Undercover agents, who are given a dispensation to drink on duty because of their duties, are now banned from drinking alcohol because of the health risks.
“This is quite scary and the public needs to be warned,” says Sheppard.
He says many alleged drinking incidents may be the result of drinking alcohol bought in good faith at the bar in supposedly legitimate clubs.
In 2021, there was a spate of suspected drink spikes in Prahran, but toxicology tests showed no traces of illicit drugs.
All were originally investigated by police as incidents of alcohol use, but that theory was dismissed after tests found no illicit substances.
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“Increased drinking is not entirely attributable to drugs and may involve illicit liquor,” says Sheppard.
He also says that some violent, drunken men may have consumed as little as two or three drinks of toxic alcohol “and then behave completely out of character”.
He estimates that one investigated syndicate produces legitimate (and taxable) alcohol through the front door while making five times the amount of counterfeit product out the back door.
Police have spent almost two years gathering information about syndicates and have formed a partnership with the ATO's Illicit Alcohol Team.
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They have identified shell companies, potential mafias and outlaw motorcycle identities linked to illicit spirits, as well as unlicensed third-party distillers who take bootleg alcohol and mix it with water flavorings and imitation spirits well-known brands
An ATO spokesman said the smugglers included seemingly legitimate businesses that are “well established in the alcohol supply chain”. However, intelligence also indicates that organized crime is increasing its presence in illicit alcohol activities.
“The ATO is obviously concerned about tax evasion and the unfair impact on businesses that do the right thing, as well as the wider threats to the community, including the health and safety risks inherent in the consumption of 'illegally manufactured alcohol'.
Denatured alcohol has a bad-tasting product added as a warning that it is unfit for human consumption, but some of the syndicates try to filter out the toxins and smell with varying success.
A law enforcement estimate is that around 2.4 million bottles of counterfeit liquor enter the market each year.
The beating of the State Liquor Unit this week.Credit: Victoria Police
The tax department spokesman said the errors included “unlicensed manufacture, including the use of base spirit containing harmful denaturants; deliberate understatement by alcohol manufacturers and distributors; intentional misclassification of product to facilitate smuggling; and the diversion of the product away from approved destruction, concessional use or export to the Australian consumer market.”
Police and ATO officers this week carried out their first raid on Victorian clothing, seizing alcohol which will be tested at the National Institute of Measurement, with the results being sent to forensic experts to report about the possible impacts on health.
“Victoria Police's Alcohol Drinks Unit executed a search warrant at a residence in Robinvale on Wednesday,” a police spokesman confirmed. “Laptops, mobile phones and documents and a large number of tanks, drums and bottles have been confiscated. These elements will now be analyzed.
“A 44-year-old man is expected to be interviewed at a later date. The warrant was executed as part of an ongoing investigation by the State Liquor Unit into illicit alcohol at licensed premises of Victory”.
The State Liquor Unit collects material during a raid on an illegal distillery on Wednesday.Credit: Victoria Police
The distillery had been operating without a liquor license for some time.
A liter of near-pure distilled alcohol attracts about $100 in excise duty, while industrial alcohol is almost tax-free.
In the retail market, a liter of denatured alcohol sells for as little as $10, while 95% pure alcohol sells for about $250.
Just as organized crime moved to the illicit tobacco industry because the legal product is heavily taxed, it is moving to bootleg alcohol to avoid high exercise.
Sheppard says some of the smaller clubs may not know they're selling the replacement drink, but larger venues should be aware when they're being offered heavily discounted alcohol and the price doesn't cover excise duty.
“I can't see how they don't know,” he says.
Sheppard says manufacturers and distributors could be liable for criminal offenses as well as tax and licensing offenses if a drinker suffers health complications.
He says the bootleg drink is also being sold in the retail market “under unreliable labels from bogus companies”.
“We know that illicit alcohol can cause liver damage, blindness and ultimately death.”
The Liquor Unit
The State Liquor Unit is responsible for overseeing licensed premises in Victoria. It uses its own officers, acting as patrons, to see how the clubs operate.
They are looking for intoxicated customers to be served, drunks and underage drinkers. The $2,000 fine and one demerit point for this offense may seem trivial, but it's big business that leads to court battles with high-powered (and highly paid) lawyers.
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If a premises is found to have breached these rules, its license fee is tripled for three years.
“A club that pays $40,000 a year will end up being charged $120,000 a year, and that's why we end up in court to fight them. Fortunately, the police department supports us in these cases,” says Sheppard.
In one case, a venue spent more than $100,000 to contest a $2,000 fine.
It is also a matter of public record that the police are engaged in a protracted and costly battle with the owners of the Prahran Love Machine nightclub.
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In 2022, police submitted a report to the Liquor Commission recommending the venue's closure, listing hundreds of incidents including shootings, stabbings, fights, alleged sexual assaults and a double homicide in 2019 after a shooting outside the club
The State Alcoholic Beverage Unit is looking for red-eyed patrons who stretch their words and find themselves unstable. But they need more than that. They must prove that pub or club staff saw, or should have seen, the intoxicated patron.
“If there's someone asleep with vomiting, we need to know that they're not in a dark corner, but in a place where staff can or should see them,” says Sheppard.
Undercover police, like many other customers, sit down and communicate via text. But they're not setting up Tinder dates, they're reporting to their team outside, probably about breaking the law.
Usually it's just a matter of sitting back and watching, but sometimes trouble comes to them.
Two were sitting in a bar when a drug dealer offered them material. He was arrested in possession of 25 ecstasy pills and five grams of powder, a bit like going fishing when a tuna jumps the boat.
Sheppard says COVID has hit pubs and clubs, with experienced licensees, crowd controllers and bar staff leaving the industry. “We are issuing more penalty notices than ever before.”
One notoriously difficult area to police is karaoke bars. Sheppard says the big clubs have more than 50 booths, with some renting for $2,000 to $10,000 a night.
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Some include their own bathrooms and showers (who would have thought sing my way would you gladly require a refreshing shower at the end?).
More concerning is the use of flight attendants who can be hired to join a group in a cabin.
Sheppard says some are trafficked sex workers whose passports are confiscated until they pay off alleged debts.
He says that in one raid, police were assured that the flight attendants were in Australia on work visas.
“It was incredibly hot and the AC unit wasn't working. I asked one of the women what her job was on the visa and she said 'air conditioning mechanic.' I said why don't you fix it and she said, 'What's that?'”
One of the sergeants in the unit is a ginger-haired guy who would hang around looking vague during a raid while the owners chatted with each other.
“He's fluent in Cantonese and Mandarin,” says Sheppard. “It was amazing what he heard.”
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