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Russia Contraband cigs "flooding" Europe

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A renegade network of Russian and Eastern European factories is behind at least US$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.

As delegates from nearly 160 countries met in Geneva 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."

"Since ICIJ's path-breaking investigative reporting in 2000, the illegal trade in contraband cigarettes has expanded with new players, new routes, and new techniques," said Center executive director Bill Buzenberg. "The multi-billion illegal trade in cigarettes not only further damages public health, but contributes to the cash economy of criminal syndicates and steals vast sums from the public coffers in lost tax revenues."

Using undercover video, public records and customs data, ICIJ reporters go inside the cigarette smuggling industry, starting with the Jin Ling plant run by the Baltic Tobacco Factory in Kaliningrad, Russia. The BTF network now claims to be able to produce over 24 billion cigarettes annually, equivalent to 7% of legal European Union cigarette imports.

The illicit trafficking of tobacco is a multibillion-dollar business, according to the ICIJ series, fueling corruption, organized crime, and terrorism; robbing governments of needed tax money; and spurring addiction to a deadly product. Once dominated by Western multinational companies, cigarette smuggling has morphed into a diverse new industry, with major players such as Chinese counterfeiters and Russia's Baltic Tobacco Factory.

Experts believe that contraband accounts for 11% of all cigarette sales, or about 600 billion sticks annually. The cost to governments worldwide is massive: an estimated US$40 billion to US$50 billion in lost tax revenue during 2006.

The Tobacco Underground website uses interactive and multimedia resources, from a map of global smuggling routes to interviews with experts and undercover video, to help readers grasp the scope of the growing illicit trade in contraband tobacco.
 

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Quarter 4, 2011


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