Investigative Unit Fired after Warning of Criminal Activity

Executives of Japan Tobacco International (JTI) stood by as its distributors engaged in widespread cigarette smuggling in a dozen countries, according to company records, e-mails, secretly recorded conversations by investigators, and interviews with a half-dozen past employees.

When the company’s anti-smuggling unit cracked down on smuggling routes and raised questions about suspect distributors, JTI retaliated last year by hacking into the team’s computers, firing its leaders, and phasing out nearly a dozen contractors who knew about the smuggling, according to former employees.

This year, as Syrian president Bashar al-Assad killed his own people and faced worldwide sanctions, JTI's Middle East business partner poured cigarettes into duty free shops that the European Union says helped prop  up the regime, the records show.

JTI is the international arm of Japan Tobacco, the world’s third largest tobacco company and maker of such brands as Winston, Camel and Benson & Hedges.

The widespread smuggling occurred despite a 2007 JTI agreement with the European Union to crack down on illicit shipments.

The story is being released today by the Organized Crime and Corruption Reporting Project, a joint program of 11 investigative journalism centers in Eastern Europe and the former Soviet Union.

The internal JTI records were provided to OCCRP by sources close to the company. Six former employees confirmed the authenticity of the documents, which are available on the OCCRP website. Among the revelations:

• Smuggling incidents were reported almost monthly during 2009-10, but former employees said no action was taken in the company’s most profitable areas. Investigators suspected tens of millions of JTI cigarettes were being diverted to smuggling operations in the Philippines, Afghanistan, Jordan, Iraq and elsewhere, often with the help of JTI’s own distributors.
• When investigators received information that 13 JTI employees or distributors may have been working directly with smugglers, a senior JTI vice president blocked an investigation, according to company e-mails and internal memos.
• JTI contractors paid officials in Iraq, Kurdistan and Iran to get information on smuggling routes, according to company internal reports and interviews with contractors.

Executives at JTI headquarters in Geneva, Switzerland, declined to answer specific questions, but did issue a written statement blaming a “former employee’’ for spreading false information. “Our company does not wish to comment on the unfounded allegations raised in the various e-mails you sent us,’’ media relations vice president Guy Cote wrote in an e-mail.  

“If JTI has carried on aiding and abetting smuggling, then it’s clear that a regional agreement like that negotiated by the EU is insufficient,” said Deborah Arnott, chief executive of Action on Smoking and Health (ASH) in London. “When you have smuggling, you undermine public health, you invite crime and you rob tax payers of millions of pounds of revenue every year.’’

The Organized Crime and Corruption Reporting Project (OCCRP) is a joint program of the Center for Investigative Reporting in Sarajevo, the Romanian Center for Investigative Journalism, the Bulgarian Investigative Journalism Center, the Center for Investigative Reporting in Serbia, Novaya Gazeta, the Kyiv Post, HETQ in Armenia, re:baltica, Atlatszo.hu, SCOOP-Macedonia, MANS in Montenegro and a network of investigative journalists and media from Eastern Europe to Central Asia

OCCRP’s goal is to help the people of the region better understand how organized crime and corruption affect their lives. OCCRP seeks to provide in-depth investigative stories as well as the latest news pertaining to organized crime and corruption activities in Eastern Europe and the Caucasus.

The International Consortium of Investigative Journalists (ICIJ) has named the OCCRP a finalist for its prestigious Daniel Pearl Award.

ICIJ Judges announced Thursday that Offshore Crime, Inc., has been named as one of seven finalists for the award.

Offshore Crime, Inc. was the product a six month investigation into how organized criminal groups use offshore tax havens to launder money, hide assets, and evade taxes.    OCCRP reporters investigated offshore tax havens including the U.S. state of Delaware, the Cayman Islands, Seychelles,  New Zealand, Romania and Ukraine.

Djordje Padejski, an investigative reporter with the Organized Crime and Corruption Reporting Project and a founder of the Center for Investigative Reporting in Serbia, has been awarded a John S. Knight Fellowship to study at Stanford University.  He is one of only nine journalists named this year.

Five reporters form the Center of Investigative Reporting in Serbia were honored for their investigative series detailing the offshore empire of Balkan businessman Miroslav Misković.

OCCRP and the International Center for Journalists (ICFJ) in Washington and the Jefferson Institute in Belgrade announced their cooperation on a new regional investigative journalism initiative. The Regional Investigative Journalism Network (RIJN) project is a three year initiative funded by USAID that is designed to improve the capacities of investigative reporting centers.  It will also support crossborder investigative initiatives focusing on organized crime and corruption. The project will include work in Albania, Armenia, Azerbaijan, Bosnia-Herzegovina, Georgia, Kosovo, Macedonia, Moldova, Montenegro, Serbia, Russia and Ukraine.

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Recently, OCCRP partner, the Kyiv Post, was sued in London by Ukrainian oligarch Dymytro Firtash.

The OCCRP wishes to express its support for the Kyiv Post and believes that British courts are not the proper jurisdiction for this disagreement.  While libel and slander laws are in place to protect citizens from being wrongfully accused, the practice of libel tourism, or suing in a place where the libel laws are more plaintiff friendly, is wrong and should be considered tantamount to harassment of independent media.  The UK continues to have draconian laws and its courts continue to wrongfully accept the whole Internet as its jurisdiction.  OCCRP kindly asks the UK courts to stop saddling the world media with its aberrant and destructive laws.  Furthermore, it is totally inappropriate for British courts with British standards to judge a Ukrainian newspaper working under Ukrainian standards.  The Kyiv Post must report in their world -- the lawless and non-transparent environment that is Ukrainian business and politics.  It is the same environment that has allowed the plaintiff to flourish.  This is a Ukrainian issue best left to Ukrainian courts.  We urge the UK courts to reject this case.  They are not the proper arbiter.

The FLARE Network, an advocacy organization aimed at combatting organized crime,The Associazione Ilaria Alpi and Novaya Gazeta of Moscow have announced an award for Best International Organized Crime Video-Story ideas. The group will give €2000 Euros to help produce four stories on organized crime and/or corruption. The best of the four will be awarded an additional €2000 prize after airing.

More details and applications can be found here:
www.flarenetwork.org