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A shopkeeper has allegedly been caught hiding illegal cigarettes in Special K cereal boxes.
Three retailers were found with suspected illicit cigarettes stashed in their stores during raids with sniffer dogs.
The products were found in secret compartments, fruit boxes and empty cereal cartons.
In the first operation of its kind carried out in the Towns, a dog detective agency was used alongside officers from Kent Police and Medway Council to catch people suspected of selling the contraband.
Three sniffer dogs were hired and a number of premises searched.
In total, 225 packets of suspected illegal tobacco, containing 4,500 cigarettes, were discovered.
In one store, cigarettes were found apparently hidden in a secret compartment built into the shop counter and in another they were found in the back of shelving.
In another shop, officers found large fruit juice boxes and cartons of Kellogg's Special K cereal on the shop shelves had been emptied. Rolling tobacco and cigarettes were hidden inside instead.
Medway Council has said it cannot name the stores involved for legal reasons.
Rat and mouse droppings, dead insects, dust and floor sweepings have all been found in illegal tobacco products.
"If you buy illicit cigarettes, you are putting money into the pockets of the criminal gangs that produce them and helping finance other criminal activity..." - Cllr Peter Hicks
They contain higher levels of chemicals such as lead and arsenic and produce higher levels of carbon monoxide, increasing the risks to health. They also present a significant fire risk because they are not self-extinguishing.
Cllr Peter Hicks, who is in charge of community safety, said: "While all tobacco is harmful, illegal tobacco is completely unregulated and levels of tar, nicotine and other chemicals can be much higher than those found in legal tobacco.
"In addition, if unscrupulous traders are prepared to sell illegal tobacco they may also more likely to sell those cigarettes to children and young people."
Cllr Hicks added: "We are finding that those who sell illegal tobacco are using much more sophisticated and elaborate means to conceal their contraband. Using sniffer dogs is a very useful way to detect them.
"I think it is also important to state that if you buy illicit cigarettes, you are putting money into the pockets of the criminal gangs that produce them and helping finance other criminal activity."
Medway Council went out with the sniffer dogs at the end of May and plans to use them again to target more shops and other business premises in the coming months.