VIDEO: Tobacco Wars

'Tobacco Wars'

3 March 2025

Four Corners

DAN OAKES, REPORTER: I've been tracking the ship here on the on the ship tracker for two weeks as it's gone from Indonesia down the East Coast of Australia. We can't see it yet. It's somewhere out there, getting closer, but it's picking up speed. A ship sails out of the mist and into Port Phillip Bay. We've got intelligence there's a container carrying over a million dollars worth of black market cigarettes on board. Nationally the illicit tobacco trade is worth billions.

TONY SMITH, ASSISTANT COMMISSIONER AUSTRALIAN BORDER FORCE: If I remove this piece of concealment coming through, we've got Manchester brand cigarettes.

DAN OAKES: It's fuelling a fiery turf war as organised crime battles for profits

JASON KELLY, DETECTIVE SUPERINTENDENT VICTORIA POLICE: We're averaging a couple of arsons a week. In my 30 years of policing, this is something unique.

AHMED AL ESSAWI: I'm one of Kaz's boys… Listen love, we're Iraqis we're down from Melbourne, we're comin' down to take over this shop.

DAN OAKES: Bringing death and destruction to Australia's streets.

ROHAN PIKE, LOBBYIST: people here are sick of fire-bombings every second day. And it just gives the impression that law and order is outta control

DAN OAKES: It's costing the federal government billions in lost taxes.

CBS OFFICER: Well, that box got 50 in it, so that box there is worth 8,000 bucks.

DAN OAKES: …and threatening decades of hard-won progress in the fight against deadly tobacco.

KEVIN RUDD: ..the most hardline regime for cigarette packaging anywhere in the world.

ROHAN PIKE: This policy is perhaps one of the biggest failures in Australian history, really.

DAN OAKES: We uncover how the trade works, who's behind it, and if authorities can stop it.

Title: TOBACCO WARS

DAN OAKES: To grasp the monumental scale of the illicit tobacco problem in Australia, you have to see it at street level. Hundreds of stores flogging smuggled cigarettes to grateful customers.

DAN OAKES: So I'm here in Noble Park in Melbourne, southeastern suburbs. I spoke to some contacts in the in the industry and they told me that there's an illicit tobacconist here that is probably one of the busiest and most lucrative in the state. We've got a concealed camera in this coffee cup, so I'm going to head into this tobacconist now and see whether they're actually selling any illicit brands.

SHOP ASSISTANT: Hi, how are you?

DAN OAKES: Good thanks.

DAN OAKES, REPORTER: This isn't the first time I've been to this store. I know they sell an array of black-market brands… Double Happiness, Esse, counterfeit Marlboros and others…

DAN OAKES: Manchester Sapphires, please.

SHOP ASSISTANT: How many?

DAN OAKES: Just one pack. Thanks.

DAN OAKES: The black market has erupted across the country.

SHOP ASSISTANT: Still on special $13

DAN OAKES: Oh good, okay, thanks.

DAN OAKES: Police say out of 1300 tobacconists in Victoria, a thousand sell smuggled cigarettes.

SHOP ASSISTANT: $7.00 change. Thank you so much.

DAN OAKES: Thanks

SHOP ASSISTANT: Have a lovely night.

DAN OAKES: There are a lot of people in there and they were charging $13 for a pack of Manchester's, which is the cheapest that I've seen and is roughly 1/3 the price of the cheapest pack you'd be able to buy at the supermarket. I've been watching this shop for days… a constant flow of customers goes in and out — carrying cartons of cigarettes. All paid for in cash. We got this tip, and others, from tobacco industry sources. It's staggering — Australia has world-leading tobacco controls, yet the black market is thriving… in plain sight.

The cheapest legal pack of 20 cigarettes costs you about $33… thirty of that goes to the government in tobacco tax, or excise, and GST. If you buy an illegal pack, it costs you on average $17. None of that goes to the government.

DAN OAKES: Morning, can I get a 20 Manchester sapphires please?

DAN OAKES, REPORTER: For years, authorities were blinkered to the threat

DAN OAKES: …Just one pack.

SHOP ASSISTANT: Sapphire, Sapphire..

DAN OAKES: Now, outpaced by the explosion of the illicit trade, they're scrambling to catch up. There's one particular brand that seems to be everywhere… It's sold in stores across Australia.

DAN OAKES, REPORTER: Can I get 20 Manchester Sapphires please?.. Do you have Manchester Sapphires?

SHOP ASSISTANT: Sapphire Manchesters?

DAN OAKES: Manchester Sapphires.. Yeah… just one pack thanks…

DAN OAKES: The true size of Australia's tobacco black market is unknown, but the big tobacco companies say brands like Manchester are leading the pack. So this small shopping strip in the south-east of Melbourne is just the perfect example of how prolific these illicit tobacconists are now. In the space of 50 metres you've got one there, one there and one there, all selling illicit cigarettes. Criminal gangs have been exploiting our regulatory failures: seizing on the massive profits and taking advantage of weak penalties. It's had devastating consequences on people's lives. Just after 2am two men firebombed a townhouse in Melbourne's outer west. Inside, 27-year old Katie Tangey, a performer with no links to illicit tobacco, was desperately calling triple zero.

DETECTIVE INSPECTOR CHRIS MURRAY, VICTORIA POLICE: Just…nothing short of a tragedy.

DAN OAKES: Firefighters arrived, but couldn't save Katie.

DETECTIVE INSPECTOR CHRIS MURRAY: It was probably her first time really away and by herself housesitting for her brother who's on his honeymoon and she's been subjected to the most appalling, despicable act one can imagine.

DAN OAKES: Police say neither Katie nor her brother had any connection to the Tobacco Wars.

DETECTIVE INSPECTOR CHRIS MURRAY: These offenders have targeted the wrong address.

DAN OAKES: Katie Tangey was the first innocent life lost—but there had already been several close calls. In January last year, a tobacco shop in Melbourne's outer north was set ablaze in the early hours of the morning.

AINSLIE RYAN: There was a little bits of sparking everywhere and it was flying straight into the house and they're just loud pops, pops and things flying everywhere and then big things sort of popping up and flying in the sky.

DAN OAKES: A family was living in a unit at the back of the shop.

AINSLIE RYAN: The younger kind of girl, she was just crying at the front and just devastating. She just broke my heart because it was like, it's no longer just someone's shop it's someone's house as well.

DAN OAKES: This was the latest in a spate of fire-bombings across Victorian streets.

JASON KELLY: In my 30 years of policing, this is something unique.

DAN OAKES: How many fire-bombings are we up to, to date?

JASON KELLY: So we're 120 arson attacks across, uh, Victoria we're averaging a couple of arsons a week.

DAN OAKES: The wave of arsons started spreading interstate, hitting Western Australia, Queensland and engulfing South Australia too.

BRETT FEATHERBY, DETECTIVE CHIEF INSPECTOR, SOUTH AUSTRALIA POLICE: we had a set, an offensive arson in July, 2024. We then had one in August of 2024 as well. Between September to October, we then had 16 arsons.

DAN OAKES: The mayhem in Victoria is being driven by criminal syndicates battling for control of the trade and settling personal scores. The Haddaras are said to have controlled Victoria's tobacco trade, with Fadi Haddara at the helm of a powerful, criminal empire. Underworld boss Kaz Hamad is now fighting for control.

KAZEM HAMAD: You're offering two grand a week and hundred grand…

DAN OAKES: Four Corners geo-located his whereabouts in this video to Deira in Dubai,

though he's virtually untouchable wherever he now is in the Middle East. Hamad has been paying foot soldiers to firebomb tobacco stores and extort shopkeepers.

AHMED AL ESSAWI: I'm one of Kaz's boys… You've got 24 hours. If you're not out of here by [inaudible], this shop is gonna get burnt down.

DAN OAKES: These aren't the only players. Tobacco's so lucrative, multiple syndicates have jumped into the game.

JASON KELLY: Certain syndicates were looking at, uh, forming a commission to control the pricing of illicit tobacco here in Victoria and nationally. We believe that, uh, formation of that commission, uh, didn't go well for the particular syndicates involved and that there was a falling out. And as I say, that has ended poorly.

DAN OAKES: Two months ago, champion boxer Sam "The Punisher" Abdulrahim was executed in a Melbourne car park — the latest casualty of the tobacco wars. The Punisher was a major player in the Tobacco Wars and his death has brought relative quiet to the streets. But sources tell me the tobacco wars are far from over.

DAN OAKES, REPORTER: How did smokers from Hobart to Far North Queensland come to rely on Manchesters, turning them into one of Australia's most sought-after black-market cigarettes? The story begins half a world away, in a commercial hub in Dubai called Jebel Ali.

TELITA SNYCKERS, AUTHOR AND TAX AND CUSTOMS LAWYER: Jebel Ali is a free trade zone. A lot of the manufacturing, um, of a product like this within Jebel Ali could very well be legal and licit.

DAN OAKES: Telita Snyckers is one of the world's foremost experts on the illicit tobacco trade. Manchesters are legally manufactured in and sold from Dubai, but then smuggled into Australia.

TELITA SNYCKERS: So at the point of manufacture, it's difficult to seize them, it's difficult to detain them because, um, they're not illegal. They're being manufactured quite legally. The difference is that they are manufactured with the express intent of being sold on the illicit market of a different country. So where they are sold, no duties are paid on them, no taxes are paid on them.

DAN OAKES: Industry sources estimate there are around 20 factories producing up to 200 billion cigarettes flooding out of the UAE every year, right under the noses of the Emirati rulers.

TELITA SNYCKERS: Free trade zones do create investment opportunities. They do create significant job opportunities for any country. And I think particularly for a country like the UAE, where they, they need to start investing in, in a future where they might not be as oil rich as they are today, and so that's, you know, a large part why it's so important to them.

DAN OAKES: I asked the Emirati government what they are doing to stem the flow of cigarettes from Jebel Ali, but they didn't respond. I've uncovered that the man who owns Manchester is an influential Syrian businessman operating out of a free trade zone in Dubai. Here he is meeting the Russian Foreign Minister. While he owns Manchester, there's no suggestion he smuggles cigarettes. I thought I'd give him a call and ask him what he thought about the fact his product is smuggled into Australia in such massive quantities and whether he's going to do anything to try and stop that.

DAN OAKES (ON THE PHONE): Hello Dr Al-Mahamid. My name's Dan Oakes. I'm a journalist at the Australian Broadcasting Corporation.

DAN OAKES: A short while later, I get a voice message from Khaled al-Mahamid. This is the first time he has ever spoken on the record to western media about Manchester cigarettes. He denies the Manchesters flooding the Australian black market are his.

KHALED AL-MAHAMID, MANCHESTER CIGARETTES: My dear, stop the fake, the fake cigarette, okay, come from Cambodia and Vietnam. That's the more problem, okay. They're making lot of huge quantity, Vietnam and Cambodia. Not our. This is all copy.

DAN OAKES: I sent Khaled al-Mahamid a list of detailed questions. This time he replied in writing:

KHALED AL-MAHAMID: "We are not responsible for any smuggling of cigarettes to any part of the world… We are doing all our business under the law of UAE. We are not responsible [for] what everyone [does] in the end."

DAN OAKES: In affluent Australian suburbs, these same cigarettes are sold openly on the black market. Border Force has seized thousands of cartons of them. They're stored at a covert location.

TONY SMITH: We have a container that's, uh, over there at the moment.

DAN OAKES: The night before we film, Border Force hit the jackpot, intercepting a container full of illicit tobacco.

DAN OAKES, REPORTER: What are they saying was in this?

TONY SMITH: In this one we've got apparel. In terms of clothing apparel coming through. When we actually look behind, and this is what our x-ray gives us an indication for. And if they remove this piece of concealment coming through

TONY SMITH: Manchester brand cigarettes in this consignment and estimated around 10 million cigarettes in this container all the way through.

DAN OAKES: So it's essentially potentially a $10 million load. As we walk past pallets stacked high with cigarettes confiscated by Border Force in just one week…

TONY SMITH: last week alone, we seized around 59 million cigarette sticks…

DAN OAKES: Tony tells me there's one brand they're seeing over and over.

TONY SMITH: You can see with these products here, um, Manchester brand tobacco being imported within the cartons.

DAN OAKES: But the cigarettes Border Force doesn't intercept flow through the hands of organised crime onto Australia's streets.

DAN OAKES, REPORTER: And so what, what, brand of cigarettes are these?

We see these shops mushrooming everywhere and.. Um, is there a concern that, uh, that, you know, the horse has bolted on this?

TONY SMITH: We'll do everything we can at the border and we do everything we can offshore, but equally we need to be working domestically.

DAN OAKES: Tony says while Australians continue to smoke black market cigarettes, the federal government will keep losing tax revenue.

TONY SMITH: This year, financial year alone around 2.3 billion in lost excise in revenue that could have been, uh, received at the border. It's a significant amount of money that could have been funnelled into roads, but importantly health, education and all of those other things that we rely on day to day as a community. And the worst part about that, it is, it's not just being wasted, it's been used for other forms of criminality could be converted into border control drugs, weapons, firearms, or anything else that, um, is no longer a victimless crime.

DAN OAKES: We've managed to get hold of the bill of lading — a kind of delivery receipt — for the Cosco Valencia — the ship we tracked for several weeks down the east coast of Australia.

DAN OAKES: There's no evidence that the owners of the Cosco Valencia were aware of its illicit cargo. We obtained the intel about this ship from insiders at international ports.

DAN OAKES, REPORTER: This is, um, a bill of lading. Can you just, I guess, talk, talk me through like what, what are the significant parts of it?

TONY SMITH: In this case, we can see Melbourne with an estimated time of arrival, um, being on the 17th of November.

DAN OAKES, REPORTER: The key to smuggling lies in deception — falsifying crucial shipping documents like this one from the Cosco Valencia — to hide what's really inside.

DAN OAKES: How have they tried to obscure the fact that there are cigarettes in this container?

TONY SMITH: In this example that you've shown here, a commodity declared as a table.

DAN OAKES: The bill of lading also contains another key detail. So the bill of lading had a consignee name on it. That's the name of the business that the cigarettes was supposed to go to. And in this case it's a property or construction company. We found an address in Sydney's outer NW suburbs. Now we don't know how or if they're involved in the container of cigarettes on the on the Costco Valencia. It's possible they know nothing and their company was used, which is a practise known as piggybacking. They could have been forced into participating in the import or they could have gone into it. Eyes open, 100% involved. So I'm going to knock on the door and hopefully get some answers.

DAN OAKES, REPORTER: I spoke to one of the directors of the consignee company at her front door for 10 or 15 minutes. She seemed shocked and confused by what I told her and took notes as we spoke. She said she knows absolutely nothing about this whatsoever. No, as far as she knows, they've never been involved in in smuggling cigarettes. They've got no connection to the cigarette industry. Her husband's not home and won't be back for a few hours, she said. But she said she's going to get him to give me a call. And, and she seemed, as she seemed very, very interested and very concerned. Later on I spoke to her husband, who told me his company name had been used without his knowledge. Once it's past the border and into the country, the illegal tobacco doesn't go straight to the retailers — it's often stockpiled. We've just learned about a warehouse in Brisbane where boxes of illicit cigarettes are being held. We're going to sit out here, I guess just stake it out for a few hours and see what we can see, you know, see if we see any deliveries coming and customers coming in and out. From what we've heard, black market cigarettes are supplied to retailers from here. He's got a carton as well. Manchester Blues, it looked like.We've been told members of the public can just wander in off the street too. After a while, I decide to go in, have a look, and see what the scale of their operation is.

We have a problem. He's saying, no, it's the right place. And there's all like you can see visibly all like cigarette papers, filters, all these other things. And then the guy turned around and said no, no, no cigarettes here. But the answer is different when Four Corners producer Mayeta goes in soon afterwards.

MAYETA CLARK, FOUR CORNERS PRODUCER: Okay so…

DAN OAKES: Tell me what you saw.

MAYETA CLARK: Definitely had a big carton of Manchester Reds. Umm…took cash only..

DAN OAKES: She sees cartons of Manchester reds and Double Happiness and then a van leaves the warehouse. We follow it but it stops just around the corner. He's just sitting there in his Hiace. No, now he's… Going into the self storage place… you can see he's leaning against the van there.

EDWARD "EDDY" GILL, ABC CAMERAMAN: He's loading cartoons in and out of that van.

DAN OAKES: Is he?

EDDY GILL: Yeah… he's working. He's loading up the van. That's the third box in (crosstalk: is it)

DAN OAKES: Is it just boxes? Is that all you can see? You can't see…

EDDY GILL: Huge boxes. Can't see what's in them.

DAN OAKES: From what we see, the warehouse is a hive of activity. This is a thriving operation. We've discovered that the man whose company operates from this address owns at least half a dozen tobacconists across Brisbane.

MAYETA CLARK: Oh, the van's going

DAN OAKES: We returned to the warehouse to follow another van making a delivery.That way! Several times we almost lost it…

MAYETA CLARK: There it is!

DAN OAKES: We got the feeling they knew they were being followed. Taking the Sunshine Coast exit. He's speeding, don't know whether it's cause he's realised or not.

DAN OAKES: At a busy intersection, the van made a surprising move. He basically waited and waited and waited until the light went red and then sped through against the red, probably knowing that I wasn't going to follow him through the red light. And so I suspect we've probably lost him now. We decided to visit one of the tobacconists linked to the warehouse. Producer Mayeta went in and confirmed they sell illicit cigarettes.

MAYETA CLARK: Hi, have you got any Manchester Reds.

SHOP ASSISTANT: Yes

DAN OAKES: I went back in to try to speak to the owner.

DAN OAKES, REPORTER: Hi, My name is Dan Oakes. I'm a reporter at the ABC.

DAN OAKES: So there's a lady working in there and she said that that it changed ownership 2 weeks ago. She said she worked for the previous owner and for the new owner but she said that she's never spoken to him, doesn't have a contact number for him and doesn't know how to get in touch with him. So I left my name and phone number with her and urged her to somehow get Mr *** to give me a call. I never did receive that call. For decades, Australia's war on tobacco has been fought largely with high taxes and public health policy. As the black market has flourished, that approach has come under scrutiny.

DAN OAKES, REPORTER: So when did you first realize that illicit tobacco was a problem, Rohan?

ROHAN PIKE: Yeah, I did a big job with customs back in 2000 when I was in the AFP, um, about tobacco.

DAN OAKES: For years, Rohan Pike was a senior investigator for the Federal Police and then Border Force.

ROHAN PIKE: And that really alerted me to the fact how much illicit tobacco was in the marketplace. And then, uh, I heard that uh, VICPOL task force had been set up into corruption at the docks just over here.

DAN OAKES: Pike says illicit tobacco was an issue way before the current tobacco wars.

ROHAN PIKE: They were just falling over tobacco and it turned out that tobacco was the big driver of corruption at the ports. Um, so again, that sort of piqued my interest. And then I joined the ABF in 2015 and decided that I'd dedicate my team's work to illicit tobacco.

Pike is now a lobbyist for retailers.

DAN OAKES: He thinks Australia's tobacco control policy was flawed from the start.

DAN OAKES, REPORTER: What was the assumption underpinning tobacco policy back then?

ROHAN PIKE: Yeah. Well, it's the same now as it was back then. And that is that if you make it smoking unattractive enough, either through excise or other means, like plain packaging or so, uh, people will either quit or pay the tax to the government. The inconvenient truth is that there's a third and easily available alternative, and that's the illicit tobacco market.

DAN OAKES: Until last year — in Victoria the penalty for illicit tobacco offences was less than fifty thousand dollars — that's been significantly raised now but Pike says it's too little too late.

ROHAN PIKE: We needed to increase the enforcement 10 years ago. The fact that we haven't now means that it's so widespread and entrenched that your average law-abiding citizen has no qualms in going to the illicit market. It's a huge problem. It's multi-billion dollars that it's going to criminals. Um, and it's only empowering them to do, uh, bigger and better crimes in the community.

DAN OAKES: While organised crime is riding high on black market profits…

PAM WRIGHT, TOBACCO SHOP OWNER: Hello Darls, how are ya? I don't know how to open this shop, darlin…

DAN OAKES: At the other end of the line, legitimate tobacco shop owners, like Pam Wright, are suffering. I met Pam at one of her stores in Townsville. She's had to lay off staff because sales are down.

PAM WRIGHT: It's a wait and see, you know, can the government get a handle on this illicit in Queensland? If they can, we've got a chance. If they can't, we've got no chance. And we have to start closing shops… I mean, a lot of our staff have been, some of them have been with us for 10 years.

DAN OAKES: Pam, how are you?

PAM WRIGHT: Good morning, Dan.

DAN OAKES: Nice to meet you finally. Yeah.

PAM WRIGHT: Yes. Yes. I thought you were a figment of my imagination.

DAN OAKES: No, I'm very real <laugh> Pam tells me she started seeing illicit shops popping up around her three to four years ago.

PAM WRIGHT: There was two, then there was three. And then there's there, I think we've got about 10 here now. Right. Okay.

DAN OAKES: And what did you think when you first, when, when this, when you first noticed this?

PAM WRIGHT: Well, I knew it was gonna hurt our business.

DAN OAKES: Pam says the combination of excise hikes and the illicit market have decimated her profit margins. How badly has it hurt you?

PAM WRIGHT: I would say 40% of traffic flow through the shop through our shops. Some of them have been affected more than others. Charters Towers is getting a flogging at the moment. Um, and I don't know what to do.

DAN OAKES: Pam believes serious organised crime is behind a lot of the pop-up shops she sees around town and she says they're threatening.

PAM WRIGHT: We haven't had this sort of, um, no value for life get out of my road sort of attitude. And that's what these guys are.

DAN OAKES: Why are you talking to us then? If there's this intimidation and, uh, you know, post threats.

PAM WRIGHT: I can't give it up. Right. This is mafia style stuff coming into our communities. Someone… who's gonna stand up if I don't. Sorry my car stinks, I smoke in it

DAN OAKES: Pam takes us on an black market tobacco tour of Townsville.. Do you know what they're selling in there?

PAM WRIGHT: Everything.. Manchesters..

DAN OAKES: She's determined to fight back against the illicit market.

PAM WRIGHT: I have been scared, but, you know, I know this sounds awful. I'm 70. I've had a good life. If my number's up, my number's up, right. Um, but I'm gonna go down fighting. I know that.

DAN OAKES: Pam takes us to meet another legal tobacco shop owner who's also struggling, Deb Solley.

PAM WRIGHT: Hello darlin.. Hello, Hello, cause I love the doggies. Now, I've got something to show you. They are starting to not insure shopping centres that have got tobacconists in them.

DEB SOLLEY, TOBACCO SHOP OWNER: Oh Really? Not just the illegals?

PAM WRIGHT: Not just the illegals. So this is Victoria. One business has decided to pay the extra $40,000 dollars a year to stay open in Shepparton. Then the one in Coburg, which is in Melbourne, North Melbourne. $100,000 a year extra in insurance.

DEB SOLLEY: You can't afford that.

PAM WRIGHT: And so they've been evicted really.

DEB SOLLEY: And they're legit

PAM WRIGHT: And they're legit.

DAN OAKES: Deb used to own seven tobacco stores. Now, she's got two left. She's just closed a shop she had for 20 years.

DEB SOLLEY: I feel like I've been let down a lot by the government. They say they're changing laws. They say they're doing all these things to help us. Nothing's changing though. The illicits are still around. I've always considered all of the stores to be my superannuation. So they were what I was going to sell off, um, as I was getting older. to keep me going for the rest of my life. Well, they're worthless now. So it's basically left me with nothing.

DAN OAKES: Australia has world-leading tobacco control policies. And Simon Chapman is one of the architects. Chapman's spent years advocating to drive down smoking rates, with plain packaging, advertising bans, and high excise… and saving lives.

SIMON CHAPMAN AO, PROFESSOR EMERITUS UNIVERSITY OF SYDNEY: That period from the late 1970s through to the mid-1980s changed everything.

DAN OAKES: He's been successful. Australia's smoking rates are among the lowest in the world. Chapman strongly defends high taxes on tobacco. And says cutting or freezing excise would be reverse a strategy that has saved countless lives. Many in the public health community agree.

SIMON CHAPMAN: the question that you, you know, repeatedly asking me is, is it whether we should drop the excise? And I don't think we should

DAN OAKES: Chapman's been fighting Big Tobacco for decades. And he's not finished yet.

He argues that Big Tobacco companies have long worked to drive down the price of legal cigarettes by exaggerating the size of the black market.

SIMON CHAPMAN: Look, we got a, a principle in tobacco control, which is called the "scream test". Basically, this means that if you follow the media monitors and look at what the tobacco industry is saying about policies X, Y, Z, um, if they are screaming very loud, you know, that that is a policy that is gonna bite hard on their bottom line. And the things that they have screamed loudest about throughout my career are probably tax number one

DAN OAKES: You have a, a, a deep seated hatred of Big, Big Tobacco. Do you think that risks blinding you though to what people are actually in good faith? And-

SIMON CHAPMAN: Look, I think people who, who look in the mirror and see what they're asking for is exactly the same as what Big Tobacco's asking for, uh, political useful idiots.

DAN OAKES: Until recently There's been no coordinated crackdown on the illegal tobacco market. Police target the organised crime syndicates running the trade but rarely shut down the retailers selling the cigarettes. In most states, enforcement falls to local councils, public health officers, and consumer affairs—agencies never built to tackle a booming black market.

SAT NAV: You have arrived.

CUSTOMER & BUSINESS SERVICES OFFICER #1: Our mission, as you know, is to attend the target premises and undertake and undertake inspections.

DAN OAKES: After sixteen firebombings over two months in 2024, the South Australian government finally acted — ramping up law enforcement and legal penalties.

ANDREA MICHAELS MP, MINISTER FOR CONSUMER AND BUSINESS AFFAIRS: We really wanted to make sure here in South Australia, we were killing it before it, uh, escalated.

DAN OAKES: Andrea Michaels is the South Australian minister responsible for enforcing small business regulations and consumer affairs.

ANDREA MICHAELS: I was seeing in my own letter box, pamphlets being dropped about illegal, uh, illicit tobacco being sold so we were getting reports like that from MPs right across the state of letterbox drops, really quite extraordinary.

DAN OAKES: Ms. Michaels's government moved tobacco control away from public health.

Now, Consumer and Business Services officers — like these ones — are trying to bring down the four to 500 illicit tobacco shops that have spread across the state.On the outskirts of Adelaide, they're swooping on a small row of shops…

CBS OFFICER #1: Do you have any cigarettes in your vehicle? Have a look through.

CBS OFFICER #3: All right. We've got cash.

DAN OAKES: There's a, a, a big box here full of all different types of Manchester cigarettes and other brands, um, including Mick and what appear to be counterfeited Benson and hinges. Uh, there's a box here, it's full of, uh, chop chop in Ziploc bags. Uh, and there are a whole bunch of, um, illicit vapes here. You can see really faintly written here to, uh, tobacco vapes shop. And what appears to be like a, a pretty crude drawing of a, a vape here. I mean, if you went back over there and had a look at this shop, you would probably not have any idea what it was selling. Uh, it just goes to show, you know, these shops are popping up. They're not even bothering to advertise what they're selling. They rely on word of mouth, and that's good enough. Even while the raid is happening, the customers keep turning up. The Consumer Business Services finished raiding, um, this tobacconist and, uh, there's a gentleman in the back room there. Uh, they've spoken to him. Apparently he's not being hugely cooperative. I'm gonna go in there and, um, have a chat with him, see if I can find out, you know, maybe who, anything about who's running this place or who owns the business. Hey mate, how are you?

SHOPKEEPER: Sorry, the English? Not English.

DAN OAKES: No, sorry. You the manager or owner of this?

SHOPKEEPER: No, no, the,

DAN OAKES: No,

SHOPKEEPER: Sorry. No, the boss.

DAN OAKES: The boss?

SHOPKEEPER: Yeah. The boss. No,

DAN OAKES: Not here The shopkeeper doesn't speak much English but calls a friend to translate.

SHOPKEEPER: The friend, the English.

ALI, VOICE ON PHONE: Hello?

DAN OAKES: Hello?

ALI: Yeah, he's asking me to translate.

DAN OAKES: Oh, sorry. Who am I talking to?

ALI: Ali.

DAN OAKES: Oh, hi Ali. My name's Dan. I'm a reporter from the ABC. We just want to know, um, is he the manager of the shop or —

SHOPKEEPER: [in Arabic]

ALI: He is asking if you guys don't take any photos because he's just looking after the shop.

DAN OAKES: Sure, okay.

DAN OAKES, REPORTER: I've just spoken to the gentleman inside. Um, he's saying that he only started work here two days ago. He had a phone conversation with someone he's referring to as the boss who told him to come here and, and start work. He says he had no idea that, you know, that the cigarettes he was selling were, were elicit. Uh, he doesn't know what's happening here today. Um, he doesn't really wanna comment on, on what's happened because he says he's only worked here for two days and, and he doesn't even really know who the boss is. Straight after the raid, the shop remained open. We asked Minister Michaels why. We saw a raid this morning, but the shop didn't even close after the, the CBS people left. Is that a problem?

ANDREA MICHAELS: That is one of the real issues. Um, just the flagrant disregard of what the laws are. So, um, what we have done is put an amendment through, which allows me to close stores for 72 hours, but I can also go to the magistrate's court and get six month closure orders, uh, in the hope that, that, you know, really does on top of the penalties, make these people think about what they're doing.

DAN OAKES: Two months later, Four Corners returned to the same shop — it was still open, still selling Manchesters… and it was busy.

MARK BUTLER MP, FEDERAL HEALTH MINISTER: Just heading into a really important forum of health and policing criminal intelligence authorities from all jurisdictions to just redouble our efforts around enforcing the new vaping and illicit tobacco reforms.

DAN OAKES: At a high-level gathering of law enforcement, bureaucrats, and health experts, Health Minister Mark Butler warns that illicit tobacco is both a criminal and public health threat.

MARK BUTLER: We understand now this is not just a fight against big tobacco, this is also a fight against serious organised crime.

DAN OAKES: But the minister can't escape questions about whether the world's highest cigarette prices have turbocharged the black market.

SAM JONSCHER, ABC REPORTER: On the tax excise, are there any plans to drop the price of cigarettes to deter people from going today?

MARK BUTLER: There are no plans to make cigarettes cheaper.

DAN OAKES: In a closed event across the hall, Butler addresses a room full of bureaucrats..

MARK BUTLER: in front of the media just then. I got the questions I get all the time. How are you really going to stamp this out?

DAN OAKES: While our cameras are rolling, Victoria Police's Jason Kelly openly questions why the government won't make legal cigarettes cheaper.

JASON KELLY: Jason Kelly from Victoria Police. Minister, thank you for the, uh, presentation….a lot of members of the community just don't understand, um, why we can't pause the tax or at least reduce the tax because the illicit market and organized crime are really reaping the benefits.

MARK BUTLER: And it, and it's a really tough one. I I get, I get that….Um, so the difficulty we have with, uh, that proposal is with sort of raising the white involves raising the white flag, um, uh, on, on, on this question, and basically allowing criminals to dictate the legal price and the revenue arrangements that the Commonwealth would have.

DAN OAKES: Black market cigarettes are everywhere—even in the shadows of power. We've found them just metres from Victoria Police HQ, and in the electorates of senior politicians: Jim Chalmers and Peter Dutton in Brisbane and Mark Butler in Adelaide.

DAN OAKES: There, there are, um, illicit tobacconists in your electorate. I mean, is, is that not a, an absolute, um, uh, demonstration of how out of control this problem is? I mean, when you've got someone overtly committing a crime two doors down from a senior minister's electorate office, what does that say?

MARK BUTLER: Well, we had a vape store down the, down the road from my office as well. It's closed. Every single vape store in my electorate has closed since we put in place the laws last year.

DAN OAKES: How could law enforcement possibly now try and put a cap on this problem, given how prevalent it is?

MARK BUTLER: Well, we've gotta change the risk reward balance, really. I mean, the, the, the challenge here has been, uh, the organized crime saw this as a low risk, high reward market for them. There weren't many penalties, there wasn't much enforcement activity.

DAN OAKES: The head of the, um, Victoria Police anti-gang squad asked you a question to do with the excise, should, should we be cutting the excise now? I mean, that's law enforcement. We've heard that from other law enforcement people as well. You know, why aren't we doing this?

MARK BUTLER: Every piece of advice I have is that dropping the price of cigarettes, certainly by the, the level you are suggesting in your question, would simply drive up rates of smoking. And we are committed to getting the rates of smoking down, still, still kills over 20,000 Australians every year.

DAN OAKES: The price point's not necessarily the most important thing in the dismantling of a black market, though, is it?

MARK BUTLER: Well, the dismantling the black market is about law enforcement. We're introducing licensing regimes in the three big states for the first time, and you see policing, uh, activity across the country, uh, trying to shut down these stores that we simply haven't seen in years gone by.

DAN OAKES: So, in your mind, it's enforcement, enforcement, enforcement is the key to, to, to nobbling this black market?

MARK BUTLER: Absolutely.

DAN OAKES: You made that reference to, you know, we don't wanna let organized crime dictate policy, but isn't that essentially what's, what's happening now? I mean, organized crime is dictating the sale of tobacco in this country now, essentially.

MARK BUTLER: Well, that's right, they've been able to get a foothold, and I regret that that's the case, but, you know, the best time to deal with this would've been five years ago. The second best time is to deal with it now. And that's what we're doing.

DAN OAKES: When you put aside the fire-bombings, deaths, and lost billions, what's clear is the flow of cheap, black-market cigarettes is not going to stop.

PAM WRIGHT: That's a boy darling. That's a boy. There youse go.

DAN OAKES: Pam says organised crime still has the upper hand…

PAM WRIGHT: I don't mind any competition if it's on a level playing field. But this is not level at all. Nowhere near it.

DAN OAKES:… and loosening its grip is a monumental task.

PAM WRIGHT: These guys are laughing at us. They're one step ahead of us all the time. And they're laughing at the, they're laughing at me and they're also laughing at the government. They think our country is a joke.