OLAF is the european union agency which tackles fraud in the European Union. A German-Russian criminal was sentenced recently to 9 years imprisonment by the Criminal Court Berlin-Moabit in Germany, following a complex international investigation co-ordinated by OLAF. The investigation involved authorities in Germany, Poland, Belgium, Latvia, Estonia and Switzerland as well as OLAF. The Berlin-based criminal was arrested by German Customs in March 2011 during a raid of one of the largest illegal cigarette factories ever discovered in Poland. He was convicted for evading tobacco duties and VAT when importing tobacco into the European Union and for the production of illegal cigarettes. Three accomplices still awaiting trial will face similar charges. His Russian-speaking gang had been producing cigarettes in various illegal factories in Poland and the Transnistrian region in Moldova and selling them in the EU since the end of 2005. More than €50 million in taxes were evaded by the gang while smuggling 1,200 tonnes of tobacco from 2006 to 2011.
OLAF Director-General Giovanni Kessler said: “Crimes carried out in several countries by multi-national gangs are difficult for law enforcement authorities to investigate. It requires close co-operation and sharing of sensitive information by police and customs authorities. But thanks to the hard work and excellent co-operation of our partners, this investigation was successfully accomplished and the criminals were brought to justice.”
The illegal cigarette factory in Poland was raided shortly after production had started. The criminals changed the location of their factories frequently in a bid to defy law enforcement authorities. If it had continued to run, financial losses to the taxpayers in the EU would potentially have been at least €6 million a week. Evidence gathered during the raid shows that further deliveries of tobacco were planned. The quantity of tobacco seized was sufficient to produce around 120 million cigarettes which is equivalent to about €24 million in revenue losses. Customs estimate that the overall profit made by the four main suspects would have been as much as €40 million for the illegal production and sale of untaxed cigarettes over the five year period between 2006 and 2011. Most of the cigarettes were destined for the British market where excise duties are high.
The operation resulted in the seizure of more than € 2.3 million worth of assets in Germany including real estate, jewellery, gold and cash (€230 000 in Lithuania and €9000 in Latvia). 20 Bulgarian and 2 Lithuanian workers were arrested during the operation and have already been charged for working in the illegal factory. They have each been sentenced to one year imprisonment in Poland.
Customs investigators uncovered a very complex illegal trade route that supplied the cigarette factory in Poland with tobacco. More than one hundred containers (122,000 kilograms) of smoking tobacco were imported from Brazil and the United Arab Emirates via Lithuania into EU Member States between January 2006 and March 2011. The containers were declared to contain raw tobacco (which is not subject to excise duties) destined for Armenia. However, the tobacco was unloaded in Poland and used for the illegal production of cigarettes. The real tobacco waste was then transported by truck using false paperwork via the Ukraine and shipped to Belgium to be disposed of.
In parallel, a similar amount of smoking tobacco – also declared as tobacco waste – was transported by ship from India and Belgium via the Ukraine to Transnistria, where it was used for the production of contraband cigarettes.
OLAF The mission of the European Anti-Fraud Office (OLAF) is threefold: it protects the financial interests of the European Union (EU) by investigating fraud, corruption and any other illegal activities; it detects and investigates serious matters relating to the discharge of professional duties by members and staff of the EU institutions and bodies that could result in disciplinary or criminal proceedings; and it supports the European Commission in the development and implementation of fraud prevention and detection policies.