Tobacco companies, cigarette smuggling & organised crime

Sunday 04 March 2001

Immediate Sun 4th March 2001

A stunning investigative report on tobacco industry involvement in cigarette smuggling and links to organised crime has just been published (Sunday 4th March) by the Washington-based International Consortium of Investigative Journalists (ICIJ).

The full report covers the activities of BAT, Philip Morris, RJ Reynolds and others – and includes special sections on China, North America, Italy, Latin America, Africa, United States and Cyprus. It gives new insights into the major racketeering (RICO) cases against BAT, Philip Morris and RJR and includes some clues as to the direction the cases will take, with the first public quotes from the lawyers co-ordinating two of the RICO actions on behalf of the European Union and Colombian state governors.

It is also clearly relevant to the DTI’s investigation of BAT, which commenced last October with a raid on BAT’s London offices. It also includes quotes from an (unnamed) industry insider confirming BAT’s involvement and new terminology to disguise continuing smuggling – ‘Wholesale Duty Free’.

Three days before the Budget, the report offers a timely reminder that cigarette smuggling is far more complex than ‘white van man’ and shows that the simplistic idea of tackling it by reducing taxes is unlikely to be effective. The real question is ‘who supplies the smugglers, and why?’. The report provides some alarming answers for the tobacco companies and a wake-up call for the strategists at HM Customs and Excise.

In response, Clive Bates, Director of ASH, said:

“The evidence that tobacco companies orchestrate large-scale smuggling continues to pile up and the case is rapidly becoming unanswerable – we can only wait to see what the DTI investigation will make of this and what Stephen Byers will do to bring British American Tobacco and its directors under some sort of control.

“Having thrust himself forward in BAT’s defence before looking at the evidence against the company, Kenneth Clarke must be a worried man and wondering whether it is as easy to get away with his characteristic chutzpah in the business world as it is in politics.”

“Before they call for any more tax cuts in the Budget, the British cigarette companies need to explain why they export so many billions of cigarettes to countries in the Eastern Europe and the Balkans where there is no market for them, and the most obvious customers are the mafia syndicates that bring them back into Britain illegally.”

“I hope this report will be widely read in Customs ­it gives a damning indictment of the tobacco companies and the clearest possible explanation of why the tobacco companies are part of the problem rather than part of the solution.

Contacts:Clive Bates:020 7739 5902 (office) 077 6879 1237 (mobile) (ISDN available)

Further information, visit the smuggling section of the ASH website.