Advertisement
YOU ARE HERE: LAT HomeCollectionsFixme

Companies Seen as Aiding Illegal Tobacco Business

July 31, 2002|WILLIAM ORME | TIMES STAFF WRITER

UNITED NATIONS — Illegal sales and smuggling of a powerfully addictive narcotic earn billions for criminal syndicates, corrupt police and customs agencies, and claim thousands of lives every year.

In a new campaign to combat this trade, the United Nations and the U.S. government convened a conference of law enforcement experts from around the world this week, from New York City's police commissioner to a former Colombian Cabinet minister who is an expert on the lucrative contraband market.

The drug is not cocaine or heroin, but tobacco--a far bigger business.

The world's biggest tobacco companies are witting accomplices in the illicit trade, producing and distributing huge quantities of cigarettes destined for the global black market, conference speakers charged.

About a quarter of the cigarettes exported around the world are ultimately sold to consumers outside the legal and fiscal control of any government, depriving national treasuries of more than $20 billion yearly in lost tax revenue, according to U.N. and World Bank estimates. In the United States, the Treasury estimates, cigarette smuggling costs the federal and state governments $1.4 billion in lost revenue every year.

The illegal proceeds from this business help finance international arms rings and prostitution rackets--and, increasingly, armed insurgents and terrorist organizations, according to police and prosecutors from the 145 countries participating in the U.N. conference. And drug gangs sometimes launder cash from cocaine and heroin sales by buying black market cigarettes, according to Latin American and East European experts.

"There is a great deal of money to be made in cigarette smuggling," said Raymond W. Kelly, New York City's police commissioner and a former chief of the U.S. Customs Service.

And in a world of increasingly freer trade, Kelly added, "international boundaries do not provide the safeguards against smuggling that they may have in the past, and organized crime is poised to take advantage of the eagerness of nations to break down the barriers that separate us.

"Smuggled cigarettes typically lack health warning labels and are often sold to children in contravention of national laws," according to the World Health Organization, one of the conference's sponsors.

"Tobacco smuggling undermines national pricing policies, deprives governments of revenues used to combat smoking, permits tobacco companies to subvert and undermine international cooperation in tobacco control and, above all, undermines legal restrictions and health regulations such as those that deal with health warnings and sales to minors," said Derek Yach, executive director of WHO's noncommunicable diseases division.

The world's leading tobacco companies produce cigarettes for what is known in the industry as the DNP market: the "duty not paid" business that includes thousands of legitimate customs-free shops at airports and border posts around the world. But most of the cigarettes exported free of duty from the United States and other big tobacco-producing countries end up smuggled across international borders, law enforcement and economic analysts at the conference said.

"Container-loads of billions of cigarettes just disappear from official view and end up in the black market," said Joy de Beyer, the World Bank's top expert on tobacco trade.

The motivation for tobacco companies to encourage this clandestine trade, De Beyer and other speakers asserted, is to expand their markets into countries where cigarette imports are banned or prohibitively taxed.

"If you are banned, one way of getting your brand known at an early stage is to smuggle it in," De Beyer said.

Representatives of major tobacco companies, who were invited to attend the conference, dispute the assertion that they knowingly supply the contraband trade. An international organization of duty-free airport shops also took issue with the accusation, contending that shipments of untaxed cigarettes are carefully documented by suppliers, retailers and monitoring governments.

Most conference delegates vigorously dispute those claims, however. Among them are officials from the European Union and Colombia, which have jointly filed a lawsuit in U.S. courts against Philip Morris, accusing the tobacco giant of coordinating the smuggling of American-made cigarettes through Europe and northern South America.

Bradley Buckles, director of the U.S. Bureau of Alcohol, Tobacco and Firearms, noted Tuesday that a subsidiary of another "major U.S. tobacco company"--RJ Reynolds, though he didn't name the firm--was convicted on charges stemming from its knowing participation in cigarette smuggling to Canada.

The three-day meeting is the first international conference devoted to the illicit tobacco trade. Organized jointly by WHO and the Bureau of Alcohol, Tobacco and Firearms, it is intended to lay the groundwork for the anti-smuggling provisions of a proposed treaty regulating the global tobacco trade.

Advertisement
Los Angeles Times Articles
|
|
|