Unclassified. ACC Submission into the supply and use of Methamphetamines, particularly ice. February Unclassified. Page 1

Transcription

1 ACC Submission into the supply and use of Methamphetamines, particularly ice February 2014 Page 1

2 Contents ACC Submission to the Victorian Parliamentary Inquiry into Ice Introduction 4 Committee Question 1: To what extent has the ACC examined the production, supply and use of methylamphetamine, and particularly ice? To what extent does the ACCs High Risk and Emerging Drugs (HRED) Determination address methylamphetamine, and particularly ice, production, supply and use. What intelligence has been gathered for this Determination regarding methylamphetamine, and particularly ice, used in Victoria? What intelligence can be made available to the Committee for the purposes of its inquiry? Term of Reference 1: Supply of methamphetamine including direct importation and local manufacture of final product and raw constituent chemical precursors and ingredients Committee Question 2: To what extent is methylamphetamine and particularly ice brought into Victoria from other states and territories (which?), or from overseas countries (which)? Committee Question 3: How is imported 'ice' being introduced/smuggled into Australia? What are the most common methods for importation and what methods of concealment are used? To what extent is methylamphetamine arriving in Australia through parcel post, following online sales? How is this being addressed? Committee Question 4: To what extent is methylamphetamine manufactured in clandestine laboratories in Australia, and particularly in Victoria? Committee Question 5: What production methods are currently used in Victoria for manufacturing methylamphetamine? To what extent have methods of production changed since 2005? Term of Reference 2: Supply and distribution of methamphetamine and links to organised crime organisations including outlaw motorcycle gangs Committee Question 6: To what extent are OMCGs involved in the production and supply of methylamphetamines, and particularly ice in Victoria? Committee Question 7: What is the nature of the involvement of organised crime in the production and supply of methylamphetamines, and particularly ice in Victoria? Committee Question 8: What other (and which) organised crime groups, or others, are involved in the production and supply of methylamphetamine, and particularly ice in Victoria? Committee Question 9: Has the involvement of organised crime in the production and supply of methylamphetamines, and particularly ice in Victoria changed since 2005? Term of Reference 3: the nature, prevalence and culture of methamphetamine use in Victoria, particularly amongst young people, indigenous people and those who live in rural areas Committee Question 10: To what extent is methylamphetamine, and particularly ice, used in Victoria and, in particular, in rural or urban areas? How does this compare with other jurisdictions in Australia? Page 2

3 Term of Reference 4: links between methamphetamine use and crime, in particular crimes against the person Committee Question 11: How much violent crime in Australia, and particularly Victoria, is linked with methylamphetamine use, particularly ice? Term of Reference 5: Short and long term consequences of methamphetamine use 30 Term of Reference 6: The relationship of methamphetamine use to other forms of illicit and licit substances Committee Question 12: What, if any, harm reduction/education measures would the ACC support in attempting to minimise the harms associated with methylamphetamine use and ice in particular? Term of Reference 7: The adequacy of past and existing state and federal strategies for dealing with methamphetamine use Term of Reference 8: Practice strategies to address methamphetamine use and associated crime, including regulatory, law enforcement, education and treatment responses Committee Question 13: How should the clandestine manufacture of methylamphetamines best be addressed? Should the accessibility and availability of precursor chemicals be more strictly regulated or controlled? If so, how and at what level, including point of purchase? Are border controls on precursors adequate at present? Committee Question 14: How effective are state laws in investigating, addressing and combating (meth)amphetamine use? What, if any, legislative reform is needed? Committee Question 15: How effective are asset confiscations laws in deterring organised criminal activity? How could they be improved? Committee Question 16: Are there national or cross-jurisdictional issues that have an impact on or concern for Victoria (for example, inconsistent state laws, resourcing problems at national and state level, state border smuggling and control) that you would like to comment on? Page 3

4 Introduction ACC Submission to the Victorian Parliamentary Inquiry into ice Established under the Australian Crime Commission Act 2002, the Australian Crime Commission (ACC) commenced operations on 1 January 2003, and is Australia s national criminal intelligence agency. The ACC is the only Australian agency solely dedicated to understanding and combating serious and organised crime of national significance. The ACC works in partnership with law enforcement, national security, government and industry to discover, understand and respond to serious and organised crime in Australia. We do this by gathering and sharing criminal intelligence to identify new and emerging threats, filling gaps in the national criminal intelligence picture and by leading or collaborating in joint investigations and intelligence operations to disrupt or prevent serious and organised criminal activities. Through this work we produce a national picture of the threat and harm posed to Australia by serious and organised crime. The ACC Board consists of the ACC and 14 other law enforcement, regulatory and national security agencies, including Victoria Police. The Board is responsible for providing strategic direction to the Australian Crime Commission, approving the use of the Crime Commission s special coercive powers, and is responsible for determining special operations and special investigations. One of the Board-approved special intelligence operations is the High Risk and Emerging Drugs Determination. Definitions Although the terms methylamphetamine and methamphetamine are synonymous, and different Australian pieces of legislation use one or the other of the terms, the ACC prefers to use the term methylamphetamine and we will use that terminology in this submission. The terms crystal methylamphetamine and ice will be used inter-changeably. While the crystal form of methylamphetamine is typically of higher purity, appearance alone is not a reliable indicator. For convenience, in this submission the term crystal methylamphetamine will be used to describe all methylamphetamine which is crystalline in appearance and hence is perceived by users to be ice, regardless of the related purity. Methylamphetamine has four common forms tablet, crystal, base (also referred to as paste ) and powder (also referred to as speed ). Powder is the most common form used in Australia. Methylamphetamine can be swallowed, snorted, smoked or injected. The crystalline form of methylamphetamine, often referred to as ice, is considered the most potent form. Crystal methylamphetamine is generally heated and the vapours inhaled. It can also be injected after being dissolved in water. Some data received by the ACC and included in ACC assessments refers to the more generic term amphetamine-type stimulants (ATS), which includes substances other than methylamphetamine such as amphetamine and sometimes phenethylamines including 3,4- Page 4

5 methylenedioxymethylamphetamine (MDMA). The term ATS will be retained in some circumstances in this submission, with the range of substances included noted where possible. Committee Question 1: To what extent has the ACC examined the production, supply and use of methylamphetamine, and particularly ice? To what extent does the ACCs High Risk and Emerging Drugs (HRED) Determination address methylamphetamine, and particularly ice, production, supply and use. What intelligence has been gathered for this Determination regarding methylamphetamine, and particularly ice, used in Victoria? What intelligence can be made available to the Committee for the purposes of its inquiry? The High Risk and Emerging Drugs Determination On 15 June 2011, the ACC Board approved the Australian Crime Commission Special Operation Authorisation and Determination (High Risk and Emerging Drugs) 2011 (the HRED Determination). The HRED Determination covered all illicit drug markets. The Determination was reviewed in mid in response to changes in Australian illicit drug markets, in particular around new psychoactive substances and new types of performance and image enhancing drugs, and it was recommended that the Board approve a special operation with a slightly amended and more comprehensive ambit. Accordingly, on 4 September 2013, the Board of the Australian Crime Commission approved the Australian Crime Commission Special Operation Authorisation and Determination (High Risk and Emerging Drugs No. 2) 2013 (the HRED2 Determination), which remains in effect until 30 June For the purposes of the HRED2 Determination, high risk drugs are defined in the Determination Instrument as any controlled drug or drug analogue of a controlled drug, controlled plant or controlled precursor; or a border controlled drug or drug analogue of a border controlled drug, border controlled plant or border controlled precursor as those terms are defined for the purposes of Part 9.1 of the (Commonwealth) Criminal Code. This definition covers methylamphetamine in its various forms, including crystal methylamphetamine ( ice ), and precursor chemicals used in the production of methylamphetamine. Aims The HRED2 Determination aims to: enhance the national understanding of high risk and emerging drug markets through the production of regular, timely and proactive intelligence, indicators and warnings support law enforcement agencies target development and investigations in relation to high risk and emerging drug markets through the use of ACC coercive powers and by identifying the highest risk criminal networks in the market identify systemic and sectoral vulnerabilities which are being exploited by participants in HRED markets and assess the resultant impact on threat levels for the respective markets reduce the impact of assessed vulnerabilities by providing advice and support which contributes to legislative and policy responses designed to reduce the risk to a tolerable level make a tangible contribution to minimising drug-related health, social and economic harms in accordance with the three pillars of the National Drug Strategy (demand, supply and harm reduction) through the Organised Crime Strategic Framework (OCSF) and drug- Page 5

6 related components of the Organised Crime Threat Assessment (OCTA) and the Organised Crime Response Plan (OCRP). The ACC s Organised Crime Management Committee (OCMC) has approved a number of projects and investigations under the auspices of the HRED and HRED2 Determinations that are relevant to the methylamphetamine market, including Projects Baystone, Protege and Alberta. Project Baystone covers the methylamphetamine market per se, Project Protege covers new and emerging supply and manufacturing trends in the market and Project Alberta targets the diversion of chemicals from legitimate industry to illicit drug production. Findings from projects, operations and investigations which were conducted by the ACC pursuant to its Highest Risk Criminal Targets and Targeting Criminal Wealth Determinations will also be discussed, to the extent that these are relevant to the methylamphetamine market. The related investigations identified and/or disrupted the importation, trafficking, supply and production of methylamphetamine and related precursor chemicals, usually as part of multi-agency initiatives. The ACC assessed in 2012 that the risk posed by the methylamphetamine market was very high, constituting the highest risk of all organised crime and illicit drug markets. The 2012 assessment remains appropriate today, and in fact, the risk posed by the methylamphetamine market has increased since Consequently, the methylamphetamine market is the highest priority of the HRED2 Determination. International context It is important to understand that the problems being faced in Victoria are not isolated to that state, or indeed to Australia. The problems posed by crystal methylamphetamine are national and global, and there is currently little cause for optimism. The United Nations Office on Drugs and Crime (UNODC) s World Drug Report noted that there are signs the market for ATS is expanding, with increases in seizures and reported use, spreading manufacture and the development of new markets. The use of ATS (excluding MDMA), remains a global issue and appears to be increasing in most regions. In 2011, an estimated 0.7 per cent of the global population aged 15 64, or 33.8 million people, had used ATS in the preceding year. The UNODC report identified an increase in the ATS market in Asia s developed economies, notably in East and South-East Asia, and also an emerging market in Africa, evidenced by increased precursor diversions, methylamphetamine and ATS seizures and methylamphetamine manufacture. The estimated annual prevalence of ATS use in Asia in 2011 was found by the UNODC to be higher than the global average. 1 United Nations Office on Drugs and Crime, 2013, World Drug Report 2013, New York. Page 6

7 At the global level, the weight of ATS seizures increased to a new high of 123 tonnes in 2011, more than double the 60 tonnes seized in 2005 and a 66 per cent increase over the 74 tonnes seized in Methylamphetamine accounted for 71 per cent of global ATS seizures in Mexico accounted for the greatest proportion of methylamphetamine seized in 2011, with the weight of seizures more than doubling, from 13 tonnes to 31 tonnes within the space of a year, surpassing the United States for the first time. Methylamphetamine tablets remain the predominant form of ATS used and seized in East and South-East Asia; however seizures of crystal methylamphetamine increased significantly in 2011, from approximately 7 tonnes in 2010 to 8.8 tonnes. Another 2013 UNODC report focused on illicit drug markets in East and South-East Asia 2 found that the market for ATS in the Asia and Pacific region continued to expand in Thirteen of the 15 countries covered by the report reported methylamphetamine as the primary or secondary drug of use. Seizures reached record highs, with methylamphetamine manufacture continuing to spread throughout the region, with some 385 illicit synthetic drug manufacturing facilities dismantled in East and South-East Asia in Regional integration in East and South-East Asia is being exploited by transnational organised crime in order to expand its activities in the region. The misuse of economic integration for the illicit trafficking of drugs and other contraband will continue to pose a significant threat to security, good governance, human rights and sustainable development in the region. Although methylamphetamine tablets are increasingly being used in the region and seizures have increased substantially, the rate of increase in the use of crystal methylamphetamine is much more pronounced. The total weight of crystal methylamphetamine seized in the region in 2012 increased by 12 per cent, from 10.2 tonnes in 2011 to 11.6 tonnes. In China, the market for methylamphetamine and other synthetic drugs is continuously expanding, particularly among young drug users. The risk of diversion of precursor chemicals and pharmaceutical preparations used in the manufacture of methylamphetamine and other illicit drugs continues to be high. Trafficking of crystal methylamphetamine into Indonesia by transnational organised criminal groups continues to be a major concern. The weight of crystal methylamphetamine seized in 2012 increased 75 per cent, from 1.17 tonnes in 2011 to 2.05 tonnes, the highest total ever reported in Indonesia. In 2012, Japan reported the largest weight of crystal methylamphetamine seized since Japan has a large methylamphetamine market that is driven by high drug prices. Over the last few years, the importation to Japan of methylamphetamine from countries in Central and South America, in particular Mexico, has increased. Similarly, crystal methylamphetamine manufacture, trafficking and use remain the most significant drug threats in Malaysia. Transnational drug trafficking groups are increasingly targeting Malaysia, both as a destination and transit country for methylamphetamine and other illicit drugs, as well as for the manufacture of crystal methylamphetamine and MDMA tablets. Methylamphetamine seizures in tablet and crystal form have increased substantially in Thailand over the last five years, reaching historically high levels in In 2012, the number of arrests and drug treatment admissions relating to this drug were the highest ever reported. Transnational 2 UNODC, 2013, Patterns and Trends of Amphetamine Type Stimulants and Other Drugs: Challenges of Asia and the Pacific, New York. Page 7

8 criminal groups continue to target Thailand as a major transit country for trafficking illicit drugs and precursor chemicals to international markets. Transnational organised criminal groups continue to use the Pacific Island states and territories as a transit point for trafficking methylamphetamine and precursor chemicals to and from Asia. These groups also seek to use South Asia as a major base, given the high availability of the precursor chemicals necessary to manufacture illicit drugs within the region. Drug trafficking syndicates from Africa and Iran, and others with links to China and Hong Kong, traffic methylamphetamine into and through South-East Asia by air transport and sea cargo containers, while Indian drug trafficking networks smuggle precursor chemicals to drug manufacturing locations in the region. National Context The ACC believes that the risk posed by crystal methylamphetamine is rapidly evolving and expanding, due to push factors on the demand and supply side of the market. The ice market is an existing problem which is getting worse. These factors include: the increasing use of this form of methylamphetamine the widespread negative impact of this market, including the associated tangible medical and psychological harms the fact that crystal methylamphetamine is often smoked as opposed to being injected the intense and rapid high that is generated by this method of administration and the corresponding severe adverse reaction once the high wears off the risks posed to disadvantaged groups by crystal methylamphetamine the violence that can be directly linked to its use the presence of sophisticated domestic and transnational organised crime groups in the market. There has been an upward trend in the use of crystal methylamphetamine among groups of regular drug users in Australia over the past few years, although methylamphetamine powder, often referred to as speed, continues to be reported as the most widely used form of methylamphetamine in Australia. Border detections and domestic seizures are at record levels. The Australian methylamphetamine market remains robust, and is likely expanding. Increases in domestically produced and imported methylamphetamine are being absorbed by a domestic market which appears to retain a level of residual demand. The market is supported by increasingly diverse and concerning domestic and transnational supply sources, for both the drug and its precursors. There is evidence that some crime groups that previously specialised in other drug markets are now focusing their activities on the methylamphetamine market. Page 8

9 Response to Terms of Reference and Committee Questions Term of Reference 1: Examine the channels of supply of methylamphetamine including direct importation and local manufacture of final product and raw constituent chemical precursors and ingredients. Committee Question 2: To what extent is methylamphetamine and particularly ice brought into Victoria from other states and territories (which?), or from overseas countries (which)? Traditionally, the domestic methylamphetamine market has been largely supplied by domestic production. It is not yet clear what has driven the recent increase in importations of methylamphetamine, though it is likely that the high prices for which the drug is sold in Australia, and the resultant high profits to be made, are an important draw-card for transnational organised crime. Similarly, tightening of domestic controls on precursor chemicals over the past several years may have contributed to the growth in methylamphetamine importations. The increase in methylamphetamine imports does not appear to have coincided with indicators of a decrease in local production, as there are still significant illicit precursor importations occurring and the number of clandestine laboratories detected nationally is at record levels. The ACC assesses that more methylamphetamine is being supplied to a market where demand is increasing, and where new sources of demand are being identified. Without knowing the total size of the domestic methylamphetamine market, it is difficult to determine the respective proportions of the supply side of the market that are attributed to importation and domestic manufacture. The ACC is confident that the proportion of methylamphetamine supply met by importations is increasing largely due to the popularity of ice but we suspect that domestic manufacture continues to supply a reduced majority of the market (ie the rate of increase of imports exceeds the rate of increase of domestically manufactured methylamphetamine). Cross-jurisdictional trafficking of ice and its precursor chemicals ACC investigations and file holdings (derived from Commonwealth, state and territory partners) indicate that methylamphetamine and ice is trafficked from Victoria to all other states and territories and from other states into Victoria. Cross-jurisdictional trafficking occurs via motor vehicle, commercial and light aircraft and air freight and, in the case of distribution to Tasmania, ferry. The ACC maintains a National Criminal Target List (NCTL), derived from its own holdings and those of partner agencies, to identify nationally significant organised crime syndicates and individuals who are impacting on Australia. The information captured for the NCTL is used for both operational and strategic outcomes and informs decision-making concerning appropriate preventative and investigative responses to those targets that are assessed to pose the highest threat. Of the Victoria-based targets recorded on the NCTL, 56 per cent are recorded as having involvement in the methylamphetamine and precursors market, underlining the primary risk posed by this drug market. Additional interstate-based targets are recorded as being involved in methylamphetamine supply that impacts on the Victorian market, whether by importing, manufacturing or trafficking the drug or its precursors. Victoria is also listed in several cases as the source of methylamphetamine distributed in other jurisdictions. The majority of targets recorded as being involved in the Victorian methylamphetamine market are involved in multiple criminal activities, including multiple illicit drug markets. Page 9

10 Importations of Ice and its precursor chemicals As noted previously, Australian users of methylamphetamine, including ice, pay a premium price compared to their overseas counterparts, making importations to Australia attractive and profitable. For example, prices for a kilogram of methylamphetamine in select overseas countries based on UNODC and European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) data were: China: US$6,000 per kg (UNODC 2010) = A$6,522 3 USA: US$90,000 per kg (USDEA 2011) = A$97,826 Japan: US$200,000 per kg (UNODC 2010) = A$217,391 Germany: EUR79,000 per kg (EMCDDA 2011) = A$121,538 Czech Republic: EUR53,000 per kg (EMCDDA 2011) = A$81,538 UK: GBP100,000 per kg (Home Office 2012) = A$181,818 Canada: CAD180,000 per kg (RCMP 2011) = A$189,474 By way of comparison, according to the ACC s Illicit Drug Data Report (IDDR), the national median price of a street deal (weighing an average of 0.1 grams) in Australia in that reporting period was A$59. Based on the above pricing estimates, this equates to a potential return of A$590,000 per kilogram. The IDDR reveals that larger quantities also almost always exceeded overseas prices, with the price of a kilogram of crystal methylamphetamine in ranging between A$280,000 and A$330,000 in Victoria and A$200,000 and A$250,000 in New South Wales. Due to the significant proportion of domestic production of methylamphetamine, the difference in price is not explained by a requirement to import the drug. The difference in price is also not explained by higher purity levels in this country. Prices for pseudoephedrine a precursor often used in methylamphetamine production show a similar mark-up in Australia. According to the UNODC, pseudoephedrine can be purchased in both China and India for between US$600 and US$2,000 (A$652 A$2174) per kilogram, whereas in Australia, the IDDR reported the price for a kilogram of pseudoephedrine ranged between A$35,000 and A$100,000, with the A$100,000 per kilogram price being more consistent with Customs and Border Protections figures. Ice and precursor chemicals consumed in Victoria are sometimes directly imported into Melbourne, and on other occasions imported into other Australian air and sea ports (for example Sydney and Perth) and then transported to Melbourne. Similarly, ice and precursor imports into Melbourne may subsequently be distributed interstate the determining factors tend to be demand for the product at the time that the importation is arranged and the geographic spread of the criminal connections of the importing network. Advice from Customs and Border Protection is that border detections of methylamphetamine have increased significantly in 2013 in comparison with 2012, both in terms of number and weight. Most of the 2013 shipments, both number and weight, have emanated from China. The IDDR reports that during , the most prominent embarkation points for ATS (excluding MDMA) detections at the Australian border were India, Hong Kong and China by number and Mexico, Hong Kong and Canada by weight. 3 All Australian dollar equivalents equate to the value of the dollar as at 1 November Page 10

11 Authorities are detecting Iranian produced methylamphetamine being transhipped through South- East Asia and to Australia. It is likely this pattern of trafficking will continue. Iranian methylamphetamine is characterised by very high purity, indicating large scale production utilising high quality materials. West African organised crime groups are also prominent traffickers of methylamphetamine throughout South-East Asia, the Middle East and into Europe and import into Australia. From a global perspective, it is notable that there appears to currently be more production of methylamphetamine in Mexico than at any other time in history. Mexican crime groups are implicated in cocaine importations to Australia and it is likely this will eventually extend to methylamphetamine importations, if this is not already occurring. Organised crime groups which may have traditionally focused on importing particular illicit drugs, for example heroin or cocaine, have commenced importing multiple illicit commodities, particularly methylamphetamine. It is highly likely that this change in market involvement is a result of consumer demand and the ability to obtain significant profits. Committee Question 3: How is imported 'ice' being introduced/smuggled into Australia? What are the most common methods for importation and what methods of concealment are used? To what extent is methylamphetamine arriving in Australia through parcel post, following online sales? How is this being addressed? According to the IDDR, during , parcel post accounted for the majority of ATS (excluding MDMA) detections by number, followed by air cargo, air passengers/crew and sea cargo. During the same period, sea cargo accounted for the largest proportion of ATS (excluding MDMA) detections by weight, followed by air cargo, parcel post and air passengers/crew. Examples of notable recent methylamphetamine seizures include a seizure in Melbourne in October 2013, when a multi-agency taskforce seized more than 200 kilograms of methylamphetamine in crystalline form concealed in truck tyres. The seizure had an estimated street value of up to A$200 million, with two of the persons arrested as part of the investigation employed as dock workers. 4 A number of Asian countries, particularly China and India, have large legitimate chemical industries. Organised crime groups are challenging the domestic controls over precursor chemicals in these countries to divert or export chemicals for illicit drug production. For example, in October 2013, 650 kilograms of pseudoephedrine concealed within vanilla powder shipped from India by air freight was seized during the closure of Operation Diamondback, a joint agency investigation. The estimated street value of this seizure was A$100 million. During the 18 month investigation, a total of 10 individuals (members of a Canadian transnational crime group) were arrested and an estimated 1.9 tonnes of powder mix was seized. Precursor chemicals are available for purchase on both legitimate and Darknet websites. It is likely that organised crime will attempt to purchase precursor chemicals from internet sites due to the ease of using this method, relatively low prices and their perceived ability to avoid detection. Methylamphetamine and ice are both available online at competitive prices. A six month Silk Road monitoring study compared the prices (per gram) for methylamphetamine and crystal Page 11

12 methylamphetamine through domestic and international vendors to the 2012 (Australian) Ecstasy and Related Drugs Reporting System listed prices (prices in bitcoin converted to Australian dollars) and found the following: 5 o Methylamphetamine: Median international price A$19. Median domestic price A$147 EDRS [street] A$300 o Crystal methylamphetamine: Median international price A$125 Median domestic price A$574 EDRS [street] A$700 Committee Question 4: To what extent is methylamphetamine manufactured in clandestine laboratories in Australia, and particularly in Victoria? Clandestine laboratories, commonly referred to as clan labs, covertly manufacture illicit drugs and/or their precursors and can range from crude, makeshift operations using simple processes, to highly sophisticated operations using technically advanced equipment and facilities. In Australia and internationally, amphetamine-type stimulants (ATS) are reported as the dominant illicit drug manufactured in clandestine laboratories, with those manufacturing methylamphetamine continuing to be the most common type of laboratory detected in Australia. A record 809 clandestine laboratories were detected in Australia in Of these, 552 (62 per cent) were identified as manufacturing ATS (excluding MDMA), the majority of which were using the hypophosphorous method of production (see Tables 1 and 2). 5 Van Buskirk, J., Roxburgh, A., Bruno, R., and Burns, L. (2013). Drugs and the Internet, Issue 1, August Sydney: National Drug and Alcohol Research Centre. Page 12

13 TABLE 1: Number of clandestine laboratory detections, by state and territory, to Year NSW Vic Qld SA WA Tas NT ACT Total TABLE 2: Method of ATS (excluding MDMA) production in clandestine laboratory detections, by state and territory, State/ Territory Hypophosphorous (Iodine) Redphosphorus (Hydriotic) Nazi/Birch (Lithium/ Ammonia) Phenyl-2- Propanone (P2P) Other a Total b NSW Vic Qld SA WA Tas NT ACT Total a. Other includes the detection of other ATS (excluding MDMA) production methodologies. b. Total may exceed the number of ATS (excluding MDMA) clandestine laboratory detections due to multiple methods of production being identified at a single laboratory. In , Victoria reported the greatest percentage increase in clandestine laboratory detections and the second highest number of detections for that jurisdiction in the last decade. The number of clandestine laboratory detections is not indicative of production output, which is calculated using a number of variables including size of reaction vessels, amount and type of precursor chemicals used, the skill of people involved and the method of manufacture. Regardless of their size, the residual contamination arising from illicit drug manufacture presents a serious risk to human and environmental health. Residential areas remain the prominent location of clandestine laboratory detections in Australia. In , 70.6 per cent of detected clandestine laboratories were located in residential areas, followed by vehicles (8.5 per cent) and public places (7.8 per cent) (see Figure 1). In 2011, the Australian Government launched the Clandestine Drug Laboratory Remediation Guidelines in recognition of the hazardous nature of clandestine laboratories. Page 13

14 FIGURE 1: Location of clandestine laboratory detections, Residential (70.6%) Vehicle (8.5%) Public place (7.8%) Rural (3.1%) Commercial/industrial (2.8%) Other (7.2%) Committee Question 5: What production methods are currently used in Victoria for manufacturing methylamphetamine? To what extent have methods of production changed since 2005? The methods of ATS (excluding MDMA) production in detected clandestine laboratories in appear in Table 2. Nationally, the hypophosphorous method of production remains the prominent method of manufacture identified, with the hypophosphorous method the most common method of manufacture identified in Victoria. Over the past decade, the most common precursors used in the manufacture of methylamphetamine have been pseudoephedrine and ephedrine. However, recent reporting indicates that production methods have now diversified. Organised crime groups maintain their intent and capability to source precursors in sufficient volume to feed the large Australian methylamphetamine market. Australian-based and transnational groups remain heavily involved in the illicit precursor chemical market. They have responded to increasing restrictions on precursor chemicals by adopting alternative manufacture processes utilising non-regulated chemicals, or methods utilising substances not traditionally associated with drug manufacture. 6 Increasing compliance with regulatory and voluntary controls on precursor substances by Australian chemical, pharmaceutical and retail industries has resulted in a tightening of domestic sources of chemicals. Because of this tightening, and possibly also due to lower prices and the ability to obtain large volumes of precursor chemicals off-shore, there has been strong growth in illicit precursor importations. Several large-scale importations have been detected, including 33 kilograms of pseudoephedrine originating from Vietnam in June 2013, and 21 kilograms of ephedrine originating from India in March This trend continues despite a concurrent rise in detections of imported 6 International Narcotics Control Board 2013, Precursors and chemicals frequently used in the illicit manufacture of narcotic drugs and psychotropic substances, United Nations, Vienna. Page 14

15 finished ATS product, with the weight of ATS seized by the AFP almost quadrupling from to Some Australian illicit drug producers are also acquiring materials consistent with several methylamphetamine or precursor production methods not previously known to Australian law enforcement. These illicit drug producers have been accessing chemicals or groups of chemicals which are entirely unregulated and, in most instances, not recognised as being associated with illicit drug production. For example, there has been recent reporting of the use of the perfumery component helional in the manufacture of 3,4-methylenedioxyamphetamine (MDA). This process provides an ideal example of the evolutionary nature of illicit drug production and the corresponding challenges in maintaining appropriate regulation over potential drug precursor chemicals (see Case Study 1). Case Study 1: Purchase of Precursor Chemical Helional ACC Project Alberta identified an individual purchasing, and receiving, multiple kilograms of helional from a domestic supplier. The seller was identified to be the proprietor of a legitimate chemical supply company. Helional is a precursor to MDA and MDMA. Purchases by individuals, particularly in large quantities, are generally suspicious as helional can be used in clandestine laboratories to produce MDA. In this particular case, there was evidence that the helional was intended for use in illicit drug production. In many cases, these methods are developed to produce controlled precursor chemicals, however in this instance, the helional method leads directly to the production of the drug. As is increasingly common in emerging illicit drug manufacturing recipes, the process draws on common unregulated domestic chemicals to act as chemical tools to perform the necessary structural changes. As access to pseudoephedrine and ephedrine has become more difficult, there is evidence that some illicit drug producers in Australia are reverting to classical phenyl-2-propanone (P2P) based techniques for the production of methylamphetamine and are producing ephedrine in clandestine laboratories. While there are a wide range of substances and methodologies available to the producers of P2P, there is a requirement for a higher level of technical competence associated with a number of the processes. In one case, a range of chemicals was identified that indicated production of both ephedrine and P2P, as well as some additional chemicals which could be used to facilitate the conversion of P2P to methylamphetamine. Of note, this case provided clear evidence of offshore suppliers mislabelling original containers to avoid the interdiction efforts of the Customs and Border Protection. A number of processes for the production of ephedrine have been identified. The processes generally involve the use of non-controlled pre-precursor chemicals to manufacture the precursor. Some of the processes are described in legitimate scientific literature and are relatively simple and inexpensive. All of the information regarding the chemicals and processing methods is readily accessible to motivated individuals from particular underground press publications and also several internet sites devoted to the dissemination of drug manufacturing techniques. These publications and sites function as aggregation points for data extracted and collated from legitimate open source scientific and industrial literature. While there are many methods available for producing 7 AFP, Annual Report , AFP, Canberra. Page 15

16 P2P from a variety of starting materials, the options available for viable ephedrine manufacture are relatively few in number. In addition, the Mexican method of producing methylamphetamine involves the use of pseudoephedrine and P2P as its primary precursors. As P2P is regulated in Mexico, it is often produced by drug manufacturers by synthesising phenyl acetic acid (PAA). Traces of PAA are often found in analysis of methylamphetamine produced by this method and are a key marker for identifying methylamphetamine produced using this method. There have been seizures at the Australian border and domestically of methylamphetamine produced by this method it is not known whether this indicates that methylamphetamine is being directly imported from Mexico or whether domestic crime groups are using a new production method for methylamphetamine which does not rely on P2P but on the pre-precursor PAA. Term of Reference 2: Examine supply and distribution of methylamphetamine and links to organised crime organizations including outlaw motorcycle gangs. There are a number of individuals and groups involved in the Australian methylamphetamine market. In , for those able to be categorised, the majority of clandestine laboratories detected were addict-based, reflecting diverse domestic production and supply. 8 No one criminal syndicate, type of crime group, or ethnicity-based group are dominant in the methylamphetamine market in Victoria. Members of Outlaw Motorcycle Gangs (OMCGs), family groups, ethnic groups and entrepreneurial individuals working alone or in partnership are represented. The methylamphetamine market is sufficiently diverse and profitable to support a large number of competing and sometimes collaborating suppliers, at different levels of sophistication. Committee Question 6: To what extent are OMCGs involved in the production and supply of methylamphetamines, and particularly ice in Victoria? Members of a number of OMCGs have been linked to methylamphetamine importations, manufacture and distribution, in Victoria and throughout Australia. This involvement extends from Melbourne to rural areas of Victoria, where in some cases the OMCG members represent one of the more organised local crime networks and hence have an ability to supply locally on a regular basis. They also have the capability to leverage off their OMCG to establish broader criminal associations (and hence sources of drugs and precursors) and to ensure that debts are repaid. The OMCG members may be more ethnically homogenous with communities outside Melbourne and this sometimes gives them a competitive advantage in terms of local supply. Members of OMCG chapters in other states also supply methylamphetamine and precursors into the Victorian market or are supplied from the Victorian market. 8 In , jurisdictions were asked to distinguish detected clandestine laboratories into the following four categories, taken from the United Nations Office on Drugs and Crime Annual Report Questionnaire that is used to inform the World Drug Report. Addictbased labs (kitchen labs) use basic equipment and simple procedures. Typically, those operating in such laboratories have a limited or non-existent knowledge of chemistry and simply follow instructions. Usually, there are no significant stores of precursors and the amount of drugs or other substances manufactured is for personal use. A typical manufacture cycle for amphetamine-type stimulants would yield less than 50 grams of the substance. Page 16

17 Committee Question 7: What is the nature of the involvement of organised crime in the production and supply of methylamphetamines, and particularly ice in Victoria? Of the Victoria-based targets recorded on the NCTL as at 13 January 2014, most are recorded in intelligence holdings as being involved in multiple aspects of the market, including in descending order of involvement: methylamphetamine distribution methylamphetamine manufacture methylamphetamine importation precursor importation precursor distribution. Committee Question 8: What other (and which) organised crime groups, or others, are involved in the production and supply of methylamphetamine, and particularly ice in Victoria? A range of criminal groups are involved in the importation, manufacture and trafficking of methylamphetamine in Australia, as well as the importation of particular precursor chemicals. These include, apart from Australian-based members of OMCGs, persons of Iranian, Middle Eastern, Eastern European and West African background, individuals and groups of Asian extraction (Vietnamese and Chinese in particular) and persons and groups from Canada, the US and Mexico. It is now not unusual for persons of different ethnic or criminal backgrounds to collaborate at different stages of the methylamphetamine supply chain, or to collaborate on an importation or local supply. In some cases the collaboration lasts for only a small series of transactions, but in other cases the relationship is more enduring. Committee Question 9: Has the involvement of organised crime in the production and supply of methylamphetamines, and particularly ice in Victoria changed since 2005? The Victorian methylamphetamine/ice market is more sophisticated across the board than it was in 2005, as is the national and transnational market. Australia-based organised crime groups now have far greater access to high purity imported methylamphetamine, precursors and pre-precursors; connections that permit the groups to engage effectively with methylamphetamine importing networks from a number of continents and ready access via the internet and underground literature to detailed information on alternative methylamphetamine and precursor production processes. The crime groups are also more diverse, flexible and innovative and are better connected across Australian jurisdictions. Organised crime groups that in 2005 were in the heroin or cocaine markets are now focusing in part or predominantly on the methylamphetamine/ice market. Groups are seeking to satisfy increasing demand for ice as opposed to methylamphetamine in the form of pills or powder. New sources of demand have been identified in particular segments of the population and rural areas of Victoria. Clan labs are more prolific, regardless of their size and potential output. Although crystal methylamphetamine is produced domestically, an increasing proportion of the market is being supplied from imports. Page 17

18 Term of Reference 3: Examine the nature, prevalence and culture of methylamphetamine use in Victoria, particularly amongst young people, indigenous people and those who live in rural areas. The UNODC noted in September 2013 that although seizure data is well recorded, accurate demand data is scarce and tends to be anecdotal in nature 9. This problem is shared by Australian agencies. There is conflicting data on the rate of methylamphetamine use in Australia. National drug use monitoring surveys have identified increasing use and availability of methylamphetamine and increases in users perceptions of the purity of the drug. However, another survey indicated that the rate of recent use of methylamphetamine has decreased in the last two years, without corresponding market changes which may account for this fall. 10 Self-report data obtained from drug users in relation to illicit stimulants in particular has limitations and tends to result in underestimation of actual drug use. Border detection and seizure rates, precursor chemical seizures, clandestine laboratory detections and street prices for illicit drugs suggest that methylamphetamine use is growing. In the future, more objective assessments of methylamphetamine use, such as assessments of waste water, may augment data obtained from self-reporting and provide a more accurate estimate of national methylamphetamine use and that of some other drugs. Committee Question 10: To what extent is methylamphetamine, and particularly ice, used in Victoria and, in particular, in rural or urban areas? How does this compare with other jurisdictions in Australia? According to the 2010 National Drug Strategy Household Survey (NDSHS) a survey of drug use within the general population which is undertaken every two to three years 7 per cent of the Australian population aged 14 years or older reported using amphetamine/methylamphetamine at least once in their lifetime. In the same survey, 2.1 per cent reported recent 11 amphetamine/methylamphetamine use. In a 2012 national study of regular injecting drug users, the proportion of respondents reporting recent 12 use of methylamphetamine increased, from 66 per cent in 2011 to 68 per cent in Recent methylamphetamine users within this regular injecting drug user population reported using methylamphetamine a median of 22 days in the 6 months preceding interview, the highest reported since Early findings from the 2013 study indicate the proportion of respondents reporting recent use of methylamphetamine decreased to 66 per cent; with the reported median days of methylamphetamine use in the 6 months preceding interview increasing to 24 days (see Figure 2). 9 UNODC, 2013, Global SMART Update Volume 10, Vienna. 10 Ecstasy and Related Drugs Reporting System (ERDS), October 2013, Drug Trends Bulletin, An overview of the 2013 Ecstasy and Related Drugs Reporting System, University of NSW, Sydney. 11 In the NDSHS, recent use refers to reported use in the 12 months preceding interview. 12 The term recent use in the regular injecting drug user and regular ecstasy user studies refers to reported use in the 6 months preceding interview. Page 18

19 Recent use (%) Median days use (max = 180) FIGURE 2: Proportion of a regular injecting drug user population reporting recent use of speed, base and crystal/ice compared to median days of use of any form of methylamphetamine, 2004 to 2013 (Source: National Drug and Alcohol Research Centre) Median days use Speed Base Ice a a. Note: Reported figures for 2013 are preliminary In the same 2012 study, the proportion of respondents reporting methylamphetamine as their drug of choice increased, from 20 per cent in 2011 to 21 per cent in Early findings from the 2013 study indicate this has increased to 23 per cent. For any form of methylamphetamine, injection (65 per cent) was the most common method of administration in 2012, followed by smoking at 19 per cent and swallowing at 8 per cent. In a 2012 national study of regular ecstasy users, the proportion of respondents reporting recent use of one or more forms of methylamphetamine increased, from 60 per cent in 2011 to 61 per cent in 2012, the highest percentage reported since Powder (speed) remains the most common form of methylamphetamine used, followed by crystal and base. Recent users of any form of methylamphetamine within this user population reported using methylamphetamine a median of 6 days in the 6 months preceding interview, which has remained stable since In 2012, among recent speed users, snorting (73%) and swallowing (60%) were the most common reported routes of administration. Among recent base users, swallowing was the most commonly nominated route of administration (76%), with smoking the most common route of administration for ice/crystal users (88%). Early findings from the 2013 study indicate the proportion of respondents reporting recent use of any form of methylamphetamine decreased to 50 per cent; with the reported median days of methylamphetamine use in the 6 months preceding interview decreasing to 4 days (see Figure 3). Page 19

20 Recent use (%) Median days use (max = 180) FIGURE 3: Proportion of a regular ecstasy user population reporting the recent use of speed, base and crystal/ice compared to median days of use of any form of methylamphetamine, 2004 to 2013 (Source: National Drug and Alcohol Research Centre) Median days use Speed Base Ice a a. Note: Reported figures for 2013 are preliminary. According to a report focused on trends in alcohol and drug related ambulance attendances in Victoria in , large increases were noted in crystal methylamphetamine attendances. 13 In total there were 671 recorded attendances related to crystal methylamphetamine in , of which 592 were reported in metropolitan Melbourne and 78 in regional Victoria. 14 In metropolitan Melbourne, the number of crystal methylamphetamine related attendances increased by per cent, from 282 in to 592 in While the number of related attendances remains lower that that of other drugs such as alcohol, benzodiazepines and heroin crystal methylamphetamine recorded the highest percentage increase in attendances of any drug related attendance. Based on aggregations of all related attendance times, the peak days in both metropolitan Melbourne and regional Victoria in were Saturday and Sunday, with the peak times between 6pm and 2am in metropolitan Melbourne and between 8pm and midnight in regional Victoria. 13 Attendances assessed as being related to crystal methylamphetamine is based on ambulance paramedic mention of the involvement, established through patient self-report or from information provided by someone else at the scene. 14 The total exceeds the sum of metropolitan and regional cases as attendances may not contain location information. Page 20

21 Weight (kg) Number SEIZURES The number and weight of national ATS 15 seizures increased in While the weight of national seizures remains lower than that seized earlier in the decade, since , both the number and weight of ATS seizures have continued to increase, with the number of seizures this reporting period the highest reported in the last decade (see Figure 4). FIGURE 4: National ATS seizures, by number and weight, to Weight Number and 6 reflect ATS seizures over the last decade specific to Victoria. Figure 5 15 The term amphetamine-type stimulants (ATS) encompass drugs included under both the amphetamine and phenethylamines groupings. Page 21

22 Weight (kg) Number Weight (kg) Number FIGURE 5: ATS seizures in Victoria 16, by number and weight, to (including record MDMA seizure in ) 5000 Weight Number FIGURE 6: ATS seizures in Victoria 17, by number and weight, to (excluding the record MDMA seizure in ) 1400 Weight Number ATS seizures reflected in this figure incorporate both Victoria Police and AFP seizures that occurred in Victoria. 17 ATS seizures reflected in this figure incorporate both Victoria Police and AFP seizures that occurred in Victoria. Page 22