Airline staff smuggle blackmarket cigs

Branch manager among Air China workers arrested in Auckland

Staff at an international airline smuggled thousands of blackmarket cigarettes through Auckland Airport, in a case that highlights a glaring breach of New Zealand’s border security.

Three men who worked for Air China, including the branch manager, were arrested after a Customs investigation uncovered the simple ruse the trio used at least a dozen times at Auckland International Airport.

One of them would just walk on the tarmac to the Air China flight that had landed and return to the office with the backpack full of cartons of cigarettes — without declaring the goods and paying the duty tax.

If caught, the staff planned to say passengers had accidentally left the cigarettes while disembarking.

With a pack of cigarettes costing about $35 at retailers, black-market cigarettes have become a lucrative commodity in New Zealand, estimated to be eight times more profitable than cocaine, which has attracted the attention of organised-crime syndicates.

Customs seizes about 125,000 undeclared cigarettes every month in a growing illegal market estimated to cost the Government $287 million in unpaid tax in 2019.

Although the Air China staff only cheated the taxpayer out of a few thousand dollars, Customs prosecuted them because of the risk to border security by employees who repeatedly abused their position for personal gain.

“It’s a breach of trust in the supply chain,” head of Customs investigations Bruce Berry told the Herald. “The risk is that the subversion of the supply chain opens the door for any type of illicit product.”

The three Air China staff members pleaded guilty to defrauding Customs of revenue and were discharged without conviction by Judge David McNaughton in the Manukau District Court in November. Air China did not respond to a request for comment.

The existence of Operation Waxeye was mentioned in documents released under the Official Information Act to the Herald, which requested briefings about examples of corruption at the border.

Although there were no known links to organised crime in this case, Berry said international criminal networks constantly looked for ways to exploit supply chains.

Although New Zealand has a reputation as one of the least corrupt countries, in the past 12 months the Herald has revealed several examples of an “inside man” allegedly working for organised crime groups.

Last year, a crew of Air New Zealand baggage handlers was arrested for allegedly helping smuggle in drugs during a Covid lockdown.

And in an extraordinary heist, a suspicious shipping container linked to the Mongols motorcycle gang disappeared from the Ports of Auckland on the back of the truck in the middle of the night. A shoebox filled with $90,000 was found in the home of a senior staff member at the port.

This year, a stevedore at the Port of Tauranga was arrested in an alleged Mexican cartel plot to smuggle hundreds of kilograms of cocaine and methamphetamine.

Customs stopped nearly 11 million cigarettes at the border in the 2020/21 financial year, and another 2.5 tonnes of loose tobacco, and Berry said there had been a recent swing to large-scale shipments inside sea containers.

Last year, an Auckland businessman was jailed for smuggling 20 million cigarettes over three years and avoiding more than $18m in tax.

Just two weeks later, another man was charged with allegedly avoiding a $3m tax bill when Customs seized 2.39 million cigarettes — the largest shipment discovered in New Zealand.

A report by accounting firm KPMG estimated the New Zealand Government missed out on $287m in unpaid tax in 2019 because of the expanding tobacco blackmarket.

“The money coming through is massive,” said Berry.

“We’re talking revenue in the millions of dollars, in terms of the shipments we’re seizing.

New Zealand was being targeted by the same criminal groups sending cigarettes to Australia, said Berry, so Customs was working with the Australian Border Force.