The nation\u2019s ports had become an open book to them from sheer practice.<\/p>\n
Authorities have no idea how many containers of tobacco \u2013 and who knows what other contraband \u2013 slipped into the country during that period, like water flowing around a rock.<\/p>\n
It was just another crack in the border wall that would soon become a flood. Black market tobacco was filling shops in Melbourne, Sydney, Brisbane and Perth.<\/p>\n
The ABF already knew they had a major problem with illicit tobacco.<\/p>\n
Taskforces had been launched, with hundreds of millions of dollars being spent \u201ccracking down\u201d on the illicit tobacco black market across the country.<\/p>\n
And yet today, Australia is one of the world\u2019s most lucrative markets for illicit tobacco.<\/p>\n
It feeds a multibillion-dollar black market that has been injected with so much dirty money that transnational organised crime syndicates have gone to war to control it \u2013 leading to a nationwide campaign of more than 200 firebombings, a score of shootings, rampant extortion, the death of an innocent woman<\/a> and even spawned a terror attack<\/a>.<\/p>\n This is the story of how law enforcement and state and federal governments allowed a well-intentioned health measure designed to stop smoking \u2013 raising taxes \u2013 create a black market<\/a> that has now become a national security problem.<\/p>\n And it was entirely predictable.<\/p>\n A custom-made market<\/p>\n \u201cThere has been a clear regulatory failure by all levels of government going back a number of years to enforce laws governing illicit tobacco, in particular those governing retailing and distribution.<\/p>\n \u201cYet very little effective enforcement action appears to have been taken. This undermines confidence in the rule of law and provides free-rein to organised criminals,\u201d a report from the Black Economy Taskforce<\/a> found.<\/p>\n This could be a spot-on assessment of the current state of play in Australia\u2019s illicit tobacco market \u2013 except it was written in 2017 not 2026.<\/p>\n There have been six separate federal and state parliamentary inquiries into the illicit tobacco market since 2015, including one \u2013 the second for the Australian parliament \u2013 that is currently underway.<\/p>\n Add to that at least 10 specialist anti-tobacco state and federal law enforcement taskforces, including the creation of a dedicated Illicit Tobacco and E-cigarette Commissioner.<\/p>\n All of them have been essentially undertaken to combat a simple problem \u2013 the unintended consequences of skyrocketing taxes on cigarettes.<\/p>\n Forcing up the cost of smoking was originally intended as a health measure that would also deliver a massive win in public health and a financial windfall for the government \u2013 and both were highly successful.<\/p>\n Smoking rates fell to record lows and the Commonwealth received billions in taxes, making tobacco one of its biggest revenue raisers. At its peak in 2019-20, tobacco excise revenue accounted for $16.3 billion. <\/p>\n But, as every government inquiry has shown, there have been multiple warnings about the unintended consequence of steeply raising tobacco taxes \u2013 the lure it presented to organised crime.<\/p>\n Related Article Sir Ronnie Flanagan, former chief inspector of constabulary for the United Kingdom, testified before a 2016 Australian parliamentary inquiry that the connection between price rises and criminal activity was \u201cself-evident\u201d.<\/p>\n \u201cI think everyone accepts that there should be properly calibrated annual increases in revenue, but the shock ad hoc increases over and above the calibrated increases, I think, do have the real risk of bringing about the effect of driving people into the illegal tobacco market.\u201d<\/p>\n In March 2017, a single cigarette attracted a tax of $0.61 and a \u201ccheap\u201d packet of cigarettes cost about $18.<\/p>\n Fast-forward nearly a decade, and the tax per cigarette is $1.52 and packets are now $37 to $55.<\/p>\n The result?<\/p>\n The tobacco market is now deeply infiltrated by organised crime, with up to 60 per cent of all cigarettes sold in Australia coming from black market sources, according to the Illicit Tobacco and E-Cigarette Commissioner<\/a>.<\/p>\n These operations can provide packs of cigarettes for $12 to $25.<\/p>\n Dr James Martin, associate professor in criminology at Deakin University, said the tipping point was around 2018, after the government had been implementing a series of tax rises of 12.5 per cent each year since 2013.<\/p>\n<\/p>\n \u201cWe saw this coming a long time ago. I basically argued at the time<\/a> that it wasn\u2019t going to work \u2013 and that these taxes would backfire, and you\u2019d end up with a massive black market and that it would create more problems than it solved,\u201d he said.<\/p>\n \u201cSupply finds a way around whatever obstacles are there with it when there\u2019s sufficient demand.\u201d<\/p>\n Illicit tobacco is now the second most valuable illegal commodity after drugs. It is worth up to $8.5 billion a year to organised crime<\/a>, including the sale of illicit vapes since 2024.<\/p>\n It\u2019s a lesson that Australian political authorities are still struggling to understand or accept.<\/p>\n At a press conference last year<\/a>, Minister of Health Mark Butler said Australia was a victim of criminal gangs capitalising on a worldwide glut in cigarette production.<\/p>\n \u201cThe explosion in illicit tobacco was \u2026 a product of significant oversupply in the world, dumping of this product on every single country around the world by these gangs that are controlling this traffic.\u201d<\/p>\n But this simply isn\u2019t right.<\/p>\n Related Article Multiple law enforcement, intelligence and industry sources have described Australia\u2019s taxation policy as creating the \u201cinvestment capital\u201d for the massive growth in organised crime related to the illicit tobacco market.<\/p>\n \u201cAustralia is flooded with illicit cigarettes because Australian criminals are ordering them from the factories where they are made in Dubai, Cambodia and China,\u201d a criminal intelligence source said.<\/p>\n \u201cBottom line: nicotine addicts will buy f—ing cigarettes. The money that can be made means all the well-intentioned health policies in the world won\u2019t stop the flow if the taxes are so high that fortunes can be made.\u201d<\/p>\n One container of Manchester brand cigarettes bought for $250,000 in Dubai can be sold in illicit shops in Australia for $7 million to $10 million, according to underworld sources.<\/p>\n And crime gangs need only one in 30 containers to make it through the ports to turn a profit, according to the Australian Criminal Intelligence Commission<\/a>.<\/p>\n As The Age has previously revealed, the now top-selling cigarette in Australia \u2013 the illicit brand Manchester United Kingdom \u2013 is part owned by the transnational organised crime syndicate<\/a> run by Kazem \u201cKaz\u201d Hamad.<\/p>\n More than 4.4 billion Manchester cigarettes<\/a> were shipped to Asia and onward to Australia in 2023 to 2025, flooding the market with cheap tobacco.<\/p>\n The federal government remains steadfast in its refusal to consider a change in excise, with Butler equating it to \u201craising the white flag\u201d to organised crime.<\/p>\n The illicit cigarettes commissioner Amber Shuhyta \u2013 a new federal oversight role created in 2024 as the illicit market exploded in size and violence \u2013 told The Age there \u201cisn\u2019t clear evidence that changing excise would reduce the illicit tobacco market\u201d.<\/p>\n \u201cIn the case of excise, entering into a price competition with the illicit market could lead to adverse health outcomes, and undo successive generations of government policy to drive down smoking rates.<\/p>\n \u201cChanging the excise rate would not necessarily deter criminal involvement, for instance, surplus cheap illicit supply means illicit trade can always be cheaper whilst still remaining highly profitable.\u201d<\/p>\n Australia has now found itself in a catch-22.<\/p>\n Former deputy chief medical officer Dr Nick Coatsworth has called the effects of the excise a \u201cdisastrous public health policy\u201d.<\/p>\n Yet, many public health experts argue that dropping the excise will only further worsen smoking as a health problem<\/a>.<\/p>\n That has left Australian law enforcement to try to stop the flow at the border \u2013 a policy which has been failing for more than a decade.<\/p>\n Stop, seize, repeat<\/p>\n In 2013, a federal and state law enforcement investigation on Melbourne\u2019s waterfront known as Operation Peacham\/Farlax intercepted 80 million cigarettes and hundreds of tonnes of tobacco worth more than $67 million.<\/p>\n It was then the biggest seizure in Australian history<\/a> \u2013 and the tentacles of the Haddara crime family were all over it, according to court documents and police intelligence.<\/p>\n The Haddaras were rapidly becoming the main operators in Victoria\u2019s illicit tobacco market, smuggling in cigarettes from Dubai and China and then distributing to a network of shops that would sell them under the counter to the public.<\/p>\n The bust was heralded as a massive success by Australian law enforcement at the time.<\/p>\n Those in the know on the inside were less confident.<\/p>\n \u201cIndustry analysts noted that these seizures did have a temporary impact on the flow of illicit tobacco to the marketplace, however the illicit supply soon returned to previous levels once the investigation had been completed,\u201d former ABF commander-turned-private consultant<\/a> Rohan Pike wrote in a submission<\/a> to the 2016 parliamentary inquiry into tobacco.<\/p>\n At the time in 2013, border authorities were seizing about 200 million cigarettes a year.<\/p>\n By 2021, nearly 600 million cigarettes were seized. Still, it was a cause for triumphalism.<\/p>\n \u201cThis increase in illicit tobacco detection rates highlight just how committed the ABF is to disrupting and dismantling the tobacco black market, and the dangerous criminal syndicates who operate it,\u201d then-assistant minister for Customs Jason Wood<\/a> said.<\/p>\n \u201cAustralia has one of the strongest regulatory regimes for tobacco in the world, and the high rate of detections by the ABF show the effectiveness of this approach.\u201d<\/p>\n It was so successful that just two years later, in 2023, more than 1.77 billion illicit cigarettes were seized. In 2025, it was 2.5 billion.<\/p>\n Related Article Law enforcement and industry sources, who cannot be identified publicly, said ABF and the government had become committed to a failing methodology focused on \u201cseizing\u201d their way out of the problem for lack of a politically palatable alternative.<\/p>\n Even as late as September 2025, the ABF was trumping its impact after seizing 30 million cigarettes and 400,000 vapes worth $74 million in an operation in Queensland.<\/p>\n \u201cIn less than a week, the ABF has put a significant dent in two major illicit tobacco networks,\u201d ABF acting Assistant Commissioner James Copeman announced to the media<\/a>.<\/p>\n Yet shipping manifests for the illicit Manchester brand obtained by The Age shows that at almost that same time \u2013 in a single month \u2013 more than 500 million illicit cigarettes were being loaded on ships in Dubai to be sent towards Australia.<\/p>\n Meanwhile, the Hamad syndicate had also created a lucrative new partnership with a China-based criminal<\/a> that saw Australia flooded with illegal vapes.<\/p>\n This obsession about seizure numbers fundamentally misread the nature of how illicit markets work, according to Deakin University\u2019s James Martin.<\/p>\n \u201cBlack markets are adaptable. You can damage individual players but you can\u2019t damage the market as a whole when it gets beyond a certain scale,\u201d Martin said.<\/p>\n \u201cOnce it\u2019s big, which is clearly the case in Australia, you can count on the fact that there\u2019ll be more suppliers entering the market and that makes it nearly impossible to disrupt supply.\u201d<\/p>\n The ABF weren\u2019t in the dark. They knew from at least 2020 that their methods were not working.<\/p>\n \u201cBy then it had already gotten too big. The tax had risen to a point where it made economic sense for the syndicates to keep expanding and [smoking] had become normalised in the community as well,\u201d said a former senior law enforcement source with direct knowledge of the system.<\/p>\n \u201cABF realised they were not having an impact. That they were not going to seize their way out of the problem. Those big numbers were not really an indication of success.<\/p>\n \u201cWhat impact is there from seizing 10 million sticks? It\u2019s just merely numbers. That\u2019s really more speaking to the sheer size of the market than some kind of successful outcome.\u201d<\/p>\n The result?<\/p>\n \u201cWe\u2019ve handed over billions of dollars to organised crime,\u201d the source said.<\/p>\n This was the outcome despite federal government spending half a billion dollars on enforcement measures since 2015 directly on combatting illicit tobacco \u2013 above and beyond the regular budgets of the ABF, ACIC and Australian Federal Police.<\/p>\n ITEC commissioner Shuhyta told The Age that \u201cenforcement serves as an effective disruption tool\u201d.<\/p>\n \u201cComprehensive effort should focus on the Australian border, in conjunction with law enforcement efforts at the federal and state and territory level, public health measures, and working closely with international partners to disrupt the supply chain.\u201d<\/p>\n But even as enforcement is continually publicly pushed as a way out of the worsening morass, border authorities were being hobbled by under-investment in an ageing cargo system and lacklustre intelligence capabilities.<\/p>\n The reality is that the ABF has a very low \u201cstrike rate\u201d at detecting illicit tobacco shipments, sources say.<\/p>\n Officers only checked about 1 per cent of containers<\/a> in 2023, and those searches were overwhelmingly based on intelligence, rather than being random checks. That figure is down from 5 per cent more than 20 years ago.<\/p>\n The vast majority of intelligence is provided through tip-offs by the tobacco industry and international law enforcement agencies.<\/p>\n There was also always a litany of other more serious and politically sensitive issues that had to take priority \u2013 terrorism, people smuggling, illegal fishing, drugs, firearms.<\/p>\n This despite the known connections between tobacco smuggling and how the money it reaped was ploughed back into more serious organised crime.<\/p>\n The operation of Australia\u2019s sea cargo system itself had also become deeply problematic.<\/p>\n When former ABF commissioner Michael Outram was retiring in October 2024, he delivered a pointed critique during an address at the National Press Club<\/a>.<\/p>\n While only mentioning tobacco once, the speech got right to the heart of how federal law enforcement \u2013 and the governments that have funded it \u2013 opened the door for the flood of illicit tobacco that has led to the rampant criminality and violence of today.<\/p>\n \u201cAt the time of the Sydney Olympics, our border was highly regarded globally. The Integrated Cargo System or ICS, which handles Australia\u2019s import and export transactions, was about to be introduced as a world-leading single window system,\u201d Outram told the National Press Club.<\/p>\n \u201cIn 2007, a few years after ICS was introduced, Australia was ranked 23rd in the World Bank Trading Across Border index and just over a decade later we\u2019d slipped to 106th.\u201d<\/p>\n Outram declined to comment when contacted for this article.<\/p>\n But other sources familiar with ABF operations describe a litany of problems that have gone uncorrected for decades.<\/p>\n \u201cWe\u2019ve still got paper-based systems for incoming passengers and incoming sea cargo, which is a massive problem. We have people going through pieces of paper like it\u2019s 1950,\u201d one source said.<\/p>\n \u201cThe fact that we\u2019re still using X-ray machines in this day and age. Great, they were awesome in 1994.\u201d<\/p>\n The price tag on bringing the system up to state-of-the-art would cost billions.<\/p>\n Meet the new boss<\/p>\n This was the state of affairs on the morning of March 24, 2023 \u2013 the day the \u201ctobacco war\u201d began.<\/p>\n Apart from budget announcements that the federal government was drawing an ever declining chunk of revenue from excise taxes (the federal budget is facing a $67 billion shortfall in tobacco excise<\/a> in the decade to 2028-29), the widespread availability of illicit tobacco was practically invisible to the public \u2013 unless you were a smoker.<\/p>\n<\/p>\n Hundreds, if not thousands, of specialty tobacco shops had opened up and illicit brands like Manchester and Double Happiness were readily available at cut-rate prices.<\/p>\n So profitable had it become, that competition was seeing new players push into the market \u2013 bikie gangs, Middle Eastern and Asian organised crime start-ups, even punters looking to make a fast buck off a quick shipment.<\/p>\n In February 2023, the reigning powers in the Haddara crime family called a meeting to set ground rules about prices, supply and who got a piece of the trade.<\/p>\n Kaz Hamad, who was on the cusp of being released from an eight-year prison sentence for heroin trafficking, demanded a seat at the table and was refused.<\/p>\n What came next was chaos. Dozens of firebombings, shootings and murders.<\/p>\n This is what brought the sheer moneyed power of the illicit tobacco market to public attention \u2013 and brought the chickens home to roost for the government and law enforcement.<\/p>\n State police forces were now confronted with a street war over something that had been festering for years without concerted attention by the federal government.<\/p>\n Editor’s pick Hamad waged a two-year war to gain control of the illicit tobacco market, forming a cartel in early 2025 known as \u201cThe Commission\u201d.<\/p>\n In late 2025, AFP Commissioner Krissy Barrett declared Hamad was a threat to Australia\u2019s national security as a result of his suspected involvement in illicit tobacco industry, alleged links to serious violence and suspected involvement in the firebombing of the Adass Israel synagogue<\/a> in December 2024 on behalf of the Iranian government.<\/p>\n But the so-called \u201ctobacco war\u201d would be ended by the same person who started it \u2013 Hamad.<\/p>\n With the Haddaras beaten into submission, the Hamad syndicate seized control of its operations and expanded it dramatically.<\/p>\n The AFP has said Hamad runs a nationwide operation, with a presence in five states and one territory. The cartel is strongest in Victoria, New South Wales, Queensland and Western Australia.<\/p>\n Hamad was arrested <\/a>in January in his native country of Iraq, in circumstances that remain a mystery.<\/p>\n But it\u2019s not clear how any of this has affected the supply of illicit tobacco, which is still widely available despite his arrest and a \u201clicensing crackdown\u201d promised by the Victorian government on February 1. (NSW toughened its laws last year and has shut down more than 50 shops suspected of selling illicit tobacco or vapes, and seized more than 1.6 million illicit cigarettes.)<\/p>\n \u201cSeizures are not a success metric, they\u2019re a symptom of a market that\u2019s out of control. What matters is the size of the illicit market,\u201d the former federal law enforcement official said. \u201cUntil we see criminals losing market share, not stock, we can\u2019t claim progress.\u201d<\/p>\n In fact, the black market recently got even more profitable for the syndicates.<\/p>\n![\"Rising](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/03\/8b60bea8af1ccc32ef8bb1aa7ff9828ac37e30a0.jpeg\")
Rising taxes on tobacco over several years helped create a black market that became so lucrative that transnational crime gangs battled for control of it. One is led by Kazem\u00a0\u201cKaz\u201d Hamad.Artwork: Aresna Villanueva<\/p>\n![\"Treasurer](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/03\/a1754a91fc743384a2e353ab8a13ee8a2b283d3f.jpeg\")
<\/a><\/p>\n![\"Manchester](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/03\/7ac853d0337a800c53e4088529d0e082ac695952b416ff2243ec91782d1c77cb.gif\")
<\/a><\/p>\n![\"Budget](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/03\/291e00f711e9ccdd4b061a3079b22d316b376ec2.jpeg\")
Budget decisions on tobacco excise over more than a decade have helped spawn a black market.Dominic Lorrimer<\/p>\n![\"Fadi](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/03\/bf43a9c469b59720f892fbfd3d8bfa3199adc9a2.jpeg\")
Fadi Haddara in 2024 leaving the Melbourne Magistrates\u2019 Court.Jason South<\/p>\n![\"Tobacco](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/02\/1771259533_671_08c8b7876e5c39c891d6260afeadeb479f63039ea097bb4749a2ab7e9c88b80e.jpeg\")
<\/a><\/p>\n![\"A](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/03\/2dc838f60db6bc0aa6398b290110a309f805a773.jpeg\")
A shipping container full of illegal cigarettes at the Port of Melbourne.Joe Armao<\/p>\n![\"Michael](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/03\/36b544305764609913d747a62f6e908dbd6baee7.jpeg\")
Michael Outram during an address to the National Press Club in 2024. Alex Ellinghausen<\/p>\n![\"Fadi](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/03\/e98817e4d4157c61a6d099af2c82f7878f3bab83.jpeg\")
<\/a><\/p>\n