British Smuggling Scandal (fwd)

[Robert Weissman <rob@essential.org>]

BBC Online
             Monday, November 9, 1998 Published at 03:53 GMT 

             Business: The Company File

             Cigarette giants in
             'smuggling scandal' 

             Cigarette smuggling from Andorra to Britain is rife 

             Leading British tobacco firms have sold millions of
             cigarettes to customers overseas knowing that they
             would be smuggled illegally back into the UK, according
             to documents unearthed by the BBC's Money
             Programme. 


                           Gallaher, which produces best selling
                           brands such as Silk Cut and Benson
                           & Hedges, stands accused of
                           shipping cigarettes into the tiny
                           principality of Andorra, sandwiched
             between France and Spain in the Pyrenees, even though
             they were aware that the cigarettes were destined to be
             smuggled back into the UK. 


                                 The number of British-made
                                 cigarettes imported into
                                 Andorra increased over a
                                 hundred-fold from 1993 to
                                 1997. 

                                 According to UK customs
                                 officials Andorra was the
                                 largest source of smuggling
                                 in Europe, importing nine
                                 million cigarettes a day but
                                 officially exporting none. 

                                 In other words either every
             man woman and child was smoking 140 cigarettes a day
             or they were being smuggled out. 

             Spanish police believe that of the smuggled cigarettes
             about half were British brands. 

             The programme has obtained a confidential report from a
             European Union task group revealing the close
             relationship between British tobacco manufacturers and
             their importers in Andorra. 

             EU evidence 

             Per Brix Knudsen, chief EU fraud investigator, told the
             Money Programme that the cigarette manufacturers
             must have been aware that the sudden increase of the
             brands of cigarettes to Andorra could not be explained
             by any legal supply to a normal commercial market. 


                                 Asked if he was suggesting
                                 that manufacturers were
                                 knowingly selling to
                                 smugglers Mr Knudsen said:
                                 "We find it difficult to seen
                                 how they could avoid
                                 knowing that." 

                                 Challenged by the Money
                                 Programme, the Chief
                                 Executive of Gallaher, Peter
                                 Wilson, said: "We will sell
                                 legally to our distributors... if
                                 those distributors
             subsequently sell those products on to other people who
             are going to illegally bring them back into this country,
             that is something totally outside our control." 

             Smuggling explosion 

             Cigarette smuggling into the UK has exploded over the
             past few years, costing the government £600m in lost
             tax revenues. 

             Customs officials believe that around one in 10 of all
             cigarettes sold now in Britain are contraband, and that
             figure is increasing all the time. 

             The price gap between cigarettes in Britain and
             neighbouring countries is getting wider. 

             After the latest 21p hike in duty, due to come into force
             next month, 20 Benson & Hedges cigarettes will cost
             about £3.50 in Britain compared to just £1.79 in France
             and £1 in Andorra. 

             Around 70% of the rolling tobacco smoked in Britain is
             thought to be smuggled into the country without paying
             duty. 

             The UK Tobacco Manufacturers Association blamed the
             government for the increasing amount of tobacco
             smuggling. 

             John Carlisle, spokesman for the association, said: "By
             increasing taxes and encouraging smuggling we are
             getting the worst of all worlds."