evaded taxes and duties.24 In Montenegro a journalist was shot following a series of allegations of senior policemen being involved in a counterfeit cigarette syndicate.25 Greece disbanded a contraband cigarette syndicate headed by an ex-policeman. In the US, three military veterans were charged with cigarette smuggling. In one of the Balkan countries illicit tobacco largely comes from two factories in the country – both of them rumoured to be run by the state security agency.26
Not all government complicity takes the form of corruption, though. Sometimes governments’ complicity may be unintentional: The Indian government resells some of the smuggled cigarettes it seizes in special customs shops. However, a BAT document reveals how it viewed these shops as a new marketing opportunity: cigarettes were being smuggled directly to the shops, where they were illegally sold under the cover of the shops’ legal sales of seized cigarettes.27
Other politicians actively encourage illicit trade and smuggling as an act of patriotism. Former Australian senator David Leyonhjelm praised tobacco smugglers, calling them patriots. He said people dealing in illicit tobacco were simply avoiding unreasonable taxes, arguing that the government is only getting away with harsh new measures to target tobacco smugglers because ‘smokers are sneered at by the elites of society.’28
Of course, the illicit trade in tobacco frequently involves crime syndicates. In Europe alone, organised crime groups rake in at least €9,4 billion a year from illicit cigarettes. Illicit tobacco in France yields more than €2 billion a year. In Canada, an estimated 105 crime syndicates are involved in the illicit tobacco trade.29 At one point, illicit tobacco in Ireland was generating up to €3 million a week.30
And some reports suggest that illicit tobacco may be funding extremist organisations who are increasingly turning to cigarette smuggling as a high-profit, low-risk way to finance their operations. It’s an extremely lucrative business, earning the Real IRA an estimated $100 million over a five-year period. It also provided the bulk of the financing for AQIM, formerly backed by Osama bin Laden; constituted the second biggest source of funding for the Taliban (after heroin); and – together with oil – earned Saddam Hussein as much as $2,7 billion annually.31
Where do syndicates get the cigarettes from? The smaller independent manufacturers may be fuelling some of it, but a study by a US-based think-tank claims that they simply may not have the capacity to produce those kinds of volumes by themselves.32 The smaller independent manufacturers are an indisputable problem – but they are certainly not the whole problem.
Whether we’re dealing with the new crop of smaller independent manufacturers, or senior politicians, or crime syndicates, the road was paved by big tobacco. What big tobacco did – globally – was perhaps to perfect the trick of making tons of cigarettes disappear. An illusion that was subsequently adopted by smaller competitors, who can operate even more obscurely than big tobacco can, but using the same supply lines and facilitators and tactics as the ones originally perfected by big tobacco. They have mastered the art of infiltrating illicit products into the legal supply chain, making it more and more difficult to distinguish between licit and illicit products on the market.33
It’s clear that between the explosion in illicit cigarettes, the rise of legitimate independent cigarette manufacturers, and the growing regulatory framework, big tobacco is increasingly under pressure. And a business under pressure is a business with an incentive to play dirty.
Big tobacco needs governments to focus their efforts somewhere else. Why? For two key reasons, which we explore in the rest of the book: to get our law enforcement agencies to get rid of the competition that is eating into its market share, and because big tobacco appears to have had its own hand in the cookie jar.
Smoke. Mirrors. Obfuscation.
3. ‘Bigger than drugs’
Jacques Pauw’s bombshell book The President’s Keepers includes a revealing quote from Glenn Agliotti – one of South Africa’s best-known crime bosses (in turn described as a fixer, drug dealer and gangster, sometimes called The Landlord): ‘I have been smuggling cigarettes for thirty years. I am a fucking gangster. Cigarette game is bigger than drugs.’1
The picture he paints of smugglers fits in with the perception many people have: ‘We terrible. We gangsters. I believe in the AGE. A in AGE stands for Arrogance. Most of us, we are arrogant. G for greed. E for Ego.’2
This is part of the problem, of course: We have a certain picture of what a cigarette smuggler looks like. Tough, a bit rough around the edges, enigmatic, crew-cut hair, bad grammar.
Part of the challenge in telling the story of how big tobacco smuggles is that the ‘optics’ are wrong – in essence, how things look, how they seem from the outside. Big tobacco doesn’t look like a smuggler, and so we believe it isn’t one.
Having worked in more than 25 countries around the world – from Singapore to Serbia; from Cape Town to Canberra – I can assure you: smugglers don’t have a ‘look’. They may be burly musclemen with gold chains and chunky rings, or skinny boys with flipflops and haunted eyes, or men wearing tight Armani shirts and Rolex watches in shiny Porsches. They may be good people simply trying to put food on the table, or they may be fraudsters or mobsters or all-round bad guys. They may carry boxes across a border for a pittance, or they may be living it up in luxury villas and Instagram-worthy offices with plush carpets. They may be dads who take their kids to football practice on Saturdays. They may well live in a temple with pig sties. They’re all smugglers.
But the really good smugglers? They do have a look. They’re suave, smart, well-spoken. They’re generally quite likeable. And they’re always – always – powerful.
When I first started toying with the idea of writing this book – and in subsequent conversations about it – virtually every person I spoke to met the notion that a big, listed company could be smuggling its own products with incredulity.
The risks to the company would be too big. There would be no incentive to do so. They would never get away with it. Illicit cigarettes are made by criminals, not by large listed companies with shareholders to account to. Right?
To tell you the truth, until a few years ago, it is most likely what my reaction would have been, too. Because, while I’ve long known that big companies have no qualms playing both sides of that thin line between evasion and avoidance, the very idea that a company like BAT or PMI or JTI would stuff packs of cigarettes into containers destined for the black market just seemed anathema to their very business model. Surely illicit trade was harming them – not being perpetrated by them? Surely big companies stick to white collar tax evasion, leaving criminals to sell dirty cigarettes in dark alleys?
Surely, if there are illicit cigarettes being sold anywhere, they must all come from smaller companies like Gold Leaf, Savanna, Amalgamated Tobacco, Carnilinx or perhaps from Zimbabwe or China or the United Arab Emirates – but most certainly not from the big tobacco companies?
There is also another factor that drives public scepticism of the notion that big tobacco’s hands may be dirty: most of the industry’s tax troubles – for both the big players and the smaller independent manufacturers – are hidden from sight under a veil of legislated confidentiality and secrecy. It is relatively easy to compile a dossier with examples of instances where tobacco companies defrauded us with respect to the supposed safety of tobacco products. It is far more difficult to compile a list of examples where tobacco companies defrauded the tax man, simply because tax and customs agencies are invariably subject to secrecy clauses. We tend to only know about the complicity of established, licensed tobacco companies in criminality where a case is referred to court and becomes a matter of public record and where they are no longer subject to the secrecy clauses imposed by legislation. Consequently, much of the criminality on the part
