Pubdate: Sun, 04 Mar 2001
Source: Age, The (Australia)
Copyright: 2001 The Age Company Ltd
Contact:  250 Spencer Street, Melbourne, 3000, Australia
Website: http://www.theage.com.au/
Forum: http://forums.f2.com.au/login/login.asp?board=TheAge-Talkback
Author: Bill Birnbauer, with William Marsden, Maud Beelman, Duncan 
Campbell, Erik Schelzig and Leo Sisti.

CRIME LINK TO TOBACCO GIANTS

SUNDAY EXPOSE

A year-long investigation has found that senior officials at British 
American Tobacco, Philip Morris and R.J. Reynolds worked closely with 
companies and individuals directly connected to organised crime in at least 
five countries.

The investigation estimated that one in every three cigarettes exported 
worldwide was sold on the black market.

Triad groups in Asia, the Italian Mafia, eastern European gangs, Colombian 
drug cartels, and motorcycle gangs and the Mafia in North America were 
involved in tobacco smuggling.

"Licensed distributors for the manufacturers feed these organised crime 
syndicates billions of cigarettes worldwide, often with corporate 
knowledge," the investigation report says. It also details how tobacco 
company officials worked closely with organised crime groups in Hong Kong, 
Canada, Colombia, Italy and the US.

The investigation was conducted by the International Consortium of 
Investigative Journalists, which has 74 investigative reporters and editors 
in 41countries, and is an arm of the Centre for Public Integrity, a 
non-partisan, non-profit-making investigative watchdog based in Washington. 
(Sunday Age senior reporter Bill Birnbauer is a member of the consortium.)

Tobacco manufacturers have often blamed international smuggling of their 
products on organised crime and denied any involvement.

But corporate documents, court records and government reports - some dating 
to the 1970s - show that BAT, Philip Morris and R.J. Reynolds orchestrated 
smuggling networks variously in China, Canada, Colombia, South-East Asia, 
Europe, the Middle East, Africa and the US as an important part of their 
strategy to increase profits.

Corporate documents refer to this black market business as "duty not paid", 
"parallel" markets, "general trade" or "transit". They often clearly 
delineate between this aspect of the business and legal trade.

The investigation found one Triad-backed distributor in Hong Kong sold 
about $2.3 billion of BAT cigarettes into black markets in China and 
Taiwan. A former director of the distribution company, who was later 
murdered, told investigators three BAT Hong Kong executives were paid $24.5 
million in bribes to ensure supplies.

An Italian government report states that Philip Morris' and R.J. Reynolds' 
licensed agents in Switzerland were high-level criminals who ran a vast 
smuggling operation into Italy in the 1980s directly linked to the Sicilian 
Mafia.

In Colombia, tobacco companies are alleged to have helped launder drug 
money and worked closely with distributors involved in drug trafficking. A 
Colombian law suit against Philip Morris and BAT accuses them of 
involvement in drug money laundering through what is known as the "black 
market peso exchange".
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