Big Tobacco
| May 6, 2002
thenation.com
Page 1
by MARK SCHAPIRO
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.
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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