DRUG GANGS SMUGGLE CIGARETTES BY BILLION

Drug syndicates are turning to cigarette smuggling because the profits
are greater and the risks, if caught, are smaller.

The gangs are shipping billions of illegal cigarettes through
Britain's eastern ports, which customs investigators have discovered
are the biggest gateway used by tobacco smugglers.

New figures reveal that the illegal trade, which mainly targets
Felixstowe in Suffolk and uses freight containers and lorries, dwarfs
the imports by tobacco gangs at Dover who use van drivers and foot
passengers with holdall bags.

Profits of more than UKP1m a day can be made in cigarette smuggling
and several criminals are now known to have built up international
property portfolios from the trade. One smuggler, who had a brandy
distillery in Cognac and a flat in Cannes, even continued his
smuggling operation after being jailed for bootlegging.

Seizures of contraband cigarettes at Britain's eastern ports rose from
31m in 1998 to more than 350m last year. Customs officers admit that
billions more cigarettes have passed undetected through the ports with
the majority smuggled from Egypt, China, Singapore and eastern Europe.

Contraband cigarettes are usually concealed within the cargo or inside
a lorry frame. Others are openly transported with forged paperwork.
Gangs - some of which have been involved in the drug trade - smuggle
up to 15m cigarettes in each shipment.

One gang due to appear in court this week smuggled cigarettes from
Lithuania, through Harwich in Essex, to a Norfolk farm used as a
makeshift distribution centre. In one shipment more than 1m cigarettes
were hidden in clothing and another 500,000 were concealed in the
floor of a lorry.

After Gordon Brown's budget increase of 25p on a packet of cigarettes
last week, the government announced a UKP209m programme to combat
smugglers. But Britain's retailers believe Customs will be unable to
stem the massive increase in contraband cigarettes.

Customs officers last week said organised crime using freight accounts
for about 80% of smuggled cigarettes. "White van man has been seen
off," said a customs spokesman. "Most smugglers are backed by
organised gangs who have financial backing and more sophisticated
techniques."

Smugglers who import cigarettes transport them to a distribution
point, usually a warehouse. Couriers then transport the cigarettes to
"wholesalers" around the country. They are subsequently sold in shops,
pubs and street markets.

At a south London market last week, it took less than 20 minutes to
find a wholesale supplier. The seller, dressed in a baseball cap and
designer jeans, offered an undercover reporter 200 cigarettes for
UKP25 - just UKP2.50 a packet. "You can have 1,000 cigarettes now,
then I can do as many as you want on a weekly basis," he said.

The trade is so profitable that some of the country's biggest crime
gangs have moved into tobacco. "On some occasions we have been
targeting gangs for drugs and have found they're dealing in cigarettes
instead," said Tim Mahony, of the National Crime Squad.

Ellis Martin, who ran the so-called A-gang in East Anglia, found the
freight trade so lucrative that he kept the business going even after
he was sent to jail. In two years, Martin generated profits of UKP18m
while serving a sentence for smuggling.

Martin, 41, used offshore accounts to fund the operation and built up
an extensive property portfolio with the profits. In December he was
sentenced to another nine years in jail and was ordered to repay the
public purse UKP10m.

Another East Anglian cigarette smuggling ring was smashed by Customs
after a two-month surveillance operation. The gang, which included two
Lithuanian lorry drivers, removed the insulation materials from
refrigerated trucks to create false floors and ceilings.

Blackberry Farm in Long Stratton, Norfolk, was used as the
distribution centre for an estimated 7m cigarettes which were smuggled
in through Harwich. Six men have pleaded guilty and are due to be
sentenced at Norwich crown court this week.

Other importers falsify the paperwork and openly import the
cigarettes. "I make about 65% profit on each carton," said one last
week. "Some of the big boys are making UKP1m a day. There is no way it
can be stopped, it is too big."