Illicit cigarette factory in Germany shut down

An illegal tobacco factory capable of making 10m cigarettes per week in the German city of Kranenburg has been closed down by enforcement agencies.

The operation – codenamed LUPA – resulted in the arrests of 12 individuals and was carried out by German customs with the assistance of German and Polish police and Europol. All those arrested were either Polish or Ukrainian nationals, aged between 28 and 59.

11m cigarettes were also seized as they were being loaded into a truck. Most of the cigarettes are believed to have been destined for the black market in the UK, where the retail value of cigarettes is much higher than in Germany.

“This is only the fourth such illicit production facility uncovered on the German territory and undoubtedly one of the largest,” according to Europol.

The estimated tax loss to the German state revenue for the illegal production alone stands at approximately €1.5m per week and – as the factory is thought to have been in operation since the end of 2016, the total tax loss to the German state revenue amounts to several hundred million euros.

The investigation is still ongoing to try to identify potential links to other European countries, says Europol.

A recent study by KPMG – commissioned by tobacco giant Philip Morris International – showed that consumption of illicit cigarettes fell below 8 per cent of total cigarette use last year, but was still equivalent to nearly 39bn smokes and €9.5bn in lost tax revenues.

The report also that imports of illicit cigarettes from non-EU countries such as Ukraine and Belarus declined in 2019, with law enforcement reports suggesting there are “increasing volumes from illegal factories within the EU.”

Illicit cigarettes typically contain even higher levels of toxic ingredients such as tar, nicotine and carbon monoxide than genuine brand-name products.

They also pose a greater fire risk as they do not include designs that ensure that a lit cigarette will self-extinguish if not actively smoked.