MPs savage Imperial Tobacco over smuggling

Friday 10 January 2003

ASH news release:  Embargo 00.01 Friday 10th January 2003


Imperial Tobacco stands accused of failing to control, and actively encouraging, tobacco smuggling by MPs of the influential Public Accounts Committee of the House of Commons.  Imperial has obstructed the work of HM Customs and deliberately exported large consignments to places where there is no obvious market for them except organised crime.  The report falls short of a heavy censure of Imperial and generally adopts a forward looking approach, but ASH said the historic behaviour – leading to immense losses at the Treasury and fat profits for Imperial – should not go unpunished.

Clive Bates, Director of the anti-tobacco campaign group ASH said: 

“We keep coming back to the question of why Imperial exported so many billion cigarettes to places like Moldova, Kaliningrad and Afghanistan where there is no demand for them and the only obvious customers are organised Mafia that will smuggle them back into Britain – reaching kids and undermining the government’s efforts to tackle cancer and heart disease.

“The Committee has done enough to show that there must now be a full criminal investigation into Imperial and smuggling, with its executives questioned under caution and documents seized.  All the signs are that Imperial has been aiding and abetting a massive fraud on the Treasury and taxpayer and that cannot just be dismissed as something that belongs to history.  Even if Imperial has reformed, as it claims, that in no way wipes the slate clean.”

ASH criticised HM Customs for being slow to recognise that container fraud was driven by tobacco companies.

“For years Customs was unwilling to accept that tobacco companies were using the black market like just another distribution channel and we think they ought to put much more distance between its senior executives and tobacco industry personnel.”

ASH pointed out the links between cigarette smuggling and the drug trade – money laundering.

“The abrupt termination of supplies to a country like Afghanistan reveals that Imperial’s cigarettes were being bought for smuggling purposes.  The hard cash paid for Imperial cigarettes would almost certainly be sourced from the heroin trade which starts in Afghanistan and ends on the streets of London, Glasgow and Swansea – where else would Afghans get the cash? Imperial may well have been part of the money laundering operations of the heroin trade.”

In its press response to the PAC report, Imperial states:

“Today’s report is based on historical data and does not reflect the high level of co-operation that exists at all levels with HM Customs & Excise.”

By arguing that circumstances have changed since the PAC formulated its report, Imperial is tacitly acknowledging that it has not been co-operative and that it has been supplying rogue suppliers.  The flip side of claiming credit for ceasing supplies to 30 international wholesalers is acknowledgement that the company was supplying them in the first place and has some means of controlling it.

Imperial Tobacco also claims partial credit for a reduction in cigarette smuggling of 50 percent.  However, the company has spent years saying that the only way to reduce smuggling is to reduce taxation.  Their new position acknowledges that they exercise a degree of control – and know more about the final markets than they have previously admitted.

Contact: Clive Bates – 020 8800 1336 or 077 6879 1237

Note: British American Tobacco has been under investigation for more than two years by the DTI over similar allegations.

ASH evidence to the Public Accounts Committee (pdf)

ASH letter to the Public Accounts Committee (pdf) following the oral evidence hearing of 19 June 2002, summarising the main points.

All ASH’s information on tobacco smuggling