Black Market Billions: How Organized Retail Crime Funds Global Terrorists (Gal Zentner's Library) (27 page)

In the U.S. alone, a study suggests that states are losing about $5 billion annually in tax revenue because of illegal tobacco sales. In the case of cigarette schemes, authorities are seeing more organized crime and international rings supplanting mom-and-pop stores, such as corner delis and local tobacco shops.
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Researchers estimate that 30% of internationally exported cigarettes, or about 355 billion, are lost to smuggling.
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Globally, it’s estimated that governments lose almost $40 billion to $50 billion in tax revenues annually.
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Cigarette Smuggling Funds Local Terrorism Around the World

RJR’s alleged illicit sale of cigarettes through Europe and parts of the Middle East accounts for only a fraction of the cigarette smuggling going on worldwide that is also funding criminal acts, such as terrorism in Latin America, Africa, and Ireland. In West and North African countries, 80% of the cigarette market is illicit, meaning that most of the smoking going on in these countries profits criminals. Of that 80%, millions are used to fund terrorist groups such as al Qaeda in the Islamic Maghreb (AQIM), a group backed by Osama bin Laden. According to a document published by the United Nations Office on
Drugs and Crime (UNODC), revenue from cigarette smuggling in West Africa (around $775 million) is greater than Gambia’s entire national gross domestic product.
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The Group of Experts, a committee within the U.N. Security Council, reported that Tibert Rujugiro Ayabatwa, a tobacco tycoon who owned Mastermind Tobacco Company, which produced Yes cigarettes, and the Congo Tobacco Company, which produced Supermatch cigarettes, pled guilty to cigarette tax evasion charges in South Africa. He was funding a Congolese Tutsi-backed rebel group called the Congress National Pour la Defence du Peuple (CNDP).
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According to the report, The Group of Experts uncovered e-mails and gathered testimony from individuals who claimed Rujugiro had been supporting the CNDP through cash payments and supplies and that he paid the rebel group to allow the traffic of his untaxed cigarettes. What’s more, authorities apprehended 97 million contraband cigarettes in Ghana in 2009. The cigarettes were manufactured in the United Arab Emirates and had “Sale in Ivory Coast” stamped on the boxes. They were destined for Mali, a country in which they were not licensed for sale.
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The leader of the CNDP, Laurent Nkunda, was behind many serious human rights abuses, including mass murder, torture, rape and forced recruitment of children, and slavery, according to the Group of Experts report. He used the sale of illicit cigarettes to fund these atrocities.

The report also notes that Commandant Jerome, leader of the Ituri armed group Forces Armees du Peuple Congolais (FAPC), conspired with Ugandan business and political leaders to put in place a network that generates import transit tax-related revenue on both sides of the border through the sales of fuel, cigarettes, and soft drinks. In turn, he enjoys ongoing military and financial ties with Uganda.
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The illicit trade pact between the FAPC and the Ugandan government violates Security Council resolution 1493 (2003) of July 28, 2003, imposing an arms embargo for an initial period of 12 months. The embargo requires all states, including the Democratic Republic of the Congo,
to take necessary measures to prevent the direct or indirect supply, sale, or transfer of arms and any related material, and of any assistance, advice, or training related to military activities, to all foreign and Congolese armed groups and militias operating in the territory of North and South Kivu and Ituri.
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However, the sale of and proceeds from contraband cigarettes along the well-traveled “Salt Roads of the Tuareg” (which expand across the sand plains of Niger and into the mountains of the Algerian south) is now known as the Marlboro Connection. It allows the FAPC to obtain arms despite the embargo.

Like Western Africa, Latin American drug routes also serve as cigarette smuggling routes, earning the Marxist-based insurgency known as the Revolutionary Armed Forces of Colombia (FARC) millions of dollars in revenues from cigarettes smuggled into the U.S. The FARC, whose funds mostly come from being the world’s largest supplier of cocaine, also make money by imposing taxes on coca growers. In written testimony to the House Committee on the Judiciary in 2000, Ralf Mutschke revealed that “U.S.-manufactured cigarettes, especially Marlboros, Kents, and Lucky Strikes, made up a large portion of the trade goods that were smuggled into Colombia, and FARC was financed by this process.”
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Lucky Strike is a brand under the RJR Corp. umbrella.

When the IRA splintered into two different groups, funding from cigarette smuggling remained consistent. While the Provisional IRA announced in 2005 that it would use peaceful means to get its message across, the more radical Real IRA continued to use tactics including car bombings, robberies, kidnappings, and assassinations, often targeting senior British government officials and the British military police in Northern Ireland, according to globalsecurity.org.

In March 2009, an American businessman, Roman Vidal, was accused of masterminding a cigarette smuggling ring that netted the Real IRA hundreds of thousands of pounds. Vidal used a Miami-based freight company as a front to import hundreds of millions of cigarettes from Panama into Miami. Vidal would then hide the
contraband cigarettes in freight bound for Dublin to avoid paying 1.5 million euros in taxes. The investigation began based on a tip to U.S. customs agents. The shipments came into Ireland by way of Panama and allegedly funded the execution of two British soldiers who were gunned down while waiting for a pizza delivery car.
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According to Sean Murphy, deputy chief executive of Chambers Ireland, a business organization in Ireland, cigarette smuggling costs the country at least 300 million euros in lost earnings from taxes and duty. This estimate should be multiplied by four or five to take into account income tax not collected because workers are not employed, or corporation tax decreases because of depressed profits.
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Drug and tobacco smuggling might be the main way insurgent groups get most of their funding, but terrorism and criminal finance investigator Larry Johnson notes in an interview that it’s much easier to crack down on the flow of legal products. “You need to ensure that the products are being sold through legitimate channels through legitimate distributors—that they’re not committing willful blindness,” he says. “The contraband is fairly easy to deal with because it’s in the power of the distributors and producers to control the process. This is actually one of those few problems that are fixable.”

Chiquita International Brands: “Either You Pay Me, or I Am Going to Kill You.”

Wandering through the fruit section of the grocery store, the last thing you would think would fund terrorism would be the purchase of bananas. But in 2008, buying a bunch of Chiquita or Dole Foods bananas did just that.

Deep in the jungles of Colombia and far from their Midwestern roots, the executives who oversee Chiquita Corp. in South America had to make a decision. They could either protect their employees at the banana plantation from the Colombian paramilitary groups by
paying them off, or risk their lives for working there. In an interview with CBS News’
60 Minutes
, Fernando Aguirre, Chiquita’s current chairman and CEO, explained that the company was forced to pay taxes to the guerrillas who controlled the territory in the late 1980s and 1990s and again to the paramilitaries known as the United Self-Defense Forces of Colombia (AUC) when they occupied the same area in 1997. “It was a dilemma of having literally a gun pointed at your head, where you have someone who says, ‘Either you pay me, or I’m going to kill you, or I’m going to kill your employees.’”
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For more than seven years (1997 to 2004), Chiquita paid the guerillas and the AUC more than $2 million to “keep the employees safe.” However, the money was also being used to fund purchases of illegal weapons that massacred thousands of people. These atrocities included the beheading of a 12-year-old boy in front of his school classmates.

In October of 2001 the U.S. government amended the law originally enacted by Secretary of State Madeleine Albright designating paramilitary groups as terrorist organizations. This made any sort of financial assistance, whether coerced or not, a felony. Chiquita continued to make payments to the AUC despite the passage of this law, claiming that it missed the government’s announcement.

“What I know is all the data shows that the company, the moment it learned that these payments were illegal in the U.S., that’s when it decided to self-disclose to the Department of Justice,” says Aguirre.

In 2007, the Chiquita Company pled guilty to a felony and was ordered to pay $25 million in fines. The Justice Department originally planned to prosecute Chiquita executives, including former CEO Cyrus Friedheim, Jr., and board member Roderick Hill, but those charges were eventually dropped. This decision infuriated the Colombian government. The prosecutor general proclaimed he would start his own investigation that included a possible extradition of Chiquita’s executives to Colombia to stand trial.

Chiquita was the first American multinational corporation convicted of financing terrorism.

But paying the U.S. government more than $25 million in fines was the least of the fruit company’s worries. In April of 2010, 250 Colombians who claimed they and their relatives were victims of the violence carried out by the AUC filed a lawsuit against Chiquita. The lawsuit sought $1 billion in damages,
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alleging that the company willingly funded a terrorist organization that regularly committed atrocities.

This case came on the heels of another lawsuit filed by the families of five missionaries who were abducted and killed in Colombia by FARC guerrillas when their mission group, The New Tribes Mission Group in Florida, refused to pay a ransom. Similar to the families victimized by the AUC, the Miami-based missionary family members sought close to $780 million in damages
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because Chiquita knowingly gave money to the FARC after it fell under the Foreign Terrorist Organization (FTO) designation. The suit claimed that the money helped fund the group’s operations at the time the killings occurred.
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In February 2010, almost three years after the case was filed against Chiquita Brands, U.S. District Judge Kenneth Marra in West Palm Beach, Florida, ruled that the lawsuit would not be dismissed. He noted that the missionaries did not have to prove a link between money paid and each individual crime. “The factual allegations of the (lawsuit) detailing extensively coordinated secret payments and fraudulent concealment sufficiently support an inference of the conspiracy between Chiquita and (the terrorist group),” Marra said in the ruling.
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Judge’s ruling or not, Chiquita still denied all allegations. A statement issued by Chiquita Brands spokesperson Ed Loyd said, “We [Chiquita] were clearly extorted. We don’t share the same ideology of those groups. That’s not the type of business we practice or we would engage in.”
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The Chiquita case was just the tip of the iceberg according to U.S. Representative William Delahunt (D-MA), who chairs a House
Foreign Affairs subcommittee. Delahunt spearheaded a congressional investigation that involved spending four days in Colombia meeting with paramilitary bosses Salvatore Mancuso, Rodrigo Tovar (“Jorge 40”), Edgar Velosa (“HH”), Diego Fernando Murillo (“Don Berna”), and Carlos Mario Jimenez (“Macaco”) to talk about other multinational American companies giving payouts to paramilitary groups and guerillas in the same area. Delahunt didn’t want to disclose which companies were discussed during his conversations and therefore remained vague about other multinational involvement, but he was adamant that they were willing participants. “They [paramilitary bosses] were very specific and clear on the relationships between themselves and American companies,” he said.
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Dole Foods’ Involvement with the Colombian Paramilitary

If Delahunt wouldn’t call out the other companies involved, Mancuso (the former head of the AUC) would. During the same
60 Minutes
interview, Mancuso specifically named Dole Foods and Fresh Del Monte Produce. Mancuso helped negotiate the “Justice and Peace” program, in which almost 30,000 paramilitaries were allowed to disarm, surrender, and receive reduced jail time if they confessed to all crimes. It was in this confession that Mancuso and others claimed Dole Foods involvement.

“Was Chiquita the only American company that paid you?” interviewer Steve Kroft asked Mancuso.

“All companies in the banana region paid. For instance, there was Dole and Del Monte, which I believe are U.S. companies,” Mancuso said.
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Mancuso went on to explain that both of these companies had a choice of who would protect the plantation workers, including the local police, the army, or the guerillas. But he also noted that “the police could barely protect themselves.”
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In April 2009, 73 families of those who died at the hands of the AUC filed a wrongful death lawsuit against Dole Foods. They claimed that the 73 people were killed at the hands of the paramilitaries working as a “local police force” hired by Dole Foods in and around company-owned plantations. According to court documents, the AUC would use violent tactics on behalf of Dole Foods to allow Dole to plant banana trees. This included driving small farmers off their land, driving leftist guerillas out of banana zones, keeping unions out of Dole by murdering union leaders, and using terror tactics to discourage workers from joining the union, all while murdering thousands of innocent people in the process.