacco used in the production of these cigarettes has also been questioned. Tests conducted by the Center for Public Integrity on raw tobacco leaf used in production of Jin Ling cigarettes by Baltic Tobacco Factory, Kaliningrad found “[heavy] metals such as cadmi- um, pesticides, arsenic, rat poison and human faeces.” Perhaps the most shocking aspect of the trade is the destination of the proceeds. As organised crime groups generally exercise a monopoly on imports and sales within Europe, proceeds from these sales often go to fund further criminality. In Ireland, for example, reports on the cigarette black market often link it with the activities of the Real IRA (report from state.gov). These claims, however, are very difficult to tie to the organisa-

The Illegal Tobacco Trade 9 3. Poland - the Nexus of container seized) have fallen from five Trade in 2014, to one in 2015 and none as of August 2016. Simultaneously, smaller scale (and less costly in case of sei- Poland’s role zure) methods have seen increased use. For example, lorries carrying Poland has long been acknowledged 10,000 to 15,000 blocks of cigarettes as a key transit point for tobacco are in common use between Poland products being smuggled westwards and the Baltic countries. In July 2016, from the Baltic states and former two were seized by mobile customs Soviet republics. The eastern border units on the Polish border with Lithu- between Białystok and Ukraine has ania. Small aircraft and drones car- seen countless small-scale smuggling rying cigarettes have also seen use. operations, often run by individuals. One such example was the seizure of However, recent trends indicate a a light plane carrying over 20 mil- rise in more organised multinational lion cigarettes from Lithuania which organisations committing large-scale crashed in the Polish hinterland smuggling offences. According to (Information provided by the Polish KPMG, in 2015 alone, Polish authori- Ministry of Finance). A similar inci- ties seized 600 million cigarettes within dent occurred in August 2016 where its borders. three men of Polish citizenship were The changing methods smugglers arrested after landing a small ex-Sovi- use to import both cigarettes and raw et plane filled with counterfeit cigarettes tobacco into Poland reflect the past in the disused airport of Knislinge in successes of Poland’s customs and Northern Skåne. law enforcement in combatting them. Other methods have been witnessed Shipping container seizures (costing across the eastern border of Europe. smugglers around 125,000 euro per An article in the Economist from 2012

Figure 4 – Tunnel under Ukraine-Slovakia border. Published in ‘Tunnel vision’, The Economist, 24/6/2012

Poland – the Nexus of the Trade 10 reported the discovery of a 700m long Impact in Poland tunnel under the Ukraine-Slovakia According to the Polish Central Bu- border, shown in Figure 4. Officials -re reau of Investigation (CBS), approx- sponsible for the discovery estimated imately 20% of the tobacco products that approximately 50 million euro in consumed in Poland are illegal - ei- duty and excise tax had been avoided ther produced locally and not subject over the course of the tunnel’s work- to excise tax or smuggled without ing life. Such huge profits from such paying tariffs. The total loss of tax simple methods belies the magnitude revenue is estimated to be around two of the issue facing law enforcement in billion euro, split equally between the EU. Although this method has not illegal imports and illegal production. been identified in Poland as of yet, it Organised crime groups are wielding demonstrates the wide range of meth- an increasing monopoly. The king- ods available to smugglers. pins of the trade are often white collar The rise in domestic production criminals and generally of Polish or comes in response to customs and Ukrainian ethnicity. The proceeds border control success. Indeed, it has from the industry, according to the become the Ministry of Finance’s CBS, are generally laundered through primary concern in tackling the illegal legal businesses involved in trans- tobacco market. At the time of writing port, development and real estate or (early August), 20 illegal production sent offshore to tax havens. facilities have been raided. Compared A number of reports suggest that to 2015’s total of 18 (yielding 1300 illegal cigarettes are directly correlat- tonnes of raw tobacco – the equiv- ed with the presence of organised alent of 1.6 billion cigarettes), this crime groups. More alarming is the sharp rise indicates the rising prom- finding that the vast majority of the inence of a new smuggling strategy population have become desensi- (information provided by the Polish tised to the issue. An officer of the Ministry of Finance). Produced with- Ministry of Finance recounted his in EU borders and so not subject to personal experience as a border guard intense customs scrutiny, these ciga- on the Poland-Lithuanian border. A rettes are intended for export west- Russian-speaking man attempted to wards and pose a unique challenge to coerce the officer with a meeting in a law enforcement. restaurant for an unknown purpose. When told that the officer would not do business with a ‘bandit’, the man responded “I’m not a bandit, I’m a businessman.” Such a statement is

Cigarette Smuggling: 11 Poland to Sweden indicative of a change in perception Local Production – the Impor- of the illegal industry. Despite the tance of Raw Tobacco substantial damage done to the state, Raw tobacco is currently the primary characters within organised crime fig- target of Polish law enforcement. As ures understand their roles as simply the major material required for the ‘businessmen’, offering a product at a domestic production of cigarettes, it price that the consumer wants to pay. accounts for approximately half of Key issues in Poland all Polish cigarette exports (including Minimising the presence of illegal those in transit), both legal and illegal. tobacco products on the Polish mar- As only four EU member states (Po- ket and in transit is a multifaceted land, Slovakia, The Czech Republic process. It has evolved beyond simple and Latvia) have legal limitations or border checkpoints to include multi- controls on the import or use of raw ple agencies and all levels of govern- tobacco, it is generally easy to trans- ment. From interviews with the CBS port into the EU from sources such as and Finance Ministry, three issues Bulgaria, China and, to a lesser extent, stood out as the primary concerns for some South American states. Polish law enforcement. These are: Although the European Commission • Countering illegal domestic pro- and the European Anti-Fraud Office duction, (OLAF) only recently began to ac- knowledge the role of raw tobacco in • Policing Belarussian-sourced ciga- the illegal tobacco market, Poland en- rettes and acted legislation in June 2013 to con- • Managing the porous EU border. trol its presence on the Polish market. Within the next couple of years, the number of licenses to legally import

Figure 5 – Seizures of raw tobacco in Poland by year

Poland – the Nexus of the Trade 12 and process raw tobacco products their own experiences raiding known within Poland fell from 220 to 14, the production facilities only to find them current number (information provid- vacuum-cleaned of all traces of tobac- ed by the Polish Ministry of Finance). co and, thus, essentially not breaking This decline reflects Polish law en- the law. Indeed, the only other means forcement’s drive to centralise all (beyond the presence of tobacco) by elements of the legal tobacco industry which a facility could break the law into a more manageable core figure. is through copyright infringement if counterfeit cigarettes are being pro- Furthermore, production facilities duced. within Poland are difficult to police. As the possession of equipment to A presentation from the Polish Cus- produce cigarettes is not in itself toms Service (figure 6) reported a illegal, law enforcement must prove particularly interesting seizure from the presence of tobacco at the facilities a raid in Sosnowiec on January 28, or catch the facility during the pro- 2016. 1587kg of cut tobacco was duction process. Polish Ministry of seized, along with 2,400,000 cigarettes Finance officials offered accounts of and a large quantity of packaging

Figure 6 – Sosnowiec raid Images from Polish Customs

Cigarette Smuggling: 13 Poland to Sweden board printed with the ‘Marhaba’ images of this branding is shown in brand. Legally registered in Macedo- Figure 7. nia, the Marhaba label bears an un- The malleability of organisations canny resemblance to Marlboro Reds. to optimise their business practices Previously unseen in Poland, its use cannot be underestimated. Evolving indicates a high level of sophistication methods require constant updates in amongst illegal producers. legislation to ensure that law enforce- With the recent influx of Ara- ment can effectively operate against bic-speaking migrants, there has the illegal industry. A particular been a surge in demand for cheap example was the recent production of cigarettes. This has been further con- 70cm cigars to manipulate excise tax firmed by informants in the Swedish laws on tobacco products. The huge smuggling community. With soaring cigars would cost the equivalent tax demand, smugglers have surged to of a normal-sized cigar in tax and supply their wares as competitively as contain five times as much tobacco. possible. The below use of the Marha- The cigar would then be broken down ba label is indicative of the adaptabil- after import and its tobacco used for ity and acumen of the criminal organ- the production of cigarettes, which isations involved. In less than a year themselves are taxed at around twice after the migrant influx, the group the rate of cigars. Overall, the semi-le- involved was able to produce labels gal process would yield a profit purposed to identify with their target margin of approximately ten times market and maximise sales. Close-up production cost.

Figure 7 – Marhaba brand labelling and examples from the Sosnowiec raid

Poland – the Nexus of the Trade 14 Legislation was quickly updated to Belarus – an Export-Driven account for this loophole. Rather than Market 280 zloty (65 euro) per 1000 pieces of The two major cigarette factories in tobacco product, as was formerly the Belarus, Neman and Tabak-Invest, case, products are now taxed by their have a 2016 quota for domestic pro- weight, 280 zloty per 10kg of tobacco duction of 26.7 billion cigarettes. This in the products. To put this in per- quote is pinned by the Belarussian spective, under the former legislation, government to reported levels of cigars five times normal size were still domestic consumption (information considered ‘cigars’ and organisations sourced from Interview with cigarette were able to pay 280 zloty per 50kg of smuggling industry expert - 09.06.16). tobacco. This reported figure is often disputed Limiting the import of raw tobacco with some suggesting it may in be to the EU is a step which could yield as low as 15 billion. In any case, both great results continent-wide, as has factories are free to produce unlimited been the case more locally in Poland. quantities of cigarettes beyond the Organisations currently rely on the 26.7 billion quota, provided they are weak laws in a number of EU states to for export. gain access to the single market be- Although the destination of this ex- fore transporting the tobacco to areas port, according to Neman Factory’s suitable for production. OLAF closes ‘Commercial Proposal’ (found in Ap- an average of approximately 30 illegal pendix 1) is nominally former USSR factories per year, such as that shown territories, all Polish law enforcement in Figure 6. However, the activities of officers interviewed agreed that this the CBS in Poland demonstrate that is not the case. A 2014 KPMG report proactive policies and investigations revealed that the major destinations run domestically are much more of these exports is in fact Poland (3.15 effective in policing the illegal indus- billion cigarettes), Latvia (0.51 billion) try. In 2015 alone, their results were and Lithuania (0.87 billion) – all EU almost twice those of OLAF, with 59 states. Fittingly, in 2014 over half of all illegal tobacco handling facilities raid- cigarettes seized by Polish Customs ed in Poland. were manufactured in Belarus, as shown in Figure 8. Cigarettes purchased in Belarus can be bought in bulk at around 15 euro cents a pack. Once they cross the Polish border, this value increases around 1500%. The Belarussian gov-

Cigarette Smuggling: 15 Poland to Sweden ernment is aware of this reality, yet The involvement, or at least complic- does little to prevent the smuggling of ity of the Belarussian government in cigarettes out of its borders. Indeed, the illegal trade of cigarettes is cause cigarettes purchased above quota are for concern beyond the shear excess bought with a legal obligation to take of cheap cigarettes less than 15km them out of Belarus. The two facto- away from the Polish (and EU) bor- ries’ total production value accounts der. Essentially, addressing smuggling for approximately 2% of the total Be- at its source becomes a diplomatic as larussian GDP, around $1.5 billion per well as a legal issue. The only means year. Consequently, limiting cigarette to proceed in this matter is to address production is not possible without a the questionable production quotas heavy toll on the Belarussian econo- and limit excess, in cooperation with my. Indeed, the Belarussian govern- the Belarussian government. Until ment is the major stakeholder in both such an accord can be reached, each factories, owning 100% of the Neman year, billions of cigarettes carrying a enterprise and 50% of Tabak-Invest. legal obligation to be exported will be This may explain the legal endorse- produced within a short drive from ment of the factories’ recent sixfold Polish borders (information sourced increase in production quantities and from Interview with cigarette smug- commensurate increase in turnover gling industry expert - 09.06.16). (information sourced from Interview with cigarette smuggling industry expert - 09.06.16).

Figure 8 – Proportion of Belarussian-produced cigarettes in total Polish seizures

Poland – the Nexus of the Trade 16 The Porous EU Border Poland (information provided by the Polish Ministry of Finance). Poland’s law enforcement is regarded by OLAF as the most successful in the A 2015 report on smuggling trends in EU at addressing smuggling. Its suc- Latvia revealed the extent to which its cess, however, is undermined by the borders were compromised. It dis- failings of its neighbours. The bulk of closed that customs officers are aware the large-scale import of cigarettes no of approximately 80% of all cases of longer comes over the Polish borders smuggling, yet only act on 5-10% of with Belarus and Ukraine but through those cases (information taken from the Lithuanian border. Bypassing Po- 2015 ISDP report). It is not stated land’s external border minimises the whether this is due to pure laziness risk of seizures from an established or, more pessimistically, corruption. border checkpoint. Instead, smugglers However, the report details the cas- can cross into the EU single market es of four key figures in Latvian law through less effective borders in the enforcement who have been involved Baltic states and then proceed to in corruption. These figures’ posi-

Figure 9 – A lorry of cigarettes disguised in instant coffee cans seized at the Polish border

Cigarette Smuggling: 17 Poland to Sweden tions include the Chief Prosecutor of drawing very little risk. Indeed, of Financial and Economic Crimes, the the estimated 30,000 trucks crossing Deputy Chief of the Economic Crime the border last month (July), only Office and officials from the Ministry two seizures were made (information of Finance. provided by the Polish Ministry of Finance). The fact that a sovereign border governing access to the EU market is A similar issue is the direct St Peters- susceptible to such influence is itself burg to Kaliningrad channel, the T1 reason for alarm. However, when the route, which allows for free move- issue is projected by the open borders ment of goods between the Russian of the EU single market, it under- heartland and its Baltic satellite re- mines the efficacy of every state’s gion. The Polish Ministry of Finance customs and border services. For officials noted that there is an unstat- Poland, this has meant an influx of ex- ed agreement between the Russian tra-EU sourced contraband from the and Lithuanian governments which Baltic states to the north. Around 1000 allows goods to flow freely between trucks cross Poland’s northern border the two Russian territories. This each day giving little opportunity for allows goods to enter the EU freely, intensive security procedures. Crim- provided their stated destination is inal enterprises have an outstanding Kaliningrad. However, the Polish offi- opportunity to transport goods from cials noted that it is common practice outside the EU into Poland itself for these goods, having entered the

Figure 10 – Distribution of illegal tobacco product factory closures in Poland 2015 (on left) and between 1/1 – 1/4, 2016 (on right). Red dots indicate illegal cigarette factories raided and green dots cut-filler production facilities

Poland – the Nexus of the Trade 18 EU single market territory unchecked, April, 2016 is presented in Figure 10. to ‘disappear’. The goods lost are These success can largely be attribut- most likely transported westwards, ed to cooperation with partner agen- using Poland as a transit country. cies in neighbouring countries such as Lithuania.

Addressing the Issues Although there is formal cooperation between countries under the auspic- In recent years, Poland has shown es of Europol and OLAF, the officers demonstrable success in dealing with interviewed suggested that the most smuggling. The CBS in particular has effective contact was at a departmen- been extremely effective in addressing tal level. For example, intelligence smuggling and counterfeiting within sourced directly from a Latvian Poland’s borders. Indeed, at the time agency was partly responsible for the of writing, the CBS has been respon- closure of one of the factories men- sible for 14 of the 20 illegal factories tioned above. However, the officers closed (information provided by the interviewed reported that coopera- Polish Ministry of Finance). A dis- tion with Latvian agencies was not as tribution of these factories as of 1st effective as with Lithuanian agencies.

Figure 11 – Cooperative framework under ‘Via Baltica’, incorporating four branches of Lithuanian law enforcement

Cigarette Smuggling: 19 Poland to Sweden Indeed, they suggested that their successes with Lithuanian cooperation has resulted in a noticeable trend of organisations moving their operations to Latvia as a means of minimising operational risk. The framework for cooperation under ‘Via Baltica’ – a Lithuanian law enforcement initiative - is shown in Figure 11, showing a formally established shared intelligence capability across four law enforcement services for ease of contact with foreign agencies, a model for other states to aid cooperation. The pooled intelligence capability falls under the authority of the Customs Service yet allows for easy information-sharing with external agencies. Polish Customs officers utilise similar connections to maintain the integrity of the borders to great effect. They work particularly closely with CBS officers to systematically unravel -en tire smuggling networks. The results of this cooperation are clear – 70% of all cigarettes seized in Poland annually are by Customs officers. Minis- try of Finance officials, under whom Customs operate, commented that customs can, however, only be effective as long as they are supported by effective legislation which evolves to address changing methods. In the last two years, for example, excise tax laws have been changed three times to address changing methods and close legal loopholes (such as over- sized cigars).

Poland – the Nexus of the Trade 20 4. The Swedish Trade the offer proves very enticing for many (interview with cigarette smuggling industry expert - 09.06.16). Alternatively, delivery vans have Connecting Poland and Sweden been used which bear the logos of well-known delivery companies, such A number of methods are used to as DHL and Schenker as they raise lit- move cigarettes and, to a lesser ex- tle suspicion at customs checkpoints. tent, tobacco products from Poland to Such vans are generally acquired on Sweden. Around a half of this intake the second hand market from the will remain in Sweden for domestic delivery companies themselves on the sale, while the other half will transit condition that the logos are removed through Sweden to Norway, where it prior to use – but never are. The will either be sold or shipped further storage space of vans allows for large to British and Irish markets. A Swed- quantities of cigarettes to be shipped. ish customs officer maintained that Blocks of cigarettes are generally con- around 25 vehicles with illegal goods cealed by common consumer goods, enter Sweden every day. On average, such as candy or toys, bought cheaply around 50-20,000 cigarettes, 800 litres on the Polish market and then also of beer and a 100 litres of spirits can sold in Sweden (interview with pro- be smuggled on one van (information tected informant - 14.05.16). sourced from Swedish Customs – 28.04.16). One particular case involved a smug- gler who concealed blocks of ciga- Informants and specialists have de- rettes at the bottom of Ariel washing scribed the basic modus operandi of powder boxes, covering them with a trafficking cigarettes from Poland to layer of powder in the box themselves Sweden. The cigarettes are generally and then boxes full of powder above purchased on the Polish black market the compromised boxes. His commer- from domestic producers, although cial acumen also led him to fill the legal purchases are also involved. Ariel boxes, considered a higher-end They are loaded into cars customised brand, with cheaper, lower-quality for trafficking, with multiple secret Polish washing powder. On arriving compartments and caches. One infor- in Sweden, he would sell both the mant revealed that drivers are often cigarettes and the washing powder. Polish nationals who are offered 6000 This process, repeated almost daily, kronor per trip as well as receiving yielded such immense profit that he compensation for petrol and food was eventually able to fully fund the during the trip. Given the limited equipment for an illegal tobacco pro- legal repercussions if they are caught, cessing factory in Northern Poland.

The Swedish Trade 21 However, his success quickly dissi- that sell better in Sweden. Those ciga- pated as workers at the factory stole rettes that are smuggled from Russia the machines in his absence, leaving often have the health warning text him largely broke (interview with written in Russian and the country of protected informant - 14.05.16). origin isn’t known. They do not show much popularity on the market. The Polish CBS officers revealed that they Polish cigarettes are much preferred have pending investigations into as they are next to the same quality as two major organised crime groups Swedish ones (information sourced involved in smuggling cigarettes into from Swedish Customs – 28.04.16). Sweden. Although both cases are currently classified, the agents revealed that both groups are largely com- Domestic Sale prised of Polish nationals. However, they were unable to provide further Once the cigarettes are in Sweden, details, such as whether the partici- they enter a network of distributors. pants in the smuggling were residents Informants reveal these distributors of Poland or Sweden or what the either sell the cigarettes directly to main method of transportation used ‘regulars’ from their own homes or to was. small family-owned shops. The own- ers of the small shops have sought to The smuggling network across Swe- expand the market for their smuggled den and Norway is highly organized wares, selling both cigarettes and and there are permanent contacts alcohol to minors under the age of 18. receiving shipments from western Informants have commented that the Norway to northern Sweden. The shops use the attraction of cheap ciga- same smuggled cigarettes in northern rettes as a catalyst to also offer alcohol Sweden costs more than in Skåne or to underage consumers. Stockholm. Some will travel south to collect the smuggled goods them- When looking at the individuals selves or pay a little extra to have it behind the statistics of the illegal delivered. In Stockholm there are a lot tobacco trade, we find that a large of cigarettes which come from Latvia target market is young people. Either and Lithuania with the ferry so there those not above the legal age to pur- are many Russian cigarettes circulat- chase cigarettes and alcohol, or those ing in Stockholm whereas in Skåne willing to take the risk for the cheap- and up to Norway smuggled ciga- er product. One informant reported rettes are predominantly Polish. that there is no moral standard when it comes to selling their smuggled A Swedish customs officer informed goods, it is purely about shifting the us that it is in fact Polish cigarettes products as soon as possible.

Cigarette Smuggling: 22 Poland to Sweden further sale. However, the dominant concern is these companies’ practice Smugglers have also taken their of importing ‘building supplies’ from business to refugee camps. Such Poland, among which are hidden communities, where rule of law is large caches of illegal cigarettes. This seldom enforced, are an extremely practice cannot be ignored. In March valuable market for cheap cigarettes. 2015, Polish Customs intercepted a Their high demand has led to the rise concrete bridge segment coming from of a number of distribution networks, Belarus for use in construction. In its comprising of Swedish residents from core was hidden a shipment of ciga- a number of ethnicities, including rettes with a street value of $500,000 Kurds, Albanians and Arabs. (in- (information provided by the Polish terview with protected informant - Ministry of Finance). 22.06.16). The Cision report reveals that a num- Indeed, the refugee crisis and its asso- ber of local Police units in Sweden ciated rise in border security have not have had incredible success at com- halted the smuggling trade at all, but bating the presence and trade of ille- instead have provided a new market gal cigarettes within their jurisdiction. for it. One source reports that, during Gävle Police, for example, undertook the height of the crisis in 2015, when a two-year operation (from 2012 increased border patrols focused their to 2014) in cooperation with Gävle searches on minivan-type vehicles Municipality and the Tax and Cus- popular amongst people-smugglers, toms Administration to disrupt illegal cigarette smugglers used larger trucks trade in the area. Over the course to transport their goods without rais- of the project, a method of targeted ing suspicion. inspections and raids were carried out The source also highlighted the im- against suspected offenders. Having portance of Polish construction com- been reported as the city with the panies in smuggling practices. Work- highest concentration of illegal ciga- ers for these companies often bring rettes in Sweden in 2012 with 38%, in products purchased on the Polish 2014 Gävle scored only a 17% concen- black market to Sweden for tration with the same methodology.

“The smugglers themselves do not have any issues in selling to young people. If it’s sold on in a shop they will wait till the young people come in and ask after cigarettes or alcohol. They can also simply get their regular customers to ring and collect the cigarettes from their private homes. If you have contact with one underage person, you can be certain you have another twenty who can be potential customers.” (Interview with cigarette smuggling industry expert - 09.06.16)

The Swedish Trade 23 Magnitude of the Issue common on the Swedish market over the last three or four years as they are According to the 2016 Cision report, considered of a higher quality com- 12.8% of all cigarettes smoked in pared with other illegal brands. How- Sweden are untaxed. The breakdown ever, law enforcement has not been of the 12.8% figure was as follows: effective in countering this rise, with around 3.9% were imported legally as the most recent large cigarette seizure a duty-free product legal for personal coming from Poland in 2014, in which consumption and 8.9% of the ciga- 15 million Atu brand cigarettes were rettes consumed were from the illegal seized (information sourced from trade which either stem from foreign Swedish Customs – 28.04.16). branded cigarettes, illegally imported tax free cigarettes, counterfeit brands Most of the counterfeit duty free and illicit whites (brands manufac- cigarettes are manufactured outside tured legitimately in one country, but the EU. Evidence suggest they come smuggled and sold in another with- mainly from Russia, the Ukraine and out duties being paid). countries in the Middle East and are smuggled on transport ships in large An interview with the Customs Office containers. These cigarette packets in Gothenburg revealed that for- often have either English or Swedish eign-sourced cigarettes were gener- text on them to make them seem more ally produced in Poland or, less com- legitimate. The brands that are mostly monly, China. Cigarettes originating counterfeited are Marlboro and LM from Poland have become much more

Figure 12 – Breakdown of untaxed Swedish cigarettes, 2008-2016 , Cision 2016

Cigarette Smuggling: 24 Poland to Sweden (information sourced from Swedish and eventually to Oslo. Teams of six Customs – 28.04.16). or seven drivers transport smuggled goods (generally cigarettes and alcohol) along this route approximately Onwards from Sweden once a week, with another team oper- Despite the relatively high levels of ating each subsequent day. illegal consumption within the coun- The convoys are highly organised and try, a large portion of the cigarettes use a variety of methods to minimise smuggled into Sweden are simply their risk of capture. In Ljungskile, in transit. A law enforcement officer they disguise the cars with false specialised in the tobacco industry Norwegian registration plates. Each revealed that a number of routes convoy is led by a ‘scout’ car, which exist that take cigarettes directly from is empty of all contraband and thus Poland, through Sweden, to Norway. not at risk of seizure. The scout drives Once there they are either sold at ahead to check border areas for law almost twice the price they would be enforcement officers. The smugglers in Sweden or shipped further to the can also use decoy cars - poorly con- British and Irish markets. ditioned cars that purposefully look Svinesund, Örje and Kongsvinger suspicious and are thus stopped at are the road that the Polish smug- the border control. Of course these glers take from Sweden to Norway. cars are completely empty and whilst In Värmland alone there are twenty the check is in progress the other ve- routes to cross the border. The Nor- hicles loaded with contraband go on wegian Police have set up cameras unchecked. on certain roads but the smugglers As soon as a customs check is dis- take other routes or sometimes cross covered in Sweden, word will spread through the border through forests. amongst the smugglers. So the next They have also used security camer- day there will only be a couple of cars as to record license plates. However, stopped and by the third day none at the smugglers continually adapt all. The convoys often use remote bor- and have now begun to change their der crossings to the north as they are license plates regularly (information generally unmanned by Norwegian sourced from Swedish Customs – or Swedish law enforcement officers 28.04.16). (information sourced from Swedish Customs – 28.04.16).

One route leads from the Poland-Swe- After dropping off their goods in den ferry at Gothenburg through Oslo, the cars return to Sweden, Ljungskile to the Norwegian border where they change their registration

The Swedish Trade 25 plates back to their Polish originals. They then return to Poland via the same ferry route by which they ar- rived in Sweden (interview with cigarette smuggling industry expert - 09.06.16).

Cigarette Smuggling: 26 Poland to Sweden 5. Recommendations – meant that law enforcement agencies EU Level are often left to their own means, without the specialist support they would otherwise have from cooperation. Although the corporations themselves have teams responsible Cooperation with Corporations for combating illegal production and Both the CBS and Polish Finance protecting their brand against illegal Ministry commented on the effective- competition (lower quality products ness of cooperation with major legal being sold with their label), this is tobacco producers, such as British not, in itself, an end. It is imperative American Tobacco and Phillip Mor- to expand and deepen cooperation ris International. Indeed, these major between these teams and experts from corporations have a shared goal with the major corporations and law en- law enforcement in maintaining the forcement operatives working against integrity of the industry, as shown the illegal trade. in Appendix 2. As law enforcement Furthermore, acknowledgement of branches involved have little famil- the ends to which legal tobacco man- iarity with the intricacies of the in- ufacturers are going to combat the dustry, cooperation with specialists illegal industry must be recognised on from these corporations is incredibly a governmental level. Governments beneficial. Officers from the Ministry distancing themselves from major of Finance in particular commented producers is counterintuitive. The that experts from these corporations demand for illegal tobacco products and their professional insight into the exists regardless and it should be the industry have been indispensable in focus of all law enforcement agen- the past (information provided by cies to make sure this demand is met the Polish Ministry of Finance). Their with legal, taxable and controllable expertise has allowed estimations of products rather than black market the scale of the trade, the efficiency of contraband. Cooperating with corpo- criminals’ enterprise and the mapping rations with identical interests is thus of their network. an absolute necessity (information In July 2016, the cooperation agree- provided by the Polish Ministry of ment between European law en- Finance). forcement bodies and Phillip Morris Since Poland joined the EU and, by expired. No moves, however, were extension, the Schengen agreement, made to renew or expand it. Rather, smuggling has increased. Indeed, in the growing animosity towards the the last five years it has escalated dra- industry on a governmental level has matically. Many regions in Northern

Recommendations – EU Level 27 Poland have high rates of unemploy- It is only recently that both OLAF ment so the option to take well paid and the European Commission have illegitimate work can prove very ap- accepted the causal link between the pealing. It is not hard to find willing two entities. This change in attitude drivers. According to investigations is a positive start. However, simply by the Polish customs there is a town reacting to the presence of the mate- in the Drawsko Pomorskie region of rials is unproductive. All states need Northern Poland where almost all in- to take a proactive approach through habitants are somehow connected to legislative measures to enforce a the illegal trade to Sweden and Nor- consistent policy across the EU single way, right up to the mayor (informa- market. tion sourced from Swedish Customs While EU states, particularly those on – 28.04.16). the eastern border, exercise limited One way to approach the problem of control of raw tobacco imports, there smuggling could be to tackle the heart will be a steady influx of raw tobacco. of the issue and try to stimulate the le- One ton of raw product is enough gitimate job market in the areas most to produce 1.2 million cigarettes. To renowned for illegal operations. This aggressively control the import of cig- could be instigated through a trans- arettes on the border while raw tobac- national agreement between Sweden, co goes through largely unchecked is Norway and Poland or a corporation self-defeating. Poland’s example has at EU level. With the loss of taxes on demonstrated the utility of govern- goods and the finances being spent on ment-sanctioned licensing practices trying to prevent the illegal trade, the in this regard to centralise imports investments needed to improve em- to a number of core manufacturers. ployment in Northern Poland could Under this model, legal corporations make a lot of economic sense. By no can maintain production while other means would this be a silver bullet, imports of otherwise illegal product but, considering that many of those can be controlled and minimised. involved in smuggling operations are doing so for lack of other options, it seems necessary to provide suitable Awareness of Port Traffic alternatives for them. Although Poland has drastically reduced illegal smuggling through shipping containers, the CBS com- Raw tobacco legislation mented that ports remain viable Poland has long pushed for the recog- methods for smugglers to import nition of raw tobacco as a prominent large quantities of contraband part in the black market for cigarettes. through a largely unpoliced method.

Cigarette Smuggling: 28 Poland to Sweden Shipping containers can hold up to try of Finance). 10 million cigarettes each. Thus, just one container of cigarettes reaching the British market, for example, could Closer Control of Borders yield profits of just under 3 million Every interview conducted in the euro. research of this paper mentioned, at Despite the quantity of incoming port some point, the ineffectiveness of the traffic, it is advisable that customs EU border. Owing to the European officers at ports maintain an effective single market, every state has a stake method of policing. This method in the effective operation of the EU’s should incorporate cooperation with external border. However, its current the international monitoring centre operation indicates that many states for shipping in Rotterdam, dialogue are either oblivious of its shortcom- with international port services and ings or indifferent to them. In the case intelligence sharing with law enforce- of the illegal tobacco trade, almost ment agencies. The primary focus every state stands to lose. Thus, co- of this method should be to identify operation between both agencies and suspicious containers before they states is essential. arrive at the port in question and thus The Latvian border was identified triage those containers which require by the Polish Ministry of Finance as further investigation through x-ray the most problematic for smuggling screening or similar technique (infor- goods into the EU. According to a mation provided by the Polish Minis- Polish official, a mid-ranking -offi

Figure 13 – A seizure of Jin Ling cigarettes by Polish Customs

Recommendations – EU Level 29 cer stationed on the Latvian border is paid approximately 600 euro per month. There have been numerous reports of Latvian officers supplement- ing this income through taking bribes. One account reports that an unidentified Latvian officer charges 50 euro per ‘box’ (an unidentified amount, assumedly 25 cartons) of cigarettes smuggled across the border. The officer in question was, at the time of the source’s publication, still an active customs officer (information sourced from protected informant – 22.06.16). Incentivising the officers on these borders to be as effective as possible is the first step in dealing with the issue. With the support of stricter legislation against imports of both cigarettes and raw tobacco, customs officers have the capacity to stop the majority of the trade. As mentioned earlier, there are current ‘buy-back’ agreements between the EU and the four major tobacco manufacturers. These entail a sizeable rebate to the EU for each package of cigarettes produced by the manufacturers seized as contraband. Allotting a proportion of this income to the officers responsible for the seizures seems an option states could explore. For example, the officers who consistently uncover smuggling operations should receive a salary that reflects the impact of their work.

Cigarette Smuggling: 30 Poland to Sweden 6. Recommendations - of contact with the Polish authorities. Sweden The Polish Ministry of Finance commented that it is difficult to cooperate with Swedish authorities as there is no single agency with overriding Macro Level responsibility for cigarette smuggling. Sweden should prioritise addressing Maintaining a direct point of contact the illegal cigarette industry either at in Warsaw is an effective means of its borders or before it even reaches combating this confusion and prior- them. However, Sweden currently itizing intelligence flows. An officer has far too few customs officers to from the Polish Ministry of Finance effectively tackle the growing influx. recalled an episode when he had to The Gothenburg Customs Office call a personal friend in the Swedish commented that the current number Customs in the middle of the night of officers is too small to even manage to report an illegal shipment of raw the border as expected. Additional tobacco arriving in Gothenburg. Such officers and resources allocated to confusions can be hugely costly to known smuggling points, such as the Swedish state and demonstrate a the Poland-Sweden ferry routes, are necessity for formal cooperation with essential. Indeed, the capacity of Swe- Poland. den’s law enforcement now pales in comparison to the gravity of the issue they face. Personal Scale Recent cuts in overseas-based per- Reports with informants within the sonnel, assumedly to cut spending, smuggling community have offered are counterintuitive. Since the recall insights on how to combat it on an of Swedish liaison officers from -Po individual level. These measures are land in 2012, cooperation with Polish predominantly deterrent in nature, authorities has been hardly existent, addressing the perceived lack of legal perhaps contributing to the paucity repercussions and monetary gains. of seizures coming from Poland. The Ideally, these will limit the number CBS officers interviewed, despite of couriers willing to be involved in actively working on a case involving smuggling the cigarettes into Sweden, smuggling to Sweden, revealed that directly combating organisations’ they do not have contact with any supply. Swedish agencies. The tax losses from Reports with informants within the the large quantity of cigarettes cur- smuggling community have offered rently entering Sweden far outweighs insights on how to combat it on an the cost of maintaining a direct point

Recommendations - Sweden 31 individual level. These measures are Secondly, one informant particularly predominantly deterrent in nature, noted the influence of dog units as addressing the perceived lack of legal a deterrent measure. Indeed, Pol- repercussions and monetary gains. ish authorities mandate at least one Ideally, these will limit the number sniffer dog unit per border control of couriers willing to be involved in shift because of their effectiveness. smuggling the cigarettes into Sweden, Both the Ministry of Finance and the directly combating organisations’ CBS noted the results of such mea- supply. sures. Enforcing such measures at Swedish border control points seems Firstly, tougher laws against those a prescient option, particularly in caught smuggling are a necessity. areas which require efficient checks Many participants see smuggling sim- to be effective. This point has even ply as a short-term vocation which been raised by the Swedish Customs generates a sizeable income. Without officials as an advantageous and cost this work they would be unemployed effective method to tackle cigarette so for them the risk is definitely smuggling. worth the pay off. Usually the threat of being caught or receiving any An example of such locations are the real punishment is low and at most Poland-Sweden ferry ports. Every they’re risking three to five months source consulted in the writing of this in a Swedish prison. Given the high report commented on the regularity standards of prisons in Sweden, this of their use in smuggling, with the does not always act as a suitable de- Gothenburg Customs Office estimat- terrent. ing that approximately 20-25 cars smuggle cigarettes per ferry per trip. As such, their interest is solely finan- However, border control for vehicles cial. Enforcing harsher penalties for coming off a ferry remains extremely involvement, including much greater ineffective. Anecdotal reports suggest fines is a simple method of addressing that around four vehicles are properly this. Furthermore, a number of par- inspected before the wave of traffic ticipants use their own vehicles in the coming off the ferry forces customs smuggling process. Enforcing manda- officers to let vehicles through with- tory seizure of any vehicle involved in out proper inspection. Using dogs to smuggling is a necessary countermea- inspect these vehicles is a quick and sure. As a number of these vehicles effective alternative to the current are customised (at considerable cost) situation. to more effectively smuggle larger quantities of cigarettes. Returning ve- Authorities should also be able to hicles involved in seizures is allowing confiscate the cars used in smug- the continuation of the process. gling runs. Sometimes the same car

Cigarette Smuggling: 32 Poland to Sweden can make fifty trips in a short space (information sourced from protected of time. Norwegian Customs have informant – 22.06.16). As the type of the authority to take the cars direct- people involved in the trade have no ly from the perpetrators, whereas in qualms with having been in prison, Sweden the car needs to be returned the law is not an effective deterrent to to them directly. Many of the cars their actions. This might be addressed used for smuggling can be in extreme- by a loss of license for the premises ly poor condition, with no seatbelts involved in knowingly selling illegal and worn parts. However, the custom goods. officers cannot seize them as they are Finally, the issue which has poten- registered to a Swedish owner. It is tially the most impact on improving often the case that the car is registered resources for countering smuggling is in Sweden to an owner who may the negative effect this trade is having have up to 25-35 vehicles registered in on young people. With the legal age his or her name. to purchase cigarettes in Sweden at 18 Giving Swedish custom officers the and alcohol at 21, the smugglers have authority to seize vehicles that are not cornered a market in which they can fit for the road would hamper the ef- take full advantage. One may argue fectiveness of smuggling operations. that this is no longer simply a ques- In Norway, authorities have a policy tion of lost taxes and underhand busi- to reprimand cars that look to be in ness but a far greater atrocity which is very poor condition but this was only putting young people’s health at risk. after a deadly accident where one Policy makers should be careful not such car crashed causing the death of to simply look at the statistics and im- another innocent driver. Furthermore, plement counter measures on a cost there needs to be an opportunity to basis solution but realise that behind take legal action against Swedish these figures, young people make up citizens registered with so many cars a substantial portion of the customers involved in smuggling. In this case, in this trade. If the Swedish Ministry fines and even imprisonment could of Public Health (Folkhälsoenheten) act as a suitable deterrent. backed up a campaign with the customs office to raise awareness of Despite the fact that great success has the harm this was doing to Swedish been seen in many areas, further con- youth culture, then we could quickly trols need to be enforced on outlets see this become a priority issue. selling contraband. It was noted that token prison sentences of a few weeks are in no way a deterrent, but, as one informant commented, a time for those charged to catch up with old friends

Recommendations - Sweden 33 7. Avenues for Future Exploring the results and outcomes of the trade is necessary to understand Research the industry as a whole. Sweeping generalisations that buying illegal cigarettes is funding groups such as Current literature in the area is not Al Qaeda and ISIS may be effective extensive. Most reports detail the cur- marketing against consumption by rent state of the illegal trade in vari- the population, but they do not offer ous countries. Few investigate sources law enforcement or other government of the cigarettes and the environment agencies an insight into the magni- in which they operate. Fewer still tude of the issue they are facing. Pro- offer insights into how such a market viding this insight is the next logical might be combatted. However, over step in fully coming to terms with the entire research of this report, not what such a trade really means for the one report explored the outcomes countries it affects. of the trade. That is, analysis often concluded that income from the trade went to ‘further criminal activities’. However, a number of sources suggested this generalisation might con- ceal a more sinister reality.

Figure 14 – Viceroy brand cigarettes discovered by Polish Customs concealed in a lorry

Avenues for Future Research 34 Acknowledgements (which asked to remain anonymous) • International Specialists (who also We would like to thank the following asked to remain anonymous) for their invaluable help in research- • A number of informants within ing and writing this report: the illegal industry itself • Swedish Customs, Gothenburg Special thanks also to Oskar Gus- • Swedish Police tafson, intern at the ISDP, for his • Swedish Bureau of Economic contribution to the report. Crimes All photos are courtesy of Polish Law • Swedish Tax Authority Enforcement. • Polish National Police (CBS) Cover designed by Harryarts - • Polish Ministry of Finance Freepik.com • A Major Swedish Security Firm

Figure 15 – Cigarettes seized by Polish Customs with Cyrillic labels

Cigarette Smuggling: 35 Poland to Sweden Appendix 1 – Neman Factory, Grodno ‘Commercial Proposal’

Appendix 36 Appendix 1 – Neman Factory, Grodno ‘Commercial Proposal’ (continued)

Cigarette Smuggling: 37 Poland to Sweden Appendix 2 – Further Statistics from Customs Service Seizures in Poland

All seizures recorded:

Year Quantity seized Number of seizures Average quantity per seizure 2013 372 529 295 93 697 3 976 2014 383 937 450 105 040 3 655 2015 428 139 705 112 199 3 816

Seizures in personal cars: Year Quantity seized Number of seizures Average quantity per seizure 2013 146 907 790 69 420 2 116 2014 176 373 235 82 900 2 128 2015 167 987 570 92 293 1 820

Seizures in lorries / trucks: Year Quantity seized Number of seizures Average quantity per seizure 2013 121 718 820 2 517 48 359 2014 61 561 600 2 025 30 401 2015 103 355 950 1 953 52 922

Seizures in busses (regular connections and tourist coaches): Year Quantity seized Number of seizures Average quantity per seizure 2013 22 508 180 5 508 4 086 2014 24 875 190 5 413 4 595 2015 15 331 845 4 505 3 403

Seizures in trains (both: passenger and cargo): Year Quantity seized Number of seizures Average quantity per seizure 2013 24 897 100 1 719 14 483 2014 35 271 530 1 180 29 891 2015 40 106 625 952 42 129

Appendix 38 Illegal factories producing cigarettes (including counterfeit), detected in 2015.

There were 9 illegal cigarette factories dismantled in Poland in 2015 – details below:

1. Turek (central-western part of Poland), detection on November 9th by the Police a) 1 complete production line (2 machines) b) goods seized: • 89.000 cigarettes • 915 kg of tobacco (fine cut tobacco).

2. Konstantynów Łodzki (central part of Poland), detection on October 29th by the Police. a) 1 complete production line b) goods seized: • 901.000 cigarettes • 964.000 kg of tobacco (fine cut tobacco) • 424,4 kg of tipping paper to cover the filters.

3. City of Bydgoszcz (north-central part of Poland), detection on October 26th by the Police. a) 1 complete production line b) goods seized: • 600.000 cigarettes (MG brand) • 3.200 kg of tobacco (fine cut tobacco) • components (filters, rolling paper, foils, adhesives).

4. Slupno (near Warsaw, central part of Poland), detection om October 19th by the Police a) 1 complete production line b) goods seized: • 609 kg of tobacco (fine cut tobacco).

5. Michalow-Reginow (near city of Radom, central part of Poland), detection on September 22nd by the Police a) 1 complete production line b) goods seized: • 1.100 kg of tobacco (fine cut tobacco).

Cigarette Smuggling: 39 Poland to Sweden 6. Motoga (south-eastern part of Poland), detection on September 17th by the Police a) 1 complete production line b) goods seized: • 12.200 kg of tobacco (fine cut tobacco) • components (filters, rolling paper, foils, adhesives, printed materials).

7. Myslowice (southern part of Poland), detection on July 27th by the Police a) 1 complete production line (4 machines) b) goods seized: • 1.418.000 cigarettes (MG, PRINCE, MARLBORO brand) • 3.201,5 kg of tobacco (fine cut tobacco) • components (filters, rolling paper, foils, adhesives, printed materials).

8. Sycewo (central-western part of Poland), detection on June 23rd by the Police a) 1 complete production line b) goods seized: • 2.002.000 cigarettes • 720 kg of tobacco (fine cut tobacco)

9. Glebokie (central part of Poland), detection on June 23rd by the Police a) 1 complete production line b) goods seized: • 1.928.500 cigarettes • 4.771 kg of tobacco (fine cut tobacco) and 17.090 kg of tobacco leaves • components (filters, rolling paper, foils, adhesives, printed materials).

In addition, some tobacco-processing facilities were detected and dismantled – details below:

1. City of Lodz (central Poland), detection on January 22nd by the Police c) 1 complete fine-cut tobacco production line d) goods seized: • 2.011 kg of tobacco (tobacco leaves)

2. Koscierzyna (north part of Poland), detection on February 10th by the Police. c) 1 complete fine-cut tobacco production line d) goods seized: • 5.500 kg of tobacco leaves and 2.930 kg of fine cut tobacco.

Appendix 40 3. Ciosny (central Poland), detection on April 23rd by the Police. c) 1 complete fine-cut tobacco production line d) goods seized: • 2.575,2 kg of tobacco leaves.

4. Radom (central Poland), detection on April 9th by the Police c) 1 complete fine-cut tobacco production line d) goods seized: • 615 kg of tobacco leaves.

5. Ilawa (north-eastern part of Poland), detection on June 25th by the Police c) 1 complete fine-cut tobacco production line d) goods seized: • 50.336 kg of tobacco leaves.

6. Zielona Góra (south-western part of Poland), detection on September 24th by the Police a) 1 complete fine-cut tobacco production line b) goods seized: • 15.080,5 kg of tobacco leaves and 5.917,5 kg of fine cut tobacco.

7. City of Lodz (central Poland), detection on July 27th by the Police a) 1 complete fine-cut tobacco production line b) goods seized: • 2.843,8 kg of tobacco leaves.

8. City of Bydgoszcz (north-central part of Poland), detection on September 17th by the Police a) 5 tobacco-cutting machines b) goods seized: • 7.117 kg of tobacco leaves • 111.360 pcs. of cigarettes • empty cigarettes packages (printed marks of MARLBORO, L&M, BRADLEY brands).

Cigarette Smuggling: 41 Poland to Sweden 9. Kolonia Głowa (central part of Poland), detection on October 2nd by the Police a) 1 complete fine-cut tobacco production line (5 machines) b) goods seized: • 26.845 kg of tobacco leaves.

10. Polkowice (south-western part of Poland), detection on October 19th by the Police a) 1 complete fine-cut tobacco production line (4 machines) b) goods seized: • 1.332,8 kg of tobacco leaves.

11. Kamieniec Ząbkowicki (south-western part of Poland), detection on April 24th by the Police a) 3 tobacco leaves-cutting machines b) goods seized: • 8.146 kg of tobacco leaves.

12. Zgierz (central part of Poland), detection on May 25th by the Police a) 1 tobacco-cutting machine b) goods seized: 736 kg of tobacco leaves and 1.525 kg of fine cut tobacco.

Appendix 42