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Maicao's 70,000 inhabitants are divided between the Way'uu and a population of Middle Eastern immigrants--Colombians who emigrated from Lebanon, Syria and elsewhere in the Middle East. Historically, the Way'uu and the Turkos--as those with Middle Eastern roots are known--have divided the contraband trade between them. The mostly Muslim Turkos trade in textiles, appliances and other consumer products, leaving the vices of alcohol and cigarettes to the Way'uu.

"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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But the Way'uu do not perceive themselves as criminals in any sense of the word. Since Colombia passed a new Constitution in 1991, decentralizing federal power, the tribe has been in charge of most of La Guajira; the bulk of the state is a reserva indigena, in which they enjoy a limited form of autonomy. From the Way'uu perspective, they are merely traders--their main economic activity for centuries.

"Asi es la vida," says Francisca Sierra, a Way'uu community leader and trader in Maicao, shrugging her shoulders as she explains the tribe's longtime role as renowned smugglers. That history predates even the formation of modern-day Colombia, which revolted against the Spanish in 1814. It was the Way'uu and ranchers in Santander province who helped spark that rebellion, when they refused to pay taxes on cigarettes and coffee imposed by the Spanish--Colombia's own Boston Tea Party. For 300 years, the Way'uu have facilitated the entrance of foreign products into Colombia below the noses of the national authorities.

In the last decades of the twentieth century, the Way'uu of La Guajira became a critical link in a chain of commercial relationships stretching from the tobacco farms of the southeast United States to corporate boardrooms in Louisville, New York and London, to tax havens like Aruba and Panama, and on into the interior of Colombia. Maicao itself is part of a special free trade zone, but once goods leave that zone, they become contraband. The Way'uu were the ones who unloaded the ships in Portette and then drove the trucks south out of Maicao into the interior, providing Philip Morris and BAT a detour around the tariffs that once made Colombia one of the more restricted markets in Latin America. The Federation of Colombian Departments, representing the country's state governments, estimates that the cigarette contraband cost them more than $500 million in tax revenues over ten years--revenues that would have paid for social projects like education and healthcare, including treatment of the health effects of smoking.

Statistics compiled by Roberto Steiner, an economist and director of the Center for the Study of Economic Development at the University of the Andes in Bogotá, indicate how smuggling served the tobacco companies' long-term interests. The boom in cigarette smuggling into Colombia in the 1990s, according to Steiner, coincided closely with Philip Morris's emergence as the dominant player in Colombia's cigarette market. As the companies sold tax-free cigarettes at prices comparable to those of Colombia's homegrown brands, smokers in Bogotá, Cali, Medellín and elsewhere throughout the country became accustomed to "prestigious" imports like Philip Morris's Marlboro, Brown & Williamson's Kool and BAT's Kent. From 1984 to 1993, says Steiner, the number of cigarettes illegally imported into the country quadrupled. Meanwhile, domestic cigarette producers' share of total cigarette sales dropped from an 85 percent market share in 1984 to just 30 percent in 1993. Colombia used to have a thriving domestic tobacco industry, but since 1984 the amount of hectares devoted to tobacco crops has plummeted. As the domestic cigarette industry imploded, many tobacco farmers made the shift to Colombia's far more famous addictive crop, coca.

A comparison of Colombian tobacco imports with US tobacco exports reveals just how many contraband cigarettes were being shipped southward from the United States. According to the US Department of Agriculture's Economic Research Service, $21.6 million worth of cigarettes--1.06 billion sticks--were exported from the United States to Colombia in 1996. In that same year, the Colombian Department of National Statistics (DANE), officially recorded $10.7 million worth of cigarettes--just over 800 million sticks--as having been legally imported into the country from the United States. That discrepancy between exports and imports appeared through most of the 1990s.

Internal company documents dating back to 1991, made available as a result of the 1998 states' settlement and introduced as evidence in the Colombian lawsuit, reveal how Philip Morris and BAT were battling for market share during this time--the same period in which the overwhelming bulk of cigarette smuggling to Colombia occurred. The record, for example, of a January 14, 1992, meeting in Miami held by BAT executives representing the company's wholly owned subsidiaries in the United States (Brown & Williamson), Brazil (Souza Cruz) and Venezuela (Bigott), under the heading "Colombian Group Meeting Minutes," shows officials discussing cigarette marketing in Colombia, indicating the per-pack, no-tax price in pesos in 1991, a year in which the company had negligible legal cigarette exports to the country. The minutes noted that the company would begin selling "duty paid"--i.e., legally imported cigarettes on which taxes are paid--in the coming year, 1992.

A document covering roughly the same period from the Philip Morris International division, titled "latin america region Strategic Plan," provides a listing of prices for its "duty-free" customers in La Guajira and Aruba for the years 1991-93. During this time and into the late 1990s, Philip Morris was advertising heavily and maintaining an office in Bogotá, while the company's legal imports amounted to, as Steiner put it, "close to zero."

In fact, both BAT and Philip Morris were deploying mass advertising and discount marketing, and were providing favorable financing terms to their distributors in the battle for market share, when their sales were almost entirely illegal. Documents from both companies reveal the intense competition and propose measures such as discounts to wholesalers, contests and free gifts to outflank each other. "Plans for 1992," Brown & Williamson minutes from a 1991 meeting state, "are to offer a 5% free goods incentive in Maicao and in the San Andresitos to expand distribution in Bogotá and Medellín." ("San Andresitos" is a colloquial reference to the kiosks that abound in Colombian cities selling smuggled goods; the name came originally from the Colombian island of San Andres, located off the east coast of Nicaragua, which itself has served as a key smuggling center.)

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