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OTHER MONITORED AND EMERGING ISSUES
Highlights
Overview
Tobacco and alcohol remain the commodities which are most frequently smuggled and trafficked in Canada. The inter provincial movement of tobacco from lower tax provinces to higher tax provinces continues, with the greatest quantities being shipped from Ontario to British Columbia, although reduced quantities of tobacco are being moved across the Canada/US border.
Federal and provincial governments continually address commodity related weaknesses identified by enforcement and health agencies. For the most part, these measures take the form of tax increases, amended legislation and regulations and improved marking and packaging.
The Integrated Border Enforcement Team in British Columbia, involving
daily communication and interaction between members of US and Canadian
police and law enforcement agencies, has been successful and is being
considered for other parts of the country. Responsible for most of
the British Columbia/Washington border, the team has uncovered illicit
drugs, weapons, alcohol, tobacco and illegal migrants.
In November 1999, tobacco taxes were increased by $1.20 per carton of cigarettes in Central and parts of Eastern Canada. Saskatchewan also made a small increase in March 1999. Alberta amended its provincial tobacco legislation and introduced specially marked tobacco products for Aboriginal reserves. Nationally, improved stamping and marking of tobacco products has begun, as outlined in the last federal budget.
In mid December 1999, the Government of Canada filed a one billion dollar lawsuit in the United States Federal Court against RJR-Macdonald Inc., RJ Reynolds Tobacco Holdings Inc., several related companies and the Canadian Tobacco Manufacturers Council. The Government of Canada claimed that RJR-Macdonald and related companies defrauded Canada of billions of dollars in taxes by conspiring with known distributors and smugglers to ship tobacco products to the United States and then smuggle them back into Canada to sell on the black market. In July 2000 however, a US District Court Judge threw out the government’s action against RJR, accepting the defendant’s argument that the case is, in essence, an attempt by the Canadian government to collect evaded duties and taxes. This is barred by a US law known as “the revenue rule”, that forbids US courts to interpret or enforce foreign tax laws. The federal government will appeal the court’s decision.
Since January 2000, there have been a number of major cigarette thefts. In January, Valleyfield and Sherbrooke authorities seized large quantities of US tobacco, originating from the same theft and en route to distribution points in Canada. In May, authorities in Moncton reported the theft of $2 million worth of Canadian tobacco from a tractor trailer that had been parked in a railway freight yard.
In December 1999, a large, sophisticated still operation was dismantled in the Lower Mainland of British Columbia. A total of 2,175 liters of liquor and 4,914 liters of mash were seized and destroyed. Also, in December 1999, a highly organized bootlegging business was dismantled in Vancouver, British Columbia. The business ran an after hours delivery service throughout the Lower Mainland area, contravening the Provincial Liquor Act.
A recent Ontario alcohol smuggling case involved approximately 40,000
cases of American liquor with an estimated street value of US$8.4 million.
Both Canadian and US residents were implicated in this operation.
They utilized several border crossings, including the Queenston and Rainbow
Bridges in Niagara Falls and the Peace Bridge in Fort Erie, and distributed
the alcohol in the Niagara and Hamilton areas. The alcohol seizure
associated with this investigation is one of the largest ever in Southern
Ontario.
Contraband alcohol is a problem in Quebec. It is believed that
the underground alcohol market is worth approximately $173 million.
As well, the illegal manufacture of alcohol using home-made stills continues
to become more and more popular in Quebec. This alcohol is often
passed off as smuggled American product or sold as stock in bars and restaurants.
Another commodity of concern is weapons. Weapons used by criminals are sometimes stolen, but the majority are smuggled illegally into Canada, primarily from the United States.
In May 2000, Ontario’s Provincial Weapons Enforcement Unit and
the Toronto Area Firearms Office, in a joint operation with other law enforcement
agencies in Canada and United States, ended a year long investigation into
a major international gun smuggling operation. Law enforcement officials
in Toronto, Montreal and Reno, Nevada seized large quantities of rifles,
receivers, prohibited high capacity magazines, rifle barrels, as well as
three machine guns. During the investigation, it was discovered that businesses
in Toronto were shipping the firearm receivers illegally into the United
States and marking them as “truck parts”.
As three additional diamond mines are developed in the Canadian North, both industry and the police are cooperating in an effort to ensure a high level of crime prevention. The need for such
cooperation is apparent from the high level of criminal interest in the diamond industry and by the experiences of other diamond producing countries.
Organized Crime in Marine Ports
Organized crime groups that have been known to be active at Canada’s largest marine ports include Asian-based, East European-based and Traditional organized crime groups and outlaw motorcycle gangs.
Waterfront criminal activity includes smuggling illicit drugs, theft
and product diversion (goods stolen from docks and vessels), the export
of stolen vehicles, migrant smuggling, firearms smuggling, and alcohol
and tobacco smuggling.
A number of Joint Force Operations, comprised of law enforcement officials from a variety of agencies, continue to focus on organized crime elements at the marine ports.
Outlook