A Fairfax Media/ABC 7.30 investigation can reveal that police recently arrested US airmen Jarvis Cobb and Christopher Paul and charged them with fraud offences. The pair were responsible for distributing US Defence Department freight and mail across the Asia-Pacific region. US airman Christopher Paul has been charged with fraud offences in relation to alleged tobacco smuggling. It is alleged Cobb and Paul had been corrupted by a smuggling syndicate operating out of the Sydney suburb of Arncliffe, which is close to the city's airport. Police believe the US airmen were paid to help smuggle tobacco into Australia, depriving the Commonwealth of hundreds of thousands of dollars in customs duty. The Arncliffe syndicate, which is also suspected of involvement in drug importing, managed to plant an alleged criminal inside a company contracted by the federal government to move shipping containers from the docks to the high-security Customs Examination Facility, where the containers are scanned for banned products. The customs broker, who is now also facing criminal charges, was granted a licence by the Department of Immigration and Border Protection in 2011, despite police intelligence linking him to suspected traffickers. For three years, the alleged criminal was able to gather knowledge about which of the syndicate's containers were being watched by police and which were safe to collect.

Loopholes in the law meant that even after this alleged crime figure was charged with tobacco smuggling offences on September 29 last year, he retained his government customs broking licence for a further 75 days. He promptly got another customs broking job before finally resigning eight months after being charged, in May this year. Co-accused US airman Jarvis Cobb. The Arncliffe syndicate has continuing links with a small number of serving and former customs officers, law enforcement documents show. So entrenched are smuggling activities that secret police intelligence gathered by various agencies suggests the entire Australian molasses tobacco market – involving sweetened tobacco leaves known as "sheesha" for vapourising in hookah pipes – is tainted by smuggling and other crime. Where there's smoke: sheesha, smoked in hookah pipes and freely available, is almost all illegally imported. Credit:Getty Images

Despite being sold freely in Middle Eastern grocers and bars, almost none of the molasses tobacco has been imported lawfully, they suggest. Last year, a report by KPMG estimated about 14 per cent of tobacco consumed in Australia came via the black market, representing $1.4 billion in forgone tax receipts. Scrapping the Customs Reform Board will lead to increased corruption, former NSW Police commissioner Ken Moroney says. Credit:Daniel Munoz One underworld source confirmed to Fairfax Media that he has "friends" inside the Border Force – which was created in July 2015 when Customs merged with the Immigration Department – to help move tobacco-filled containers past border security controls. Another Sydney crime figure maintains a close and long-standing relationship with one of a small cell of NSW Border Force officials.

Terrorism fears: Security expert Neil Fergus. Credit:Andrew Quilty Some of the Middle East traffickers implicated in the scandal are suspected by law enforcement agencies to harbour strong sympathies for Hezbollah, the militant Lebanese organisation proscribed as a terrorist group by Western nations but supported by some in Sydney's Lebanese Shiite community. The revelations come as the federal government's small police corruption watchdog, the Australian Commission for Law Enforcement Integrity (ACLEI), deals with more border security corruption than at any time in its 10-year history, prompting calls for its resources to be dramatically increased, or for a national anti-corruption commission to be formed. Australian Border Force Credit:Andrew Meares The current watchdog is dealing with corruption allegations not only in the Border Force but other policing agencies employing officials suspected to have organised crime links.

The decision last month by federal and NSW officials to shut down the Polaris police waterfront taskforce, which was dedicated to fighting border crime corruption, has also been described by law enforcement officials as a loss for the nation's border security. Former NSW police commissioner Ken Moroney has entered the debate, criticising the Coalition government's decision to scrap the Customs Reform Board, which was formed by the Gillard government in early 2013 to oversee the fight against border security corruption. Mr Moroney, who was a board director alongside former royal commissioner and judge James Wood, said there was "much more to be achieved" by the board before the then immigration minister, Scott Morrison, dissolved it. "The ultimate cost must be an escalation or increase in corrupt activity," Mr Moroney said of the decision.

In the past two years, investigations into drug and tobacco trafficking by members of state and federal agencies have all identified serving Border Force officials involved in alleged corrupt conduct. Sources say the problem is potentially worse than the Sydney Airport customs scandal in late 2012 and 2013, which involved officers importing drugs. Previous nepotistic recruitment practices and poor or non-existent corruption controls in customs and immigration have, according to policing agencies, made the Border Force vulnerable to infiltration by organised criminals. Immigration Department chief Michael Pezzullo, backed by Border Force Commissioner Roman Quaedvlieg, has spent two years pushing ambitious integrity reforms throughout the force, referring any corruption claims to border security corruption watchdog the ACLEI. But senior security sources told the joint Fairfax Media/ABC 7.30 investigation that the ACLEI is unable to effectively do its job without the help of the Australian Federal Police, and has no full-time presence outside Canberra and Sydney. The ACLEI recently requested the the Border Force help fund its operations. Mr Moroney said this "poses some very serious questions about how adequately the agency is doing its job. Doubtless it is very committed but … you've got to have the resources, physical human and financial, to do your job effectively."

Government sources insisted ACLEI was small but highly effective, having worked with the federal police to make multiple arrests and drive major reforms inside the Border Force. On Monday, Fairfax revealed Mr Pezzullo had referred 132 corruption allegations involving immigration officials to the ACLEI in the past 12 months – the largest number of corruption case referrals in the resource-strapped watchdog's history. Many of the allegations are untested and some are likely to be dismissed, a departmental spokesman said. Meanwhile, a leading security expert appointed by the Howard government to review port security, Neil Fergus, said he was "perplexed" that successive governments had not acted on a key recommendation of a 2005 government inquiry aimed at preventing criminal infiltration of Australia's borders. He fears loopholes used by criminals could be exploited by terrorists. Mr Fergus recommended that in extreme cases, criminal intelligence be used to ban suspected organised crime figures, subject to an appeal process, from working in sensitive positions at Australian ports. "The fact is we will have more cases of illicit behaviour at the ports and more [illegal] imports the longer we maintain the system as it is and not put the appropriate effort into toughening it up," Mr Fergus said.