Trail of Venezuela’s Stolen Billions Leads to Caribbean Luxury Properties
People linked to alleged corruption in Venezuela appear to have invested millions in luxury properties in the Caribbean.
In January of this year, I got an email from a man calling himself “Jose.” Like dozens of emails I get, Jose wanted us to do a story.
“I send you the attached documents for your information,” Jose said. He proceeded to quickly outline the basic allegations. Japan Tobacco, one of the world’s largest tobacco companies, was knowingly dealing with some of the most notorious smugglers in the tobacco business. A group of compliance officers tried to stop these relationships but were instead fired.
Investigative journalists are busy people. We have more stories than we can do. In Eastern Europe, the Balkans, Russia, Ukraine and the other places where the Organized Crime and Corruption Reporting Project (OCCRP) works, we are blessed with more great stories than most. Corruption is endemic. We cannot look at a major tender or privatization deal without finding open and wanton corruption. Whole countries in our region are essentially organized crime groups posing as sovereign states.
OCCRP is a consortium of investigative centers and our members have very limited resources – a typical budget for one of our centers is $50,000 for a year. Yet we face crime groups, oligarchs, corrupt politicians and even whole governments who have billions at their disposal.
So why should we care that some big tobacco company is dealing with a few dodgy distributors.
We care because, outside of drug trafficking, cigarette smuggling is the most profitable criminal activity and it is practiced by the very worst organized crime groups and the most corrupt, despotic politicians.
Tobacco Companies have for years turned a blind eye to smuggling. Their interest is selling packs of cigarettes whether they sell for $12 in the UK or 50 cents in Ukraine. The lower the price, the more they sell. So for years, they worked with smugglers. Their excuse was that they couldn’t be responsible for what happened to their cigarettes once they were sold. But it was clear to them who of their distributors were smuggling. Each case of cigarettes can be tracked and when they are seized by customs officials, they can be traced back.
In the mid-2000s, cigarette companies agreed not to smuggle and promised to form compliance teams. All of them did this. Our story is the first significant evidence that at least one company, JTI, may not be taking its responsibilities seriously. As one JTI executive in the story says, you make more money smuggling than you’d have to pay in fines. If this is the company attitude, the responsible bodies will need to revisit these agreements.
While JTI may be looking at a risk-reward decision, we all lose far more from their actions. When big tobacco companies smuggle, the true profits don’t go to them but to criminals. They still only make their initial sales price – 20-40 cents per pack. But the true beneficiaries are among the most corrupt and evil people on earth. It is well documented that groups like the Irish Republican Army, the Albanian mafia, Russian mafia groups, the Camorra and Sacra Corona Unita crime families in Italy and other violent local and regional crime groups make tens and hundreds of millions off cigarette smuggling.
These groups destabilize the region, corrupt politicians, kill journalists and prosecutors, blunt accountability and transparency and thwart democracy in emerging democracies. This affects us all.
And the names of political leaders who have benefited from cigarette smuggling is a who’s who of who we don’t want running countries: war criminal Slobodan Milosevic from Serbia, Milo Djukanovic, the leader of the crime state of Montenegro, and now Syrian president Bashar Al-Assad who is leading an all-out assault on his own people. The EU believes Bashar Al-Assad’s regime may be partially supported by cigarette smuggling through JTI’s distributors.
JTI is dismissing these claims saying the information is old and coming from employees who had an ax to grind. But the evidence shows they were still trading with many of the same distributors that got other tobacco companies in trouble in the first place.
The truth is that tobacco smuggling could be virtually wiped out as a wholesale business if tobacco companies were more serious about stopping it. Clearly, they are not. We can’t make organized crime groups stop their criminality. But maybe we can put pressure on the tobacco companies, however, to fulfill their pledges they made to governments around the world and maybe it is time for the EU to crack down on this enabling behavior once and for all.