Friday, September 24, 2010

How the smugglers operate

Dubious freight forwarders bring contraband and illegal cigarettes into the country by changing the shipping manifests to pass Customs.

MOST contraband and illegal cigarettes usually originate from Dubai, the Philippines, Myanmar or China, according sources familiar with the system.

They are shipped to a central location, usually either in Singapore or Thailand’s port of Laem Chabang (both free zones), and then to their final destinations.

“Because the cigarettes are properly declared (as cigarettes) when they leave their countries of origin, they make it into either Singapore or Thailand without any issue,” the source said.

“As far as the authorities (in Singapore or Thailand) are concerned, as long as the cigarettes do not enter their own countries, they have no problems storing the cargo at their ports,” he added.

At this point, dubious freight forwarders who know about the cigarettes will then advertise or “canvass for cargo” for or on behalf of a shipping line to have them shipped to Malaysia.

The shipping company will be in the dark about the illegal cigarettes. In return for the canvass for cargo, the freight forwarders would be allowed to pre-purchase “container slots” on the shipping company’s vessel and use it to transport the cigarettes.

By purchasing the container slots, the freight forwarders are authorised to provide their own manifest (a list of the cargo being carried) to the Royal Malaysian Customs.

Illegal cargo: Officers of the Malaysian Maritime Enforcement Agency seizing contraband cigarettes.

“When they put up their manifest, the freight forwarders will change the description of the cargo. Instead of cigarettes, it would become something that is either low in duty or not taxable, like paper articles or machinery parts.”

According to the source, Customs does not require the production of export declaration at the port of loading (countries of origin).

“Although the goods are declared as cigarettes at the port of loading, our Customs only requires a manifest,” the source said.

The goods would be consigned to a fictitious person or company, or a genuine, existing recipient that does not know of the shipment.

“As far as Customs is concerned, everything (the manifest) would appear to be in order and an approval for release is given even before the vessel arrives in Malaysia,” the source said.

The shipment could land at any one of the free-zone ports in Malaysia, such as Northport or Westport (Port Klang), the North Butterworth Container Terminal or Butterworth Deep Water Wharves (Penang), Kuantan Free Port or Tanjung Gemuk (Pahang), Pasir Gudang or the Port of Tanjung Pelepas (Johor), according to the source.

He said while Langkawi was a duty-free zone, it did not have the transshipment facilities to off-load containers.

“Once the vessel has docked, the cargo would be declared as paper articles or machinery parts,” the source said.

“They then get loaded onto a lorry and make it to our shops.”

The source also said illegal cigarettes were sometimes smuggled out of the port by fellow security or Customs officers.

“When the cigarettes have landed at the port, there are people who take out the container with the connivance of the people at the gate,” he said, adding that this was especially the case when a container was to be transported to another port.

For example, a container that had landed at Westport could be waiting to be transported to Northport, which is some 15km away.

Here, a gate pass is issued by the warehouse inside Northport to have the container taken out of Westport. But instead of going to Northport, it ends up somewhere else.

The source said containers that were taken out of the local ports were not audited.

“If the containers were audited, they would discover that tonnes of cargo go missing every year!” the source said.

According to the source, only white (contraband and counterfeit) cigarettes were smuggled in through the ports. Kretek cigarettes from Indonesia, he said, were often smuggled directly across our coastal shorelines through boats.

White cigarettes consist of tobacco only, while kretek comprises a blend of tobacco, cloves and other flavours.

Kretek cigarettes have extra additives and because of this, they give out a strong, pungent smell and can be easily detected when smuggled in through the ports or when carried in a truck,” the source said.

He also said that major tobacco companies knew what was going on.

“These companies are always complaining about the illicit cigarette trade. But at the end of the day, when their contrabands are sold, they still reap the benefits of added sales and volume.

“It is only the counterfeits and kreteks that concern them, really, because these are the ones that are robbing their markets.”

Source: StarProbe

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