Two men have been arrested following an Australian Border Force (ABF) led investigation into allegations of large-scale customs alcohol fraud and smuggling totalling an estimated $28 million.
Authorities have also cancelled the licence of a depot believed to have been involved in the alcohol fraud.
The arrests followed the execution of search warrants on 15 properties in Melbourne and Sydney yesterday (Wednesday, December 11, 2019) as part of Operation Cabestro, which commenced in July 2019.
Authorities seized 800,000 bottles of alcohol during the investigation.
“[It’s] incredibly rare to see a fraud on this scale,” ABF Commissioner Michael Outram told reporters at a press conference in Melbourne on Thursday morning.
“To people in our supply chain who are infiltrating it, who are abusing positions of trust with licences, if you’re doing the wrong thing criminally, we’re coming after you,” he said.
Officers from the ABF and Australian Federal Police (AFP) seized a large amount of alcohol, close to $1 million in cash, as well as a large number of items suspected to have been obtained through the alleged fraudulent activity.
At this stage, seized items include a number of designer watches and pieces of jewellery, gold coins and four luxury vehicles.
The ABF will allege that the men used a number of businesses to illicitly import, smuggle and export alcohol, and make fraudulent claims under the Duty Drawback Scheme.
The Duty Drawback Scheme enables exporters to obtain a refund of customs duty paid on imported goods where those goods will be treated, processed, or incorporated in other goods for export; or are exported unused since importation.
Since September 2019, it is alleged these individuals and businesses have been involved in a criminal group that has defrauded the Australian Government and Australian taxpayers of tens of millions of dollars in evaded duty.
While investigations remain ongoing, it is suspected that the total amount defrauded could be in excess of several hundred million dollars.
Assistant Minister for Customs Jason Wood said the Commonwealth Government is actively targeting entities and individuals who engage in the black economy, and praised the collaborative efforts of the ABF, AFP and Australian Taxation Office (ATO) on this investigation.
“The black economy penalises honest taxpayers, undermines the integrity of Australia’s tax and welfare systems and creates an uneven playing field for the majority of businesses that are doing the right thing,” Assistant Minister Wood said.
“The black economy is multi-faceted phenomenon operating across Australia’s workplace relations, financial, welfare, procurement and migration systems. Customs and duty fraud is just one aspect.”
Outram said Operation Cabestro was launched following a review of the Duty Drawback Scheme conducted by the ABF Customs Group and the Revenue Analysis Unit.
“The ABF has disrupted a major criminal operation that has allegedly defrauded the Australian Government of a substantial amount of revenue that could have otherwise been invested in the community,” Commissioner Outram said.
“The individuals allegedly involved in this scam have not only been defrauding the Commonwealth of significant revenue, but also undercutting legitimate businesses involved in the alcohol trade, and ripping off consumers in the process.”
The ABF worked closely with the AFP and the Australian Taxation Office (ATO) to target and disrupt the individuals and groups involved in this alleged deception.
AFP Acting Commander Paul Hopkins confirmed the AFP arrested two men in relation to the investigation, along with executing 15 search warrants on properties across Sydney and Melbourne yesterday, with one warrant to be executed today.
“These search warrants were conducted at both residential and commercial properties across both cities throughout the day, with a number of items seized on behalf of ABF,” said Acting Commander Hopkins.
“This joint operation is another demonstration of the benefits of our strong collaborative partnership with our border protection authorities. We would like to commend all officers involved in this investigation for their work.”
The AFP led Criminal Assets Confiscation Taskforce (CACT) has also obtained restraining orders under the Proceeds of Crime Act 2002 (Cth) covering property valued at approximately $19 million dollars.
ATO Deputy Commissioner Will Day said the ATO was pleased to have played a supporting role in this major ABF operation.
“The ATO is committed to combating illicit alcohol activities and ensuring there is a level playing field for businesses who do the right thing,” Deputy Commissioner Day said.
Of the two men arrested in Sydney regarding the alcohol fraud, a 38 year old Dover Heights man has been charged with the following:
- One count of Dealing in money or property that was, and is believed to be, proceeds of crime, and at the time of the dealing the value of the money or property was AUD100,000 or more, contrary to subsection 400.3(1) of the Criminal Code (Cth).
The maximum penalty for this charge is 25 years imprisonment.
- Two counts of Dishonestly causing a loss to another person, namely the Department of Home Affairs which is a Commonwealth entity, contrary to subsection 135.1(3) of the Criminal Code (Cth).
The maximum penalty for this charge is 10 years imprisonment.
A 33-year-old Parramatta man has been charged with:
- One count of Dealing in money or property that was, and is believed to be, proceeds of crime, and at the time of the dealing the value of the money or property was AUD100,000 or more, contrary to subsection 400.3(1) of the Criminal Code (Cth).
- One count of Dishonestly causing a loss to another person, namely the Department of Home Affairs which is a Commonwealth entity, contrary to subsection 135.1(3) of the Criminal Code (Cth).
Operation Cabestro is ongoing and additional charges may be laid.
The ABF will continue to work with partners such as the AFP, Australian Criminal Intelligence Commission, ATO, AUSTRAC and the Commonwealth Director of Public Prosecutions to identify and prosecute those individuals and businesses involved in customs alcohol fraud.
If anyone has information relating to this matter or other potential customs alcohol fraud, they are urged to report it to Border Watch online at www.Australia.gov.au/borderwatch. Information can be provided anonymously.
Commissioner Outram urged any alcohol retailers who had bought wholesale quantities of alcohol and discovered the batch numbers were missing to contact ABF.
“We’re not going to come and seize the bottle off you, by the way — I’m not the Grinch — but we would like to know,” he said.
