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Big Tobacco | The Nation

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Big Tobacco

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Tobacco is one of the most globalized industries on the planet. More cigarettes are traded than any other single product, some trillion "sticks," as they're known in the business, passing international borders each year. As a result, American brands have been propelled into every corner of the world, with just four companies controlling 70 percent of the global market. Marlboro, Kool, Kent: They have become as omnipresent around the world as they are here in the United States. With declining sales in this country, foreign markets have become increasingly critical to the tobacco companies' financial health: The top US tobacco firms now earn more from cigarettes sold abroad than in the United States. How they got there is a tale that leads straight into a global underground of smugglers and money launderers who have played a key role in facilitating the tobacco companies' entry into foreign markets.

"Is Smuggling a Patriotic Act?" is a condensed version of this investigative report. Read Philip Morris's reponse to this report. And check out the NOW With Bill Moyers website for many other related resources.

About the Author

Mark Schapiro
Mark Schapiro is a longtime environmental journalist and lecturer at the University of California at Berkeley Graduate...

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A six-month investigation by The Nation, the Center for Investigative Reporting, and the PBS newsmagazine show NOW With Bill Moyers (which airs its investigative report on April 19), has unpeeled the many layers of a complex distribution system of a multibillion-dollar trade in smuggled cigarettes. Twenty-five percent of exported cigarettes, according to the World Health Organization, are smuggled. Smuggling has enabled multinational tobacco companies to increase sales volume dramatically by evading local tariffs and competing head to head with domestic producers, thereby helping to establish internationally recognizable brands.

The smuggling has landed the tobacco companies in US court. Lawsuits filed by European and Canadian governments and Colombian state governments against Philip Morris and British American Tobacco (BAT, Brown & Williamson's British-based parent company) have highlighted the companies' alleged links to smugglers and money launderers. Documents released as a result of the historic $200 billion-plus settlement with US state attorneys general in 1998 also provide a glimpse into the way the companies devised advertising and distribution strategies that helped fuel the market for smuggled cigarettes. The companies stand accused of violating the Racketeer Influenced and Corrupt Organizations Act (RICO), of defrauding governments of hundreds of millions in tax revenues and of hiding and ultimately taking the illicit profits back to the United States, which constitutes money laundering.

As the cases were unfolding just one month after the September 11 terrorist attacks, the tobacco companies--with support from the White House--fought back in the US Congress, where they took advantage of the nation's distraction to win changes in the USA Patriot Act in a brazen effort to shield themselves from liability. But their headache has not gone away. The cases are still winding through the courts, and the companies' attempts to evade accountability are the focus of growing international outrage.

Underground in Colombia

I went to Colombia, a country infamous for smuggling exports to the United States, to see how the flip side of that equation--smuggling from the United States to Colombia--worked for more than a decade.

The journey from the main tobacco hubs in the United States to Colombia has been a circuitous one, a route designed for ease of smuggling rather than ease of transport. From the modern, state-of-the-art ports of Wilmington, North Carolina, and Miami, huge cranes lift pastel-colored containers loaded with 10,000 kilos of cigarettes apiece onto cargo ships with the routine rhythms of oversized insects. Transiting through the free zones of Panama and Aruba, by the end of their journey at Colombia's La Guajira port of Portette, they might as well have traveled back in time. The bawdy port is what one anthropologist who studied the region calls a "phantom town"--it's not included on maps of the country and has had, until recently, few connections to the official structures of the Colombian government.

The hot, sparsely populated province of La Guajira, which sticks out of Colombia's Caribbean coast like a thumb, is home to one of the country's strongest indigenous tribes, the Way'uu. Last winter, when I visited, torrential rains knocked out the bridge between Santa Marta and Barranquilla, making coastal travel impossible. The road through the Sierra Nevada mountain range between Riohacha--the provincial capital on the coast--and Valledupar, the closest major city in the interior, runs through territory disputed by the ELN guerrilla movement and right-wing paramilitary groups. For parts of the year, the only way into La Guajira is by air or boat.

Colombia's other Caribbean ports, Santa Marta and Barranquilla, host sophisticated trucking and railroad depots right on the docks that are designed to facilitate the movement of large quantities of duty-paid cargo into the Colombian interior. Portette has no such facilities. It is a port designed, quite literally, for smugglers--and it's here that the schooners and creaky old ships from throughout the hemisphere pulled into Colombian waters with their crates of Johnnie Walker and Old Parr, and name-brand sound systems and electronic appliances, bales of textiles and those telltale cartons of Philip Morris's Marlboro and Brown & Williamson's Kool.

From Portette, trucks travel for two hours over a single rutted, mostly dirt, road to the town of Maicao, a dusty outpost of weatherbeaten shop-fronts and mud-splattered stucco buildings. In Maicao, young men are perched on stools along the side of the road amid plastic containers full of gasoline--skimmed from Venezuelan tankers and sold at a tax-free discount. Above them, a sign looms in peeling blue and yellow paint: Welcome to the Commercial Hub of Colombia. Maicao has for decades been the primary transit center in La Guajira for contraband headed for Colombian markets. The sight of brand-name whiskies, stereos, shampoos, car parts and cigarettes provides a jarring contrast to the muddy streets and crumbling kiosks where many of these products are sold.

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