Experts during the National Conference of Combating Illicit Trade: the Fight Requires the Cooperation between Different Concerned Parties and Law Enforcement Bodies
Smuggling to Rise in MENA Region by 4.5% during 2016
Revenues of Illicit Trade to Finance Terrorist Organizations and Organized Crime Groups
High Taxes over Tobacco Products to Enhance Illicit Trade
Judge Ibrahim: Smugglers Are Protected and Hiding behind their Sects and Communities
General Othman: Law Enforcement Bodies to Exchange Information and Expertise with Private Sector
Daher: Simplifying Procedures and Facilitating Goods Trading to enhance Legal Trade Activities and to Limit Smuggling
Daher: Number of Records Issued by the Regie’s Anti-Smuggling Department Raised from 82 in 2010 to 490 in 2015
During the first national conference of combating illicit trade, which was organized by the Regie, at the Seaside Front Complex in Beirut, a number of experts stressed the need for cooperation among various stakeholders and law enforcement bodies to combat trafficking and illicit trade.
After the opening session, which was attended by the sponsor of the conference, Minister of Finance Ali Hassan Khalil and the Regie’s President and Director General Nassif Seklaoui, a preliminary session was held to discuss international frameworks, standards, and best practices to combat smuggling. It was presided by international law expert Alan Janovich.
David Izadifar
UNODC expert David Izadifar discussed tobacco products illicit trade in MENA region, pointing out that “the region is one of the markets with a rare growth in smuggling rates, with an increase of 4.5% in 2016, especially in Iraq, where the increase was 41% during the same year”.
“The estimated volume of smuggling is around 43 billion cigarettes annually in MENA, or about 10.6% of the legal market,” he said, noting that the World Customs Organization (WCO) estimated the amount of confiscated products in 2012 at about 354 million cigarettes.
Izadifar tackled the danger of illicit trade, saying that “it provides opportunities to spread corruption, leads to a lack of control over health, hygiene, quality and restrictions on consumers such as minors, as well as leading to tax evasion and the financing of criminal activities, including terrorism”.
Howard Pugh
The expert at the European Police, Howard Pugh discussed the best practices of combating smuggling adopted in Europe, saying that “the incomes of illicit trade of tobacco products, estimated at millions of dollars, reach the hands of al-Qaeda, the Taliban and other terrorist organizations and organized crime groups”.
He described tobacco smuggling as an “engine of other crimes” and “a financier of threats”, arguing that “illegal profits are used to finance organized crime”. “Tobacco smuggling affects us all, and stolen revenues from the state could have been spent on vital public facilities such as schools, hospitals, and infrastructure,” he said.
He pointed out that the EU's 2016 losses due to counterfeit and smuggled tobacco amounted to 10.2 billion euros, while the consumption of illegal tobacco products amounted to 9%, or about one over 10 cigarettes. The EU's illicit tobacco market has reached 48.3 billion cigarettes.
Explaining the functions of Europol and talking about activating international cooperation, he stressed the importance of the intelligence in confronting organized crime groups through information from various sources, including law enforcement agencies, international organizations, open intelligence sources, and the private sector (such as tobacco traders). He also mentioned the need to form joint units or intervention teams from different law enforcement agencies such as police, customs, general security forces, and tax and judiciary agencies, among others. He highlighted the need for parallel financial investigations aimed at monitoring the flow of funds resulting from these crimes.
Hubert Lawrence
International law expert Hubert Lawrence said that tobacco products are among the most illegally trafficked substances and come immediately after drugs. He pointed out that wasted revenues due to illicit trade are estimated between 40 and 50 billion dollars annually.
Lawrence said that the best solution to dealing with illicit trade is cooperation and coordination between authorities in the field of financial policies, regulations, and law enforcement; health authorities through educational campaigns, for example; and industrial sector through the exchange of expertise and information. He stressed the importance of coordination and cooperation between the government and legitimate tobacco companies, and the reinvestment of one to two percent of the income of tax increase on tobacco products to strengthen law enforcement.
“Higher taxes on tobacco products are the main reason behind illicit trade and weak law enforcement” Lawrence said.
Law enforcement
An interactive dialogue was held to discuss means of law enforcement, prosecution, and developing coordination mechanisms between security services. The session was presided by the Regie’s Board member Mr. Mazen Abboud, and attended by the Financial Attorney General, Judge Ali Ibrahim, the Director General of Internal Security Forces Major General Imad Othman, the Director General of Customs Mr. Badri Daher, and the head of the anti-smuggling department at the Regie Mohammed Zaher.
Othman
Major General Othman underlined that “the economy cannot be restored unless protected in all aspects, especially on security level; a step known as investment in security”. “Products can be intellectual, commercial, or alimentary, and our duty is to combat their illicit trade, such as smuggling and counterfeit that may harm citizens’ health and safety, not to mention depriving national treasury of continuous revenues.”
He stressed that ISF “had launched relevant centers under the direction of the Directorate of Special Criminal Investigation, which is entitled to fight cyber and financial crimes and money laundry and to protect intellectual property”. He added that “money resulting from illicit activities requires to be laundered in the Lebanese financial market. In general, gangs and outlaw groups are used for this purpose, which indeed leads to the raise of different criminal activities, and sometimes to the financing of terrorism”.
He noted that “the results of smuggling and counterfeiting are not limited to one crime, while perhaps the ISF had sometimes failed in term of putting end to smuggling through border crossings, since it does not have an actual presence at these points. However, the strategic plan set by the ISF to update the agency’s performance in different areas, will allow giving adequate weight to activating its role in term of relevant crimes”.
He stressed that “the competent units at the ISF, are doing their job in terms of combating internal smuggling operations and combating counterfeiting and other infringements of economic security, public finances, and treasury.
“We were able to seize goods, drugs, cars, tobacco, and various commercial products, while raids were sometimes carried out on stores and dangerous places in order to arrest involved individuals”.
He pointed out that “the General Directorate of ISF constantly conducts necessary specialized trainings in order to raise the level of professional competence of its personnel on field”. “In terms of prevention, various ministries are called to take the necessary measures to prevent infringements on economic security. In fact, the ISF had signed several memorandums of understanding with the private sector in order to provide cooperation and training, and lately with the Brand Protection Group (BPG)”. He pointed out that “the work of the Financial Crimes Bureau, especially in the field of smuggling of goods with an exclusive agent in Lebanon, and counterfeit goods, is largely coordinated with Customs, in light of the Public Prosecutor Office’s circular concerning the cooperation between customs and ISF, through the FCB, and the referral of cases of seized counterfeit and smuggled goods to the said bureau to conduct investigation under the supervision of the Financial Public Prosecutor’s Office.
“Both public and private sectors must promptly work in order to protect legal traders and treasury’s revenues, exchange information between traders and law enforcement, and support them in sharing expertise. Hence, we could address the challenges facing not only security agencies but also financial and commercial sectors”.
Ibrahim
Judge Ibrahim explained the competence of the Financial Public Prosecutor's Office, describing smuggling as “an aspect of corruption that deprives the public treasury of the money that goes to smugglers”. “As investigating judge, we daily refer cases the competent judicial authorities. Respectively, we coordinate with relevant security agencies; such as customs, judicial police, police stations, the GSF, or the Regie’s anti-smuggling bureau. Maybe imprisonment is not sentenced in these cases, but we must compel to judgments of judicial authorities, whereas each case is unique in se”.
He stressed that “the word of sects is superior to the word of the state in many cases. Sometimes smugglers hide behind their sect that hurries to protect them under the pretext of ‘why us not others?’ Thus, each sect protects its corrupt.”
“The issue is related to education. Home is the first step in education and our children will follow what we teach them. The mother, the school, the university, and the society have a primary role in creating the right environment to fight corruption.”
Ibrahim stressed the importance of “solidarity in order to protect the nation. If each of the judicial authority, ISF, GSF, customs, and the Regie, worked separately, no solutions would be reached. Either we work with one spirit, as one person or we shall never expect to achieve any result”. He stressed that “the role of civil society, ie, associations and the media, is central to the fight against smuggling and corruption”. “Information referred to justice or security forces must be based on evidences and not just on words, since false information negatively affects the case and the citizen”. He added: “Shall we all work seriously, we can make it. I ask media to provide us with tips and we shall carry on investigations and prosecution... I hope that serious and competent media agencies that have the will to make a change and fight corruption and smuggling would provide us with leads”.
He pointed out that “there are obstacles that prevent the work of the Public Prosecution, such as permission to prosecute any employee ... There are many immunities and protected persons. We face a great challenge; either to be one hand to establish our nation or shall each party act separately but then we shall never dream of a nation.”
Daher
The Director General of the Customs Badri Daher underlined that “illicit tobacco trading threats public health and leads to great financial losses”.
Daher cited the main reasons behind illicit trade, among which “long and complicated custom procedures in one hand, and high taxes and duties in the other, along with corruption and bribery.
He pointed out that “these phenomena obstacle businessmen wishing to legally import or export goods, which pose on them additional expenses. In result, some choose to disregard legitimate canals, while others choose manipulation and fraud by presenting false statements in term of quantities, tariff heading, value, or origin, or even prefer smuggling”.
He stressed the urgency of “restricting taxation laws that facilitate tax evasion” and “enhancing e-communication between public institutions in light of the need to an information bank that connects taxpayers to all relevant public institutions such as customs, commercial register, real estate register, municipality, private sector, chamber of commerce and industry, and unions in order to enhance tax evasion control”. “Currently, work is focused on laying the foundation on a real cooperation with private sector represented by economic bodies”.
He, as well, declared that Customs had “issued 10650 fines during last year leading to the collection of 13.715.993.000 LBP in penalties”.
He pointed out that the fight against smuggling requires “attention to improving work conditions in customs, which requests granting privileges to licit dealers compared to those engaged in illicit work”. He called for “promoting licit trade activities by simplifying procedures, facilitating the movement of goods and passengers, and promoting integrity while combating trafficking and addressing threats to the health, safety, and security in order to create a fair competitive environment for business”. He pointed out that the Customs “shed the light during the past months on these matters, and succeeded to some extent in reaching the goal of a short, medium, and long term strategic plan.”
The said plan includes “the simplification of custom procedures and the reduction of goods’ clearance process. In this context, more than 360 phases and 57 working days have been reduced and more than 20 jobs have been canceled, while employees were assigned to other tasks. Soon the Customs will launch the utmost step of goods’ pre-clearance, positively reflecting on the national economy in terms of reducing the clearance period gradually to a minimum”.
He said that the plan regards also “the strengthening of partnership with private sector, where work committees have been established and cooperation with the Chamber of Industry and Trade has been laid out. The objective is to reduce illicit trade, receive complaints, and promote transparency by updating our website and launching a hotline 1703 to receive complaints and inquiries and reporting on fraud”.
“The fight against corruption is also one of the aspects of the plan, where the principles of reward and punishment, and the adjustment of wages are being consecrated,” as well as “strengthening public safety and security, providing border stations with scanners and field laboratories, enhancing the role of customs investigations, updating Human Resources, and enhancing the employees’ performance through capacity building courses, where specialized consulting companies are invited to held trainings”.
Daher concluded by confirming that “the Customs has made several steps to enhance licit trade and improve customs procedures, which will improve and increase the collection of customs duties and taxes and enhance the optimal application of laws and regulations. These mechanisms inevitably support the national economy and encourage foreign investments.
Zaher
The Regie’s Head of anti-Smuggling Bureau Mr. Mohamad Zaher said “the factors contributing to illicit trade are the unbalanced tax policy, the high burden of consecutive tax increases, the disparities between prices of tobacco products compared with neighboring countries, poor law enforcement, the absence of control at free zone especially transit goods, and the increasing demand on illegal goods due to their low price”.
Shedding lights on the accomplishments of his bureau, he said: “problems that restrain the work are the general security and political situation, the delay in the issuance of judgments against traffickers and smugglers, as well as the absence of legal texts binding security services to support the bureau upon necessity”.
He proposed some solutions to combat illicit trade; “speeding the issuance of judgments forcing the closure of cases and the offenders to pay the fines, reviewing the legislation on smuggling in order to make it more deterrent and effective, and establishing an anti-smuggling committee that includes representatives of prosecution, ISF, the Ministry of Economy, the Customs Department, and Regie’s anti-Smuggling Bureau”.
In this regards as well, he pointed to the necessity “of issuing binding texts that require security forces to support the anti-smuggling bureau upon necessity and making periodical campaign addressing the negative effects of illicit tobacco trade, as well as strengthening partnership and continued cooperation between domestic and international agencies and representatives of tobacco manufacturers”.
He stressed “the need to provide the anti-smuggling bureau with young staff to facilitate its work”, pointing out that the Civil Service Council had already sent a recruiting letter to the Cabinet.
In term of statistics, Zaher said that “his bureau filed 82 cases during 2010, while in 2015 the number raised to 490 and then fall again to 157 in 2017”. However, the volume of illicit trade increased from 5 percent in the second quarter of 2010 to about 30 percent in the third quarter of 2017.