A Malaysian businessman has been accused of smuggling millions of cigarettes into New Zealand and trying to avoid a $3 million tax bill in a record-breaking tobacco bust.
While the exact details of the seizure are yet to be disclosed by Customs, the Herald understands the 25-year-old company director surrendered himself to police on Friday following a raid at his property earlier in the week.
He was charged with importing 2.39 million cigarettes inside a container from Malaysia on July 27.
The find is the highest single-seizure for illicitly imported cigarettes and comes less than two weeks after Customs announced what was then its largest single tobacco seizure.
In that case 2.2 million cigarettes were found inside stacks of metal frames and a 30-year-old Malaysian man was arrested for attempting to evade $2.72m in duty tax and GST.
The Herald understands the two seizures are unrelated.
However, the border agency did confirm its investigation into the latest case is ongoing.
The businessman, represented by top defence lawyer David Jones, QC, appeared in court on Friday and was back for another short hearing yesterday.
Supported by his father and brother in the public gallery, he pleaded not guilty to defrauding the revenue of Customs, making an erroneous import entry and two drugs charges.
Jones also persuaded Judge Peter Winter to continue his client's name suppression for at least a week and also successfully sought bail, which was opposed by Customs.
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As part of his bail, however, the man was prevented from leaving New Zealand or applying for any travel documents, associating with any delivery or storage companies and also ordered not to be involved in the formation of a company.
"Do you understand those bail conditions?" Judge Winter asked, to which the businessman nodded.
He will appear in court again later this year.
Last month the Herald revealed New Zealand's increasing tobacco black market saw the Government miss out on $287.4m in tax revenue for 2019.
Some politicians, such as New Zealand First leader Winston Peters, have criticised the effectiveness of the annual tobacco products tax hike, with the deputy Prime Minister predicting last year that "the price point has reached such a level that organised crime groups see economic opportunity".
Act leader David Seymour has also said new legislation to combat the issue simply creates more bureaucracy and continues to drive the tobacco supply underground.
The new record follows a spate of stings by Customs to stub out cigarette smuggling schemes, many of which have been linked to registered Kiwi companies and international organised criminal syndicates.
In June, a 29-year-old Auckland businessman was arrested after Customs allegedly connected him to a January sea cargo consignment of new household items containing 75,000 undeclared Chinese-branded cigarettes.
He is due to appear in court again next month.
And in Customs' largest ever cigarette smuggling investigation, code-named Operation Whitethorn, a businessman was sentenced in June to five years and three months' imprisonment.
The man, who has interim name suppression, and his company avoided $18.73m in tax by smuggling nearly 20 million cigarettes into the country from China between 2015 and 2018.
His company was fined $9800, while a woman also charged during Operation Whitethorn remains before the court.
After the arrest in late July of the 30-year-old previous record holder, who has name suppression, Customs' group manager of intelligence, investigations and enforcement, Dana McDonald, said she expected the trend of mega-seizures will continue.
Because cigarette prices in New Zealand are amongst the highest globally and behind only Australia in the Pacific-South East Asia region, she explained, tobacco fraud is seen as a "lucrative business venture for criminals".
Peters has said the annual January 1 excise hike on tobacco products has reached the limits of its effectiveness, places additional pressure on Customs, and "disproportionately gouges the poor".
More legislation to help combat the problem came into effect last month with the Customs and Excise (Tobacco) Amendment Bill. It closed a loophole allowing people to import cigarettes and loose leaf tobacco for manufacturing cigarettes and "roll your owns" for black market sales without excise tax.
Only the Act party voted against it, with Seymour arguing legislation "has done almost nothing to reduce smoking rates".
Customs Minister Jenny Salesa, however, told the Herald she believed the new law gave authorities enough powers to stem the flow of illicit tobacco into New Zealand.
The yearly race for smokers to stock up and beat the price lift, however, has helped keep the Government's books in surplus.
In February, Treasury released the accounts for the New Zealand Government for the six months to December 31, which showed the Crown ran a small surplus of $43m.