Two Northern Ireland men arrested in connection with one of the largest ever international tobacco smuggling scams have been released on bail.

A third man from England is still in custody.

The men were arrested during a number of early morning raids yesterday by officers from HM Revenue & Customs (HMRC) investigating the smuggling of hundreds of millions of cigarettes from the Far East into the UK and the Republic.

The raids represent part of an 18-month probe into suspected tax evasion and laundering the proceeds of crime.

Two men arrested in Co Londonderry were detained but released on bail yesterday evening, while the Englishman was last night still being questioned.

The arrests were made following the search of private and business premises by HMRC officers on both sides of the border and in Cambridgeshire.

The Criminal Assets Bureau in the Republic was also involved, carrying out raids in counties Cork, Meath and Louth. John Whiting, assistant director, Criminal Investigation, HMRC, said they believed it was one of the largest ever international tobacco smuggling operations they had intercepted.

“The investigation into this gang has been ongoing for eighteen months and has resulted in the arrests today in three jurisdictions,” he said.

“With an estimated £3bn of UK taxpayers' money being diverted from public services into the pocket of tobacco fraudsters each and every year, the problem of excise fraud is considerable.

“Excise fraud is not a victimless crime and by working together in partnership with our colleagues in the Republic of Ireland and in the Organised Crime Task Force we can target global networks more effectively and leave those involved no where to hide.”

During the raids — on one business and two private addresses in Londonderry and a business in Cambridgeshire— officers seized documents, computers and mobile phones.