Philippe Boucher's Rendez-vous with . . .Luk Joossens
Consultant about tobacco smuggling for WHO and UICC Brussels, Belgium
Rendez-vous with . . .Luk Joossens
By Philippe Boucher
Tuesday, February 19 2002
PB : Thank you Luk for accepting our rendez-vous.
May I ask you to introduce yourself ?
Luk Joossens: My name is Luk Joossens. I am a sociologist and for almost 25 years I have been involved in tobacco control in Belgium and 15 years in European and global tobacco control. I started in 1977 by doing research on the effectiveness of anti-tobacco campaigns and made visits to the Netherlands, UK and France. In the UK, I met for instance Mike Daube, Director of ASH and Martin Raw, a cessation specialist. In 1979 I became interested in the legislative aspects of tobacco control and started to lobby for a ban on tobacco advertising in Belgium. My main interests in tobacco control were clear: economics, politics and lobbying. In 1988 my life as a activist changed as I was approached by the European Commission to create an information office on smoking prevention in Brussels.
In 1988, BASP was created: The European Bureau for action on smoking prevention. I became the Director and was also a consultant to the European Commission on smoking prevention. Wonderful times and a direct contact with the Commission on all aspects of tobacco control in the EU and with all the smoking prevention organizations in the countries of the European Community.
The industry didn't like the activities of BASP and it seems even that they planned to bribe me in 1990. BASP was an exciting experience, but it ended in 1994-95 as the services of the Commission felt that we became a "too effective anti-tobacco organization".
The Commission also didn't like my comments at the World Conference in Paris in 1994 on the generous EU support for tobacco growing. ( $ 1 billion a year). The BASP financing was stopped in 1995. In 1995 I became the spokes person of the Belgian Coalition against tobacco and in 1996 consultant to the International Union against Cancer. On my birthday I obtained finally a ban on tobacco advertising in Belgium in 1997 and together with many European colleagues, we obtained an European advertising ban in 1998, which was annulled in the European Court of Justice in 2000. At global level, I am involved in activities to combat cigarette smuggling, I do technical work for the World Health Organization on the Framework Convention on Tobacco Control and tobacco smuggling and I published in 1995 and 1998 the first articles, with Martin Raw, on the possible involvement of tobacco industry in cigarette smuggling.
Q1. In a recent presentation you gave at the Second World Conference on Modern Criminal Investigation, Organized crime and human rights (Durban, December 7 2001) you quoted US Surgeon David Satcher: "Worldwide, only two thirds of exported cigarettes appear as legal imports. The missing cigarettes are probably smuggled." Can you elaborate about the magnitude of tobacco smuggling, how the US multinationals are eventually involved although they vehemently deny any wrongdoing?
Luk Joossens: According to the tobacco trade report " World Tobacco 2002" a major feature of the World cigarette market is the continued growth in smuggling and counterfeit trade, which accounts for a minimum of 8% of the world cigarette consumption at around 400 billion pieces. Smuggled tobacco products represent both a threat to public health and to government treasuries which are losing thousand of millions of dollars or euro in revenue.
Smuggled cigarettes deprive governments of billions of dollars in revenue and became a major concern for governments and international organizations such the World Health Organization, the World Customs Organization, the World Bank, the International Monetary Fund and the International Criminal Police Organization (Interpol). At a conservatively estimated average tax of $1,25-1,50 per cigarette pack (this much higher in most developing countries) cigarette smuggling (20 billion packs) accounts for $25-30 000 million being lost by governments annually.
Despite its professed opposition to criminal activity, the tobacco industry benefits from smuggling in several ways:
Since 1997, there have been several court cases and official investigations in different part of the world which accused the industry of supplying the smuggled cigarettes or at least of being aware of the illegal destination of their products.
For instance, a former BAT executive was found guilty by the Hong Kong's High Court for his role in his role in an operation that smuggled cigarettes into China. In 1998, a major tobacco company was convicted for actively breaking the law to assist in a smuggling operation. An affiliate of RJ Reynolds International pled guilty to charges of helping smugglers illegally reroute export cigarettes into Canada. It is clear that more and more governments now feel that the tobacco industry has a case to answer in relation to smuggling. BAT is under investigation by the UK Government Department of Trade and Industry over tobacco smuggling. In recent years Canada, Colombian Governors, Ecuador, the European Community and ten EU Member States (Italy, Germany, Spain, France, Finland, Belgium, Netherlands, Portugal, Greece and Luxembourg) and Honduras and Belize have filed lawsuits against international tobacco companies for smuggling. According to the EU Complaint, cigarette companies RJR and Philip Morris control, direct, encourage, support, promote, and facilitate the smuggling of cigarettes into the European Community in a variety of ways, for instance by selling cigarettes directly to persons or entities they know, or have reason to know, are smugglers, or to distributors who they know, or have reason to know, are selling the cigarettes to smugglers.
Q2. What are the main health consequences of tobacco smuggling?
Luk Joossens: Taxation is considered one of the most effective measures for reducing tobacco consumption. The tobacco companies oppose such increases and are increasingly relying on the argument that higher taxes are an incentive for smuggling.
According to the industry, an increase of cigarette taxes will only reduce legal sales, but not total sales. The smuggling issue has become now the argument most used by the industry to counter the policy of those governments who want to reduce the consumption of tobacco through taxation. There is another reason why smuggling poses a serious threat to public health. Smuggled cigarettes are sold at a lower price, making cigarettes available cheaply, thereby increasing consumption and undermining efforts to keep youngsters from smoking. Smuggling makes top international brands available at affordable prices to low-income consumers, and to image-conscious young people in developing countries where western products are regarded are sophisticated and stylish. A third reason of concern is that contraband cigarettes evade legal restrictions and health regulations, such as selling to minors, labeling requirements, and regulations on additivesŠ Finally, more smuggling of cigarettes also mean more opportunities for organized crime networks in other areas such as drugs and may increase the general level of corruption in a country.
Q3. In a memorandum submitted on February 1 by the attorneys representing the European Union against Reynolds and Philip Morris, they link cigarette smuggling and terrorism. Can you explain what happened (is still happening) as far as the distribution of US brand cigarettes in Iraq is concerned?
Luk Joossens: In the same week that President Bush announced the "axis of evil", the European Community filed documents in the NY Court that US tobacco companies have distributed their products through the European Community and into Iraq. According to these documents, it is hard to exaggerate the scope of these operations as since August 1999 approximately 5,7 billion cigarettes - during a time when both RJR and Japan Tobacco had responsibility for the management and the oversight of the operations- were distributed to Cyprus and a substantial percentage of those cigarettes were destined for Iraq. Shipments into Iraq involved the Kurdistan Workers' Party, known as PKK, which is considered by the U.S. as a terrorist group. According to these documents, among those who made a profit of these illegal trade is Uday Hussein, son of Saddam Hussein, who is said to be Saddam Hussein's "heir-apparent".
One should know that already in the past the regime of Milosevic in Yugoslavia made profit of the illegal trade of British and American cigarettes .
Q4. Colombia is another place where US multinationals (mostly Philip Morris?) have been accused of being part of a huge smuggling plot involving money laundering for narcotraffickers. How does that work?
Luk Joossens: The pleadings in the Colombian governors' case against PM and BAT state it simply: "Since at least 1991, the Philip Morris defendants were selling cigarettes to individuals whom they knew were reputed drug smugglers". The link between drug money, money laundering and cigarette smuggling was also made by Alex Solagnier who worked at a company in Aruba's free trade zone who managed the cigarette operations of BAT into Colombia. In an interview with a Dutch newspaper "Trouw" (January 21, 2002) the money laundering operations were described in the following way. "Once he (Alex Solagnier) carried a suitcase with American dollars through customs in Aruba. Straight from Columbia. It was at the time that you could still get away with almost anything on Aruba.
"I carried more than a million in cash. As long as you could show just a few receipts to the custom officials, they let you through" says Alex Solagnier. "Of course I knew that a lot of the money came from drugs. You always picked up your money in cash in Columbia. That's the way business with this country was done for some 80 years. The bank accepted the cash bills and made sure it was placed in your account".
Lawyers representing the European Union, which has filed a lawsuit in New York against the American tobacco industry, have listed Alex Solagnier as one of their witnesses. In a letter to Judge Nicolas Garaufis, one of the lawyers has requested that Solagnier's testimony be heard as soon as possible to protect Solagnier's personal safety. "There will be less motivation to assassinate him when his testimony has been preserved," writes lawyer Kevin Malone in his letter to Judge Garaufis.
Q5. . A report titled "Coveting Iran, the infiltration and exploitation of Iran by global cigarette companies" (September 2001) details how Reynolds and Brown and Williamson operated in this region. The conclusion: "It is difficult to imagine how the tens of billions of smuggled cigarettes required to supply about half the Iranian market each year could be effectively supplied without the complicity of the manufacturers." Considering the major scale of this illegal trade, what can be done?
Luk Joossens: The example of Iran is amazing: it is a low tax country and still two third of market are smuggled cigarettes of Western tobacco companies. Smuggling can be explained to a great extent by the supply of the illegal cigarettes. The role of industry is difficult to deny. In general, the tobacco industry makes cigarettes available to the illegal market by exporting to countries which are not their final destination. Wholesalers in these countries may then directly or indirectly sell to smugglers.
The real solution to the problem therefore must be to control, through international treaty, the transport of this valuable and dangerous product. One of the problems has been that the manufacturers have been technically within the law, arguing that what dealers do with their (legally sold and bought) cigarettes is not their business. Similar arguments have proved socially and politically unacceptable when the product is arms, and so we recommend that tobacco export and transit should be controlled by mechanisms similar to arms control mechanisms. Since October 2000 the World Health Organization has started negotiations for a Framework Convention on Tobacco Control. A specific protocol could deal with tobacco smuggling. It could, for instance, require chain-of-custody markings on all packages of tobacco products, placing the onus on the manufacturers to show that cigarettes arrive legally in their end-user markets. Manufacturers might also apply for export licenses for cigarettes. Only such action at international level will resolve the problem, but it has now been shown to be soluble.
PB: Thank you Luk for taking the time to be with us today.
P.S: additional info about tobacco smuggling can be found on http://www.public-i.org/story_01_030301.htm and on the CTFK site, "Illegal pathways to illegal profits": http://www.tobaccofreekids.org/campaign/global/framework/docs/Smuggling.pdf
Rendez-vous is supported by a contract from the Robert Wood Johnson Foundation
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