THE illegal tobacco trade is a risk to health, sucks away public funding raised in tax, and could be encouraging underage children to smoke. Our probe today reveals it's here on Newport's streets. LAURA LEA reports.

THE ARGUS can today reveal there are thousands of illegal cigarettes hidden in the darkest corners of city shops, ready to be sold to the public.

Our special investigation into the illegal tobacco industry has found it to be more than a cheap way to continue a bad habit, but a business worth hundreds of thousands of pounds which is fast becoming the currency of crime and exploiting the youngest in our city.

Earlier this week, the Argus accompanied some of Newport’s Trading Standards officers as they carried out an investigation at three city shops. Tobacco was found with a retail value in the region of half a million pounds- if sold legitimately- under floorboards, behind walls and in secret compartments.

Non-UK duty paid (NUKPD) refers to products that have not incurred UK taxes and include tobacco products that are counterfeit, illicit-white or duty free. In other words, tobacco which is fake, produced for smuggling, or brought into this country duty-free regardless of whether duties have been paid in another country.

During a previous test-purchasing investigation carried out by JTI and the Argus across two days in March, 26 illegal products were bought from 15 different premises in the city, in seven hours.

These, along with videos and witness statements, have since been handed over to Newport Council’s Trading Standards.

A shopkeeper who sells tobacco without an authentic UK duty paid mark can lose their lotto terminal, be fined up to £5,000, have their vehicle seized and be prevented from selling any tobacco products for up to six months.

Of the products seized in March- there were four packets of 20 Jin Lings at £3.50, four 50g pouches of Cutters Choice at £9.00, two packs of 20 L+M Cigarettes for £3.00, a pack of 20 Viceroy for £3.50, a pack of 20 Benson and Hedges for £4.50, one pack of 20 Marlboros for £4.50 and a sleeve of 200 Marlboro cigarettes for £45.00.

There were 12 50g pouches of Amber Leaf Tobacco – including counterfeit bought for as little as £4.00 and duty-free bought for £9.50. The legal product typically retails at around £16.00. According to evidence given to the Home Office committee by Japan Tobacco International, each one of these counterfeit pouches represents a tax loss to the Government of more than £11.

HMRC estimated the UK tobacco illicit market share to be 9 per cent for cigarettes and 36 per cent for hand rolled tobacco in 2012/13. This costs the UK £2bn a year in lost duties.

A spokeswoman for HMRC Wales said: “The loss of duty directly affects our public services, such as hospitals and schools.”

On March 11, the Home Affairs Committee presented evidence on tobacco smuggling to members of parliament. This evidence claimed 1,272 million cigarettes and 55.7 tonnes of hand-rolling tobacco were seized in the UK in 2012-13.

MP for Newport West, Paul Flynn, sits on the Home Affairs Select committee for illegal trade and welcomed the Argus’ “worthwhile” campaign.

He said: “This is a cynical trade that pushes the most dangerous and addictive drug to children.

“Most of these cigarettes are manufactured by the major companies and supplied to countries at reduced prices in quantities beyond the nations' use of tobacco.

“It's an incitement to encourage smuggling. The Home Affairs Committee is looking at plain packaging and we have taken evidence from Tobacco Companies.”

Illegal cigarettes provide those with the least disposable income – children- an affordable option for smoking. As well as illegal tobacco, test-purchasers witnessed single cigarettes being sold to youngsters without any age identification being sought.

A JTI spokesman said: “The footage which is taken in Newport shows two young females who appear to be underage, being sold a single cigarette, which is in itself illegal. There is a high probability that the cigarettes themselves are illegal.

“The person behind the counter actually provides them with a lighter which also causes JTI concern. This footage will be passed on to law enforcement so they can take the appropriate action.”

JTI – who carried out the test-purchasing with the Argus – are a global tobacco manufacturing company and so for them, illegal tobacco primarily presents a financial threat.

Elen de Lacy, chief executive of charity ASH Wales has called the manufacturer's involvement “tobacco industry propaganda.”

She said: “How one of the biggest manufacturers of cigarettes in the world, responsible for millions of deaths worldwide, can claim to be concerned about young people is disgraceful. The more JTI can position themselves as the good guys, and make weak claims about age of purchase, the more they distract away from the real issue, which is the ongoing scandal of promotion and marketing of their brands to young people.”

But there is no denying the wider reaching threats of illegal tobacco, which HMRC say is a profitable business controlled by organised crime groups.

A HMRC spokeswoman said: “The proceeds from smuggling tobacco products are often used to fund other forms of serious and organised crime such as smuggling of drugs and weapons, and human trafficking.”

Cheap cigarettes and tobacco are unregulated so often made from the poorest quality ingredients and factories have been found to be contaminated with rat-droppings, insects and toxins.

Written evidence from the Royal College of Physicians, reads: “Illicit tobacco allows price-sensitive smokers who would otherwise quit, to remain smokers and provides a low cost and completely unregulated entry product for children and young people.”

The progress made by strict packaging rules- the shocking images and warnings displayed on packets, as well as behind the counter display restrictions imposed by the UK government, is all undermined if customers are given access to illegal tobacco.

Mark Yexley, media relations manager at JTI, said: “The impact of the illicit trade in tobacco on society is far reaching and members of the public, retailers, suppliers and the Government all haven a role to play to combat the issue.

“Criminals who deal in illegal tobacco will sell to all-comers, including children. JTI fully supports any efforts to rid our streets of illegal tobacco and stop criminals infiltrating our communities.”

Councillor Gail Giles, cabinet member for licensing and statutory functions, said:

“Newport City Council is committed to making the city safer and healthier, and part of this commitment is leading operations to uncover premises that are selling illegal tobacco.

“The council strongly opposes anyone selling illegal products of any kind especially those that pose a danger to people’s health.

“Cheap tobacco may seem like good value, however, the real cost is to an individual’s health. These products are often mixed with other unknown and potentially dangerous substances and they also do not meet safety standards.

“The council would urge anyone with any information to contact Newport City Council’s Trading Standards department.”

Anyone with information about tobacco smuggling can call HMRC’s Customs Hotline on 0800 59 5000 or trading standards on 01633 656656.

TYPES OF ILLEGAL CIGARETTES

Illicit whites - Cigarettes produced entirely independently of the international tobacco manufacturers. Jin Ling cigarettes – which were among those seized in Newport, are a common illicit white as they are only ever sold illegally, produced explicitly for smuggling.

Counterfeit - These are fake cigarettes - manufactured without authorisation of the rightful owners, with intent to deceive consumers and to avoid paying duty.

Contraband - Genuine cigarettes smuggled from abroad without domestic UK duty paid.