ILLICIT TRADE IN CIGARETTES LINK TO ORGANISED CRIME A paper by Prof Dr Cornelis Roelofse, Department of Criminology and C i i Criminal Justice l J i Cornelis.roelofse@ul.ac.za +27824926156
Introduction Introduction • Organized crime to a degree is a mythical Organized crime to a degree is a mythical concept • A concept although widely discussed • A concept, although widely discussed, debated, legislated about and enjoying international policing attention it is still not international policing attention, it is still not adequately defined.
Problem statement Problem statement • Cigarette smuggling exist ‐ the fact that it is a Cigarette smuggling exist the fact that it is a low risk, high profit activity for which punishment is very low compared to drug punishment is very low, compared to drug smuggling or human trafficking for instance. As we will see later during this presentation As we will see later during this presentation, cigarette smuggling leads to other serious crimes as proceeds are used to fund other crimes as proceeds are used to fund other crimes, even terrorism
OC OC • Lebeya (see Roelofse Oliver & Kgosimore Lebeya (see Roelofse, Oliver & Kgosimore , 2012:28) states: “The confusion pertaining to the existing descriptions and definitions and the existing descriptions and definitions and the indiscriminate use of the term ‘organised crime crime …[T]he existence of over 160 definitions [T]he existence of over 160 definitions illustrates the distorted understanding of organized crime ” organized crime.
Hypothesis Hypothesis • Cigarette smuggling is an organized illicit Cigarette smuggling is an organized, illicit economic practice, underpinned or at least passively supported by one or more politically passively supported by one or more politically motivated group(s) and/ or government(s) in an active partnership or collusion involving an active partnership or collusion involving corrupt officials and operator(s).
Hypothesis Hypothesis • As you may have perceived, I have sidestepped the need to define organized crime as the variables in the hypothesis deal with the nature of OC. The variables are: • • Illicit economy; (including illicit activities by legal operators) • • • • Political motivation; Political motivation; • • Collusion (implies organizing); • • One government/political grouping (national OC; g /p g p g ( ; and • • Governments/groups (Transnational OC). Government refers to political office bearers as well as officials
Difference between OC and other criminal groups l • OC differs from gangs in as far as it has the OC differs from gangs in as far as it has the capability to launder profits and to influence political/government agents political/government agents.
Definitions Definitions WHO WHO Lester & Allen Lester & Allen Article 1 of the World Health • • Counterfeit tobacco Organisation (WHO) FCTC5 describes illicit trade as “any practice or conduct production is the illegal prohibited by law and which relates to prohibited by law and which relates to manufacturing in which the production, shipment, receipt, possession, distribution, sale or manufactured products purchase including any practice or conduct intended to facilitate such bear a trademark without bear a trademark without Smuggled genuine products • the consent of the owner of ("contraband") refers to products illegally traded across international or the trademark. (Lester & provincial borders. These may be genuine goods that are illegally genuine goods that are illegally All Allen 2012 2012 imported and sold without payment of taxes in the country / state of consumption. (Lester & Allen 2012).
Definitions Definitions Lester & Allen Lester & Allen Lester & Allen Lester & Allen Extra production refers to cigarettes Illegally manufactured products • • produced for a domestic market with can be sold on the domestic considerable extra production market or smuggled into another market or smuggled into another specifically for smuggling into countries specifically for smuggling into countries where there is no legal market for country without payment of them. (Lester & Allen 2012). taxes. (Lester & Allen 2012) Crossborder shopping is common to • Local Tax Evasion refers to illegal many high taxing countries. Genuine y g g • product that has been purchased in one methods of avoiding payment of country is brought into another country local taxes on alcohol or tobacco and consumed without payment of products. These products are taxes in that country. This is classified as illicit trade only if the quantities illicit trade only if the quantities traded within the country of traded within the country of involved are in excess of national manufacture as well as providing personal allowances or are deemed stock for smuggling into other commercial in size (Lester & Allen 2012). countries. (Lester & Allen 2012).
THEORETICAL EXPLANATIONS OF OC THEORETICAL EXPLANATIONS OF OC • Alien Conspiracy theory (ethnic character, language and often secret codes and markings, make it almost impossible to plant informers within such groups) • The Alien Conspiracy has at its root the fact that social isolation of aliens and their grouping together in neighbourhoods create the environment for criminal conspiracy. Kleemans (2012) refers to social embeddedness that creates the safety nets for high risk operations. A th t t th f t t f hi h i k ti A certain element of trust is part of the social cohesion that is found within families and amongst associates. I want to extend the concept of the Alien Conspiracy to incorporate extend the concept of the Alien Conspiracy to incorporate ideological embeddeness. This means taking this construct out of the current conceptualization and to place it within a political context political context.
THEORETICAL EXPLANATIONS OF OC THEORETICAL EXPLANATIONS OF OC • The political domain in society is interwoven with e po t ca do a soc ety s te o e t the economic domain. Political power gives access to resources and resources give access to political influence. Harasymiv (2002) urges l l fl ( ) political scientists to study legitimate and illegitimate power illegitimate power. .. the two are connected and the two are connected and interdependent. He declares, • “ Organised crime, properly understood is Organised crime, properly understood is attached to political institutions, personnel and processes ‘.
THEORY THEORY • In this context (Bequai, (1979) referred to the loose confederation between regional and ethnic crime groups in America due to economic and political necessity. Fijnaut (1990), refers to protection that y j ( ) p criminals enjoy from “corrupt officials.” One of the most deliberate instruments used to protect the nexus between criminals and politicians is to appoint cronies p pp in critical positions in the police and elsewhere in the criminal justice system. This is supplemented by a system of bribery and corruption. Bailey and Godson,( y y p y ,( 2000) state unambiguously that that the political ‐ criminal nexus affects inter alia governments monopoly to coercion and the administration of justice. j
THEORY THEORY • To ensure continuation and reducing the risk of exposure, organized crime (political connections implied) applies the scatter effect. Some erroneously assume that if the leadership of an organized crime p g group is neutralised, the activities would seize. This is not the case for the scatter effect of being a multi ‐ facetted integrated and symbiotic relationship ensures g y p that the activities continue. Often very loose, rather than strict organizational structures, ensure perpetuation. This may be in a circle of friends, families p p y , or even political membership. Where structure exists it is based on bond rather than strict hierarchy.
ECONOMIC THEORY ECONOMIC THEORY • Smuggling flourishes where there are profits to be gg g p made as a result of tax rate differences between neighbouring countries, where the goods concerned are easily transported and the subject of many are easily transported and the subject of many thousands of individual movements each day • In the context of our theme. it simply means that p y products that are deemed to have inflated prices such as tobacco products create a market opportunity for illicit trade illicit trade. Producing cheaper cigarettes within a Producing cheaper cigarettes within a country, or a neighbouring state makes the supply and distribution very lucrative
Not only tax and excise Not only tax and excise • In the 1997 fiscal year excise tax on tobacco In the 1997 fiscal year excise tax on tobacco was 21 percent. It was then increased to 50 percent And currently is slightly above that percent. And currently is slightly above that. However between 1997 and 2008 the price of a packet of cigarettes increased by about 400 a packet of cigarettes increased by about 400 percent. This price hike is an industry driven increase and due to this increase government increase and due to this increase, government is getting a higher income at its taxation rate of over 50 % (Stassen: 2013) of over 50 %. (Stassen: 2013)
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