MARDAN: The Federal Board of Revenue (FBR) has seized machinery from an illegal cigarette-manufacturing facility in Mardan, intensifying its crackdown on the underground tobacco trade in Khyber Pakhtunkhwa, which is allegedly operating under political patronage.
In early December, a team from the Regional Tax Office (RTO) Peshawar, under the supervision of the Chief Commissioner, raided a plant operated by Universal Tobacco Company (Pvt.) Ltd. The facility was covertly producing tobacco for illegal cigarette manufacturing. The confiscated machinery had a daily production capacity of 6,000 to 7,000 kilograms, generating an estimated Rs 45 million in daily revenue. Universal Tobacco Company manufactures well-known brands including Café and Ranger.
RTO Peshawar conducted the operation independently and has initiated legal proceedings against the company. The action reflects the FBR’s commitment to protecting national revenue and enforcing tax laws.
Sources within the FBR indicate that illegal cigarette production in Khyber Pakhtunkhwa has flourished for years with alleged political backing. Multiple manufacturers and tobacco traders in the province reportedly have ties to Pakistan Tehreek-e-Insaf (PTI) leadership, which sources claim has provided them considerable political cover.
According to officials, Masood Welfare Trust, also known as Masood Sons, is linked to Universal Tobacco Company, Saleem Cigarette Industries, Millat Tobacco and Markhor Tobacco. Saad Rahman, a close relative of Senator Faisal Saleem Rahman and Haji Naseem Rahman, is reportedly a key figure in this network. The political connections allegedly allowed these companies to operate illegal manufacturing plants for years without facing action from authorities.
Several other companies with reported ties to PTI leaders have been implicated in similar practices. To avoid taxation, factories were established in Malakand and other regions where tax and customs enforcement has historically been weak.
Prominent names allegedly linked to the network include MNA and former provincial minister Shehram Tarakai and his family, who produce Red & White and Cash brands. These cigarettes have reportedly been smuggled into Afghanistan and Punjab via the Indus River route. Former MNA and provincial minister Atif Khan is also said to be associated with the group.
Senator Dilawar Khan from Mardan reportedly owns multiple factories, while Senator Faisal Naseem and his father Haji Naseem-ur-Rahman are also connected to the network. Most facilities are located in Swabi, Mardan, Sakhakot, Dargai and Nowshera.
Cigarette production costs remain minimal while market prices are kept high due to government taxes. When taxes are evaded, profit margins become enormous. During PTI’s decade-long rule in Khyber Pakhtunkhwa, this illegal trade expanded significantly, according to FBR sources.
The increase in cigarette taxes in the 2024-25 federal budget further widened profit margins in the black market, benefiting these illegal operations. FBR officials allege that billions in illegal income from this network fund social media campaigns and employ paid teams to mislead the public and target state institutions.
Under instructions from the Prime Minister, 120 Pakistan Rangers personnel have been deployed to Green Leaf Threshing (GLT) units nationwide. Special monitors have also been appointed under the Sales Tax Act 1990 and Federal Excise Act 2005 to ensure legal production.
This is not the first action against Universal Tobacco Company’s operations:
- 2021: Initial inquiry launched
- 2022: Three unregistered factories seized in Mardan and Swabi; FBR notices issued
- 2024: Investigative report exposed political patronage and illegal activities
- December 5, 2025: RTO Peshawar raided a secret plant, seized machinery and launched legal proceedings
The FBR has vowed to continue its crackdown on illegal tobacco manufacturing and ensure all producers comply with tax laws, regardless of political connections.
