Revealed: The true cost of buying cheap fake goods
By ANDREW MALONE
Last updated at 21:54 29 July 2007
Britain's trade in counterfeit goods is booming. But few bargain hunters realise the real price of their designer fakes is child slavery, gang warfare and even terrorism
Holding a cup of Fairtrade coffee in one hand and a designer purse in the other, a tall, blonde woman approached the dealer in a bustling London street last week and opened negotiations. After a quick examination of the goods, she passed him a handful of notes and the transaction was done. She slipped the package into her pocket and disappeared into the crowd.
Yet this elegant woman was not furtively trying to 'score' marijuana, cocaine or ecstasy - the illegal goods once most commonly sold on our streets. Instead, she had just bought the latest fake designer sunglasses from a market stall at London's fashionable Portobello Market - a regular haunt of pop stars, fashion editors and supermodels.
And she clearly had no idea that she had just participated in an exchange that makes her part of the fastest growing crime-wave in the world.
Just a decade ago, the global market in counterfeit goods was worth just ?3bn a year - today, it is worth more than 100 times more. New figures show that three million people bought counterfeit clothes, sunglasses, handbags, watches and jewellery in Britain alone last year - part of a ?14 billion-a- year business, which is robust enough to withstand the most brutal economic storm.
More surprising still, these goods were not bought solely by people who are unable to afford the real thing; according to the survey, Counterfeiting Luxury: Exposing The Myths, by law firm Davenport Lyons, one-in-five Britons buying fakes earns over ?50,000 a year.
Following the example of A-list stars - such as Renee Zellwegger, Jennifer Lopez and Nelly Furtado, who have all been seen with fake designer sunglasses, dresses or bags - the fashion-conscious British middle-classes believe there is a certain cachet in counterfeit chic.
But what that woman at Portobello Market and those like her fail to realise is that the fake goods industry is not the victimless crime they imagine it to be. Del Boy's appearances in Only Fools And Horses may have made under-thecounter goods appear a harmless activity, but police and Western intelligence agencies say that brutal organised crime syndicates now monopolise the trade.
In other words, anyone who buys a fake Prada bag or knock- off Gucci sunglasses is the final link in a chain that includes criminals involved in extortion, prostitution, people-smuggling, murder and even terrorism.
Yet despite the endeavours of the the UK's Serious Organised Crime Agency, who have made investigations into counterfeiting a top priority, it would seem that business is booming for the crime gangs.
The market in counterfeit goods has now become the biggest illicit sector in the world, eclipsing the drugs trade.
Fake clothes, handbags, watches, perfumes, videos, CDs and computer programmes - you name it, criminals will copy it. And these goods now represent an astonishing one-tenth of all global trade.
At the frontline are dealers like 'Tommy', a friendly man in his late 40s, whom I witnessed plying his counterfeit goods in West London last week. He had hundreds of the top fake brands on display - but crucially, the labels were missing, making it far harder for prosecutors to take action.
But these, it turned out, were simply the 'clean' bags that 'Tommy' puts up on display - his 'real fakes' were in a van parked across the street. I bought a Chloe Paddington bag for ?100. With its trademark chunky padlock and its official-looking packaging, it looked exactly like the real thing, which retails at almost ?800.
Asked what else he could get, 'Tommy' reeled off a list of the latest designs. 'Give me a couple of days' notice,' he said. 'I can get you anything you want - all in leather, and you won't be able to tell the difference from the real deal. Call me. I move around a lot.'
In reality, 'Tommy' is simply a pawn in a far wider and more sinister operation. In Britain, the bulk of counterfeiting is controlled by British crime bosses, often with overseas connections to Chinese Triads, Italian Mafia, Serbian gangsters and Far Eastern crime syndicates.
Remember the 21 Chinese ****le-pickers, who drowned after being cut off by the tide at Morecambe Bay three years ago? They had been smuggled into the country by members of the infamous Snakehead gang, whose favourite method of 'enforcement' is smashing body joints with a claw hammer.
Then the illegal immigrants were forced to work in the sea by day and to make counterfeit goods at night - in order to pay for their fake documents and passage to Britain.
At all levels of the counterfeiting business, extreme violence and cruelty are commonplace. There have been pitched battles between rival gangs - armed with knives, axes and baseball bats - at markets from London to Glasgow.
Brian Lewin, a Trading Standards officer from Northampton, will no longer go out without police back-up when called to investigate the sale of counterfeit goods.
'These people are involved in gang warfare,' he said. 'They carry all sorts of weapons and are prepared to use them against anyone who gets in their way. This is serious organised crime.'
Three-quarters of counterfeit items seized here last year came from factories in China, 'staffed' by children paid as little as ?10 a week and working up to 18 hours a day. Since their fingers are small, they are better at the intricate stitching that makes fake designer items look so convincing.
Children have also reportedly been locked up in Far East factories - for days on end, without food or water - to hit deadlines for getting the latest fashions to London and New York.
As demand from Western customers has boomed, sweat shops have sprung up throughout China - particularly in Guangdong, an industrial centre near Hong Kong - to cope with the massive demand for popular brands, such as Fendi, Prada and Gucci.
By day, some factories even produce genuine designer goods destined for sale in the top boutiques of London, Paris, New York and Rome. By night, some corrupt factory bosses bring in a 'night shift' to make fakes.
According to reports by aid workers, Chinese officials regularly accept bribes from factory bosses to turn a blind eye to child exploitation. Raids are seldom carried out.
Nor is the racket confined to the world of high fashion; cosmetics, pharmaceuticals, cigarettes - all have been the target of counterfeiters. 'Nothing is off limits,' said Michael Kessler, chief of Kessler International, a U.S. firm of corporate investigators. 'It's not just luxury goods - these people will sell whatever will make a buck. They are totally unscrupulous, highly-organised and dangerous.'
Mr Kessler added: 'It's no good taking out the street vendors selling the gear - that's just like taking out drug dealers and not going to the heart of the matter. We need to take out the people who are making this stuff.'
That may prove difficult. Through a labyrinth of offshore accounts, internet transactions and cash payments made through middlemen who subscribe to the criminal code of silence, the counterfeiters have managed to expand their global business at an astonishing rate.
With the penalties for smuggling counterfeit goods far lower than for importing drugs, many crime gangs are using their sophisticated network of supply routes and middlemen to flood the market with fakes.
Various methods are used to smuggle the finished products on to the streets of Britain and America. In one case, authorities intercepted a fishing boat towing millions of dollars-worth of fake goods in a concrete casket submerged below the waves.
Many are simply shipped across continents by giant container ships. Only one in ten will ever be searched.
'These are enterprising individuals,' said Mr Kessler. 'Say, for example, they are making fake perfume. They need a place that makes bottles, a factory with pumps to fill the bottles, a printer to make the labels and a box manufacturer to fake the packaging. Then they need a sophisticated distribution network, as well as all the cash to set everything up. It takes a powerful organisation to do that.'
Small wonder, then, that investigators fear that terrorist organisations are now behind some of the counterfeit gangs, using the profits to fund their training camps and purchase weapons.
U.S. sources say that the profits from counterfeit goods, including fake Viagra, have been traced to Hezbollah, the militant group in Lebanon.
Closer to home, former IRA and UDA paramilitaries in Northern Ireland are now thought to control 80 per cent of their local trade in fakes. There are even fears that Al-Qaeda may be in on the action.
When associates of the men who flew the planes into New York's twin towers were picked up after fleeing into Canada, they were found to have documents linking them to the manufacture of counterfeit goods.
Similarly, the men currently on trial for their alleged role in the Madrid train bombings - that killed 191 people in 2004 - had used proceeds from the sale of pirated CDs and Hollywood films to fund their activities.
So could Osama Bin Laden himself be profiting from the counterfeit trade? Intelligence sources are taking the possibility very seriously.
'Nobody's saying that Osama's sitting in his cave somewhere in the mountains of Pakistan, stitching together Louis Vuitton bags,' one intelligence source told the Mail.
'But we're buying all this fake stuff and, for sure, some of the money's finding its way back to groups linked to him. Al-Qaeda is not missing out on this massive bounty. It's just too big.'
A separate Western intelligence source concurred, saying: 'It would be more shocking if Al Qaeda wasn't involved in counterfeiting. The sums involved are staggering - it would be inconceivable if money were not being raised for their terrorist activities.'
That's certainly a sobering thought for the thousands of Britons who buy fake goods in the belief that it does no real harm. As Lavinia Carey, chairman of the Alliance Against Property Theft, which acts for 200 top manufacturers of clothes, accessories, computer games, videos and music, says: 'Shoppers must be prepared to accept the wider moral implications of what they are doing.
'When they buy counterfeit goods, they are just thinking about themselves and what they want - they are not thinking about the cost in terms of violence, criminality and loss to others'.
Stung by the assault on their profits, designers such as Burberry and Adidas have now set up special units to fight back. As well as trawling internet sites for fake copies of their designs, some have also hired teams of forensic accountants to try to trace the money back to the leaders of the operation.
But at Portobello Market last week, as traders packed away their gear, it was impossible not to be struck by the scale of the task facing those who are trying to stop the multi-billionpound trade.
As one intelligence source put it, people do not 'throw long shadows' in modern British cities. Businesses are established overnight and vanish just as quickly. Stalls and shoppers come and go. Nobody can be sure who their neighbour is, or who his associates are or where the money goes?
Even if 'Tommy' and his fake Chloe bags were tracked down, another would spring up in his place.
Quite simply, the trade has grown too big to monitor, let alone abolish. And for that, there's only one group of people to blame: the thousands of customers in Britain who buy fakes each day.
As Lavinia Carey puts it: 'We are a nation of Alright Jacks. If you don't care about anybody else, it's easy to justify your actions. We need to change.'
Revealed: The true cost of buying cheap fake goods | Mail Online
