Tobacco.org

Cigarette Smuggling Case Discussed in January  

A decision on possible court proceedings against a group of nationals from Montenegro, Italy and Serbia on their alleged involvement in an international cigarettes smuggling ring will be discussed in January, a court in Bari, Italy, decided.

According to local media, the decision on possible court proceedings will be determined on 18 January.

They are accused of being involved in cigarette smuggling between 1994 and 2000, and the list includes seven Italians, five Montenegrins and two Serbs, broadcaster RTS reports.

The trial began in November 2001. The Prosecutor of Bari's court, Giuseppe Scelsi, included Montenegrin Prime Minister Milo Djukanovic in the investigation due to his alleged role in the smuggling.

"For almost a decade, Montenegro has been a haven for illegal trafficking, where criminals acted with impunity, while the ports of Bar and Kotor were used as logistics bases for motor boats, with protection which was guaranteed by the government," the court's document says.

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• Revealed: £2bn cost to UK from cigarette smuggling  

At the Ukrainian-Polish border town of Przemysl, the seizure of 4,500 cigarettes hardly solicits a reaction. The border guards know the discovery will barely impact on one of Europe's fastest-growing forms of organised crime.

For criminal gangs from the Mafia to the Triads, cigarette smuggling is the new cash cow, and governments, companies and taxpayers are suffering the consequences.

Europe's growing addiction to cigarette smuggling is burning a £7bn hole in the pockets of governments in western Europe through lost tax revenues, and leaving companies including UK-listed British American Tobacco (BAT) and Imperial Tobacco nursing some £600m in lost sales each year.

While the problem starts in many of the former Soviet-bloc countries and other parts of the developing world, the effects are being felt on streets across the UK.

The illegal import of cigarettes that are either produced in counterfeit factories or legally purchased in low tax jurisdictions and smuggled into Britain is growing by the day and tobacco industry insiders question how it will ever be stopped.

Criminal gangs are using increasingly creative means to flood Britain with smuggled packs of Marlboro, Superkings or Lambert & Butler, or eastern European brands such as Classics or Jin Ling.

This month it emerged that children in the north east of England are being recruited to act as mules on smuggling missions. Seduced by the offer of cut-price air tickets and spending money, teenagers are flying to low-duty countries to fill their suitcases with cigarettes, returning to Britain to pass them on to criminal gangs.

Four schoolgirls aged 15 and 16 who live near Durham narrowly avoided jail after being caught smuggling 200,000 cigarettes into Britain. . . .

As the recession rocks the UK, demand for low-cost cigarettes is growing, driven by the dominant view that this is a victimless crime. However, tobacco industry insiders and customs officials suggest it is anything but. . . .

Cigarette companies have received some of the blame, with critics arguing that the "Big 4" – Philip Morris, Japan Tobacco, BAT and Imperial – over-produce in Ukraine, knowing their products will be smuggled elsewhere. Philip Morris and Japan Tobacco agreed in 2004 to pay a combined $1.65bn (£1bn) to the European Union and member states amid allegations they were involved in smuggling. However, recent signs suggest the cigarette manufacturers are now taking a different approach.

Poland's smuggling problem dates back to 2004 when the country joined the EU, since when the government has been raising tobacco duty levels to meet EU targets – twice this year alone.

However, higher duties in Poland have only heightened the disparity with taxes and tobacco sale prices in neighbouring countries such as Ukraine and Russia. . . .

"Once the line opens, the situation will get worse. Then you will see not only cigarettes but counterfeit handbags, medical products and clothing," he warns.

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Miami's Black-Market Cigarette King Pleads Guilty 

Earlier this summer, New Times brought you the story of Roman Vidal, a 54-year-old Cutler Bay resident accused of funneling millions of dollars' worth of black-market cigarettes through the Port of Miami to criminal gangs in Europe.

​Just before 11 a.m. today, Vidal pleaded guilty to four counts of wire fraud, mail fraud, and smuggling.

Speaking in heavily accented English, Vidal admitted his role in planning at least four shipments of millions of black-market smokes to Europe. Vidal hid the cigs beneath wooden flooring, yarn, and building insulation inside shipping containers and then skipped out on the millions in taxes. . . .

Although federal investigators say some of Vidal's profits went to the Irish terrorist group the Real IRA -- a violent gang responsible for the murder of two British soldiers earlier this year -- he didn't face any charges of supporting terrorism.

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Sentencing set for Miami cigarette smuggler 

FLORIDA: A Cutler Bay resident admits to smuggling more than 27 million cigarettes out of the United States.

Roman Vidal, 57, has pleaded guilty in connection with the smuggling cigarettes into various European Union countries in order to avoid paying more than $6.5 million in customs and tax duties.

To execute the scheme, Vidal, who ran the Miami portion of the operation, arranged for the purchase of hundreds of cases of cigarettes from Panama and the transportation of those cigarettes into the Port of Miami.

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German Cigarette Trade Influenced by Strong Competition 

Competition within the European Union 27 among cigarette exporters intensified in the last several years. Greater exports from France and Poland to customers in other EU contributed to a slowdown for German cigarette exports to Europe. The days of dramatic growth for German cigarette exports to European countries may be over. After scoring spectacular growth of cigarette exports to Eastern Europe from 2003 through 2005, it now appears that German cigarette exports to Europe may decline slightly in 2009. Competition from other EU countries has gained momentum. Exports of cigarettes from Poland and France made astonishing gains in 2008. Poland has already surpassed the UK as a cigarette exporter, and may eventually have exports in the range shown for the United States.

Germany was the leading world exporter of cigarettes in 2007 with shipments of 159.2 bn pieces, valued at $3.478 bn. The average price for German cigarette exports rose from 39 cents per pack of 20 in 2006 to 43.7 cents per pack in 2007. After rising by 46% between 2003 and 2006, the pace of growth for German cigarette exports slowed down to a 3.2% rise for 2007 over 2006. More competition from other exporting countries within the EU has made further expansion of German cigarette exports more difficult. The high value of the euro in comparison to the US dollar and some other currencies tended to make German cigarettes more costly to buyers in some countries, while the change had little impact on shipments to 14 other EU countries using the euro as their official currency.

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• Made to be smuggled: Russian contraband cigarettes 'flooding' European Union 

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Europe is being flooded by smuggled Russian-made cigarettes worth at least $1 billion a year, an international investigation has discovered.

A network of factories and routes has been put together across Europe since 2004, following large-scale smuggling routes previously supplied by major multinational tobacco companies. The new underground smoking trade involves only one brand, Jin Ling, which is turning up in more cities and countries across Europe every month.

Jin Ling, virtually unknown to the authorities three years ago, has grown so rapidly that law enforcement officials say it now rivals Marlboro as the top smuggled brand being seized in the European Union.

The organization behind this fast expanding black market, the Baltic Tobacco Factory (BTF) of Kaliningrad, Russia, has links to two of the world’s largest tobacco companies. Its factory network in Russia and Ukraine was previously owned and run by subsidiaries of Japan Tobacco International (JTI) Group, the world’s number three producer.

The investigation has identified a network of Russian and East European companies, including five factories believed to play roles in manufacturing the contraband cigarettes being smuggled to the West. . . .

Jin Ling cigarettes have no legal market in any European country, according to customs officials. The brand is never advertised and cannot be bought in shops. It is only sold illegally — smuggled by gangs who hope to pocket immense profits by selling unlicensed, untaxed cigarettes on black markets across Europe.

“Jin Ling is the most disturbing new development anywhere in the world in the illegal tobacco trade,” according to Luk Joossens, a World Health Organization expert in tobacco smuggling. “They are flooding into Europe.” . . .

ICIJ’s team has pieced together the unique story of the world’s first-ever cigarette brand designed and manufactured only for smuggling. . . .

Baltic Tobacco Factory’s headquarters is in Kaliningrad, a slice of Russian territory annexed by the Soviet Union after World War II and wedged between Poland and Lithuania. The freewheeling Russian exclave is known as a hotspot for smuggling and organized crime. . . .

Both RJR, Kazakov’s former supplier, and Gallaher, BTF’s former home, are now part of Japan Tobacco International (JTI). JTI acquired RJR’s non-U.S. tobacco operations in 1999 and bought Gallaher in 2007. In 2004, BTF joined JTI — as well as Philip Morris — in forming the Moscow-based Tobacco Industry Development Council. The industry group’s stated intent was to lobby for more favorable taxes on filtered cigarettes.

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Jin Ling
From the ICIJ story: "[T]the world’s first-ever cigarette brand designed and manufactured only for smuggling."

• Going undercover: Inside Baltic Tobacco’s smuggling empire 

ICIJ’s reporters went to Russia to uncover the truth about the billions of black market Jin Ling cigarettes turning up across Europe. They quickly learned that packets of Jin Ling could not be purchased even in the shops, markets, or street stalls of the Russian city where they are made, Kaliningrad. But Jin Ling was available to smugglers, in huge quantities, from its manufacturer, the Baltic Tobacco Factory.

Kaliningrad can be a dangerous place to ask questions about smuggling. The Russian territory, sandwiched between Poland and Lithuania, went into rapid and cataclysmic decline after the break up of the Soviet Union, but has since profited immensely from its close proximity and excellent transport to the European Union. It has also gained a reputation as a haven for smugglers and money launderers, and for a police force accommodating to smugglers’ interests. The city is home to a noisy night life and frontier atmosphere, with luxury limousines a frequent sight on the streets.

Russian journalists working in Kaliningrad know that to openly ask about the cigarette contraband trade is a risky business. In 2006, after criticizing the police — including the protection they give to smugglers — the local Novye Kolesa newspaper was raided and its newspapers confiscated. . . .

To investigate the Baltic Tobacco Factory company (BTF) in the high risk environment of Kaliningrad, ICIJ’s reporters went undercover in June 2008, with one posing as a Romanian smuggler setting up a new route to the EU. They carried concealed video and recording equipment to witness all that they saw and heard. (Their video report is available online.) . . .

From Kaliningrad, a team of ICIJ reporters followed the route of Jin Ling cigarettes and their containers on their journey to the west. Thirty kilometers south of Kaliningrad, at the Polish border crossing of Bagrationovsk, Jin Ling was widely available. Just outside the shabby town, parts of which have been left unrepaired since 1945, smuggling is big business. As at other border crossings between Russia and the EU nations of Poland, Latvia, and Lithuania, cigarettes are not only smuggled through in full container loads; they are also broken down into small quantities by armies of personal smugglers and their managers.

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• Swedish Match Hires Motorbike Champ Rickardsson for East Europe 

Swedish Match AB, the Swedish maker of smokeless tobacco, hired former world speedway champion Tony Rickardsson to head its eastern European operations, marrying two of Sweden’s favorite pastimes: snuff and motorcycle racing.

The 39-year-old Swede, who won six motorbike speedway world titles between 1994 and 2005, will join the Stockholm-based company in October after driving for his own team in the Porsche Carrera Cup car racing series, Swedish Match said today.

As area manager of the company’s eastern European region, Rickardsson will be responsible for selling Cricket lighters, Korona matches and Macanudo cigars in countries such as Russia and Ukraine. Swedish Match, which has sponsored his racing career since the start of 2002, is seeking to expand beyond Scandinavia, where it gets 42 percent of revenue.

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BAT's Adams Sees Favorable Climate for Acquisitions: Video  

Paul Adams, chief executive officer of British American Tobacco Plc, talks to Bloomberg's Betty Liu and Deirdre Bolton about the climate for acquisitions.

Adams, speaking from London, also discusses the the impact of Eastern European currency declines on cigarette smuggling and the outlook for price increases. (Source: Bloomberg)

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BAT Says East Europe Currency Slide Will Fuel Tobacco Smuggling  

The plunging values of some Eastern European currencies probably will lead to more cigarette smuggling as tobacco becomes cheaper in those countries, British American Tobacco Plc Chief Executive Officer Paul Adams said.

“There is a real danger that illicit trade will increase,” Adams said on a conference call today. He added that cross-border shopping has increased between Germany, Poland and Ukraine. “There is a fear that depending what happens to exchange rates, there will be an increase in contraband, in central Europe particularly.”

Smuggled and counterfeit cigarettes cost governments worldwide about $20 billion in lost tobacco tax, according to the London-based maker of Kent and Pall Mall cigarettes. Ukraine’s currency has lost 40 percent of its value against the dollar in the past year and the Polish zloty has declined 35 percent.

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Russian Contraband Cigarettes 'Flooding' Europe 

A renegade network of Russian and Eastern European factories is behind at least $1 billion worth of contraband "Jin Ling" cigarettes pouring into Europe, according to a five-month investigation by the International Consortium of Investigative Journalists (ICIJ), a project of the Center for Public Integrity in Washington, D.C.

The story, "Made To Be Smuggled," leads off a six-part ICIJ series on cigarette smuggling -- Tobacco Underground (http://www.publicintegrity.org/investigations/tobacco) -- with interactive maps, undercover video, online interviews with experts, and links to groups and documents worldwide.

As delegates from nearly 160 countries meet in Geneva this week to negotiate a global protocol to crackdown on tobacco smuggling, the ICIJ team has pieced together the unique story of the world's first ever cigarette brand designed and manufactured only for smuggling. "Jin Ling is the most disturbing new development anywhere in the world in the illegal tobacco trade," said Luk Joossens, a World Health Organization expert in tobacco smuggling. "They are flooding into Europe."

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• Thai Tobacco sets sights on Eastern Europe  

Thailand Tobacco Monopoly (TTM) is looking to penetrate the Eastern European market as part of its drive to boost exports in light of declining cigarette consumption at home.

TTM has recently exported some cigarettes to Singapore, Taiwan, Brunei and the Middle East, the workplace of a number of Thai workers. To accommodate the overseas marketing, new brands will be launched for easy recognition. Eastern Europe, particularly Poland and Russia, has high purchasing power, while its economies are expanding and regulations are not as strict as those in Thailand. . . .

In the domestic market, TTM has no plan to launch new brands, in line with the government's anti-smoking campaign. Like private tobacco companies, it has witnessed declining demand in the Thai market. Though value has been rising through higher prices, sales volume has dropped continually.

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• LN: Austria takes tough stance on cigarette imports 

Austrian customs officials have started imposing tough fines on persons bringing Czech cigarettes to Austria and in addition they confiscate all the non-permitted cigarettes they find, the daily Lidove noviny wrote Tuesday.

Czechs taking out more than one carton of Czech cigarettes while travelling for holiday to Croatia via Austria could be severely punished because the Austrian customs officials have started imposing tough fines on all drivers who violate "the tobacco law" while crossing the Austrian border, the paper says.

Under the law, passed shortly before the Czech Republic joined the Schengen area without border checks last December, one person can only take out 200 pieces of cigarettes with the Czech-language health warning message while travelling from the Czech Republic to Austria.

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• BAT Splits European Business Into Western and Eastern Units 

British American Tobacco Plc, the maker of Lucky Strike cigarettes, said it's splitting its European business into western and eastern units.

Jean-Marc Levy will be responsible for western Europe and David Fell for eastern Europe, the London-based company said today in a Regulatory News Service statement. They are replacing Ben Stevens, who previously managed the entire European division and has become chief financial officer.

Eastern European consumers are increasingly switching to brands of companies such as BAT and Philip Morris International.

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"No smoking" Lamp is Lit 

The Marriott and Westin chain seem to have started the anti-smoking fervor. But entire cities such as Chicago and Washington followed, along with more than 100 other municipalities that also enacted smoke-free laws.

Marriott banned smoking last year in all its 400,000 guest rooms, as well as restaurants, lounges, meeting rooms, public spaces and work areas.

But the chain went even farther. Marriott provides free anti-smoking packages to all its employees and their dependents who participate in a medical plan. The chain in partnership with the American Cancer Society also offers 24-hour "quitline" telephone counseling and two eight-week non-prescription nicotine replacement therapy treatments each year.

You might think the smoking policy there was based on the bottom line but Marriott says that is not the case.

"We weren't focused on ROI. It was more of 'This is the right thing to do for our guests and associates,'" says Karen Graham, Marriott's manager of health plans. . . .

Not all hotels are adopting non-smoking laws.

"Representatives from InterContinental Hotels Group, Hilton and Hyatt said they have no plans to eliminate smoking rooms throughout their chains, though these rooms represent as little as one percent of inventory," reported The New York Times a few weeks ago.

So if you want to smoke, here's a RX: go to Eastern Europe. The Romanian Tourist Office at its site points out that recent legislation banned smoking everywhere such as planes, buses and some trains. "Luxury hotels have designated no-smoking floors," the Romanian Tourist Office says.

But so what? The site admits that it looks like all adults in Romania smoke. "But smokers here, in common with many Eastern European countries," have little respect for non-smokers."

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[S]mokers here, in common with many Eastern European countries, have little respect for non-smokers.
Romanian Tourist Office, on its website.