Hong Kong customs makes first bust of illicit cigarette factory, seizing HK$120 million in items
- Syndicate allegedly operating factory in Lau Fau Shan, complete with HK$2.5 million worth of machinery to roll and package cigarettes
Hong Kong customs officers have made their first bust of an illicit cigarette factory, seizing HK$120 million (US$15.4 million) worth of untaxed goods, processed tobacco and machinery.
Yeung Yuk-man, head of the customs’ revenue crimes investigation bureau, said on Saturday that officers earlier in the week had shut down a large-scale, tight-knit syndicate that was operating a factory in Lau Fau Shan and a distribution centre in Man Kam To.
“To maintain a steady supply of illicit cigarettes, besides using [different] smuggling methods, some syndicates have also resorted to assembling large-scale production lines for illicit cigarettes at a high cost, hoping to supply such cigarettes by a dual-supply model,” Yeung said.
He added that criminal syndicates increasingly had resorted to piecemeal smuggling to counter crackdowns on large shipments.
Officers from the Customs and Excise Department found 20.5 million sticks of untaxed cigarettes and 3.5 tonnes of tobacco at the two locations on Wednesday. The tax takings from the cigarettes would have been about HK$82 million.
The value of the items seized reached HK$120 million, including HK$2.5 million in machinery.
Customs arrested four men aged between 29 and 46, three of whom allegedly drove trucks used to transport the cigarettes.
The fourth man was a worker, the department said.
Lam Chak-lun, a divisional commander under the revenue crimes investigation bureau, said customs first raided the storage centre after officers spotted the four men allegedly unloading boxes of illicit cigarettes from a container and transferring them to three trucks.
Official records showed the container was supposed to be carrying timber from Thailand.
“Further investigations showed that the cardboard boxes that held the cigarettes looked suspicious, while loose cigarette sticks, which are rarely seen, were also spotted. Cigarette sticks that seemed damaged, as well as remnants from cigarette production, were also found,” Lam said.
The discovery led officers to suspect the Lau Fau Shan site, which they were aware of through earlier intelligence, could be an underground cigarette factory rather than a simple storage area.
When officers arrived at the corrugated iron shed in Lau Fau Shan, they discovered a full production line inside a large modular structure consisting of machinery to roll cigarettes and pack them into boxes. Materials such as filters, filter paper and boxes were also found.
Customs suspected that the 3.5 tonnes of tobacco intercepted in Man Kam To was destined for the factory.
Lam described the costs of the factory as “huge”, as it was meticulously constructed and required multiple professional staff to assemble and operate the machinery.
“It’s located in a large and sealed modular unit, wrapped with soundproof insulation inside a large corrugated iron shed. This would effectively shield it from daylight and prevent sound from leaking out during production,” Lam said.
The divisional commander added that solar panels were installed on top of the unit to help the syndicate avoid attracting attention for its massive electricity use.
He said the case remained under investigation and officers were looking into the source of the machinery and materials.
Customs was also investigating possible smuggling routes, the identities of the tenants and owner of the sites, as well as the flow of illicit cigarettes from the factory.
The illicit cigarettes were suspected to be produced for local consumption.
Lam said the four arrested men had been released on bail.
Anyone who sells, handles, purchases or possesses illicit cigarettes can face a maximum fine of HK$1 million and two years in jail on conviction.
