How a Notorious Arms Dealer Hijacked Niger’s Budget and Bought Weapons From Russia
At least $137 million of public funds was stolen from one of the world’s least developed countries through corrupt arms deals.
Ukrainian Instagram influencer Lera Borodina coos with happiness as she unpacks the limited-edition aquamarine IQOS from its box and holds it up to the camera.
“Just look at this. This is the most beautiful color IQOS ever made,” she tells her audience of over 200,000 followers, turning the device to catch the light.
Inside the box is a note from IQOS Ukraine saying, “Giving gifts not on a birthday is allowed” — a reference to the company’s “можна” (“allowed”) advertising campaign launched in February to promote the device, which allows users to consume tobacco that is heated rather than lit with a flame.
Behind the marketing campaign for the “heated-tobacco device” is Philip Morris International (PMI), one of the world’s largest cigarette makers.
The video, posted on May 8, is one of dozens like it that have sprung up on Ukrainian social media since coronavirus spread across the globe, attacking the lungs of its victims. Many of them have been posted on the country’s official IQOS Instagram account during lockdown — including one from a singer aged just 19, well below PMI’s minimum age for promoters of 25.
(Philip Morris Ukraine said the company had no affiliation with the teenage singer’s accounts. See below for a fuller response.)
Ukraine is just one country where PMI is making an aggressive pandemic PR push as part of a broader strategy to portray IQOS as a healthier alternative to smoking cigarettes, in what experts have dubbed the “pharmaceuticalization” of the tobacco industry.
That trend has intensified during the pandemic as health authorities have warned smokers are more vulnerable to the COVID-19 virus, which attacks the lungs and tends to be worse for people with smoking-related conditions such as heart disease and diabetes.
In Mexico, PMI is still selling its products in stores that stayed open during the lockdown, despite government attempts to stop imports of heated tobacco devices. In Japan — a top IQOS market where cigarette sales are on the decline — the company may have taken out more advertisements than the tobacco industry’s self-imposed rules permit, many of them aimed at people stuck at home.
OCCRP and its partners found that PMI has been targeting people under lockdown all over the world, offering free delivery of heated tobacco products in at least 15 countries during the COVID-19 pandemic. In at least 11 countries, the company is offering free home trials.
PMI also said it has donated US$30 million in 62 countries to fight the pandemic. In some cases, reporters found, PMI has sidestepped rules forbidding tobacco companies from donating to governments by targeting charities in desperate need of funding.
Moira Gilchrist, PMI’s Vice President for Strategic & Scientific Communication, said all the company’s affiliates comply with local laws regulating marketing of smoke-free products.
“The totality of evidence available on IQOS confirms that it presents less risk of harm compared to continued smoking,” she said in a statement to OCCRP. “Some communications to consumers during the COVID-19 pandemic are aimed at existing adult IQOS customers, informing them that Heets can be sent to their home address.”
Days before Mexico went into lockdown, on February 19, President Andrés Manuel Lopez Obrador issued a decree prohibiting imports of heated tobacco products including IQOS and Heets tobacco sticks.
“This law already prohibited the commercialization of anything that seemed [to be] or was consumed as a cigarette,” explained Justino Regalado Pineda, Deputy Director of Pulmonary Health Care at the National Institute of Respiratory Diseases.
“What this decree does is that before, imports were not prohibited and there was a gap that the law… Now every device that you find today, in any store or boutique, is illegal.”
But neither the law nor the lockdown have stopped IQOS being sold in Mexico.
Philip Morris started selling IQOS products there in late 2019 after challenging laws prohibiting the devices. When Mexico’s president issued the February 2020 decree, the company presented a writ of “amparo,” a form of injunction in Mexican law designed to protect individual rights against governmental violations. As the lockdown stretched on, its heated tobacco products continued to be sold in the few shops that were allowed to stay open, including convenience stores like 7-Eleven and Oxxo as well the Sanborns chain.
Banned from advertising IQOS in traditional media, the company has turned to social media platforms to push its products instead, posting videos on YouTube and Facebook explaining how to clean the device or order spare parts to be delivered to your home.
The official IQOS Mexico Instagram account focused its output after lockdown on a stream of photographs of women in beautiful interiors enjoying IQOS at home.
“Take care — you’re important to us,” said a message posted on the page advising users that they could obtain IQOS products online “the moment you need them” as long as stores were closed due to the virus. “Visit our Facebook page, write to us, and one of our advisors will resolve your doubts.”
PMI has taken a similar approach during the pandemic in Colombia, selling its products online in virtual stores and advertising with the slogan: “Take care of yourself, we take care of your IQOS experience.”
Green Alliance Party senator Juan Luis Castro said the government needs to do more to stop heated tobacco products from being marketed as a less dangerous alternative to smoking during a public health crisis.
“It is very serious that in the midst of a pandemic, due to a disease that specifically affects the respiratory tract, these products are promoted as harmless,” he told OCCRP’s Colombian media partner Cuestión Pública.
“Public health is a serious matter and the government, the Ministry of Health and the Superintendency of Industry and Commerce have not wanted to pay attention to this.”
Philip Morris International denied that it promotes IQOS as a medical device or means to quit smoking. “PMI does not—and never has — promoted IQOS or any smoke free product as cessation devices or medical devices,” said Gilchrist.
In Ukraine, PMI has been working hard to ensnare new customers, slashing prices by up to 25 percent on some products, offering free subscriptions to a streaming service, and regularly sponsoring advertisements in popular media outlets.
The tobacco company has also handed out branded gifts, like refrigerator magnets and souvenir plaques saying “IQOS-friendly,” to “influencers” like Borodina and 19-year-old Valik Popsoviy. Despite being well below the minimum age of 25 set by PMI’s “marketing standards,” the teenage singer from Kyiv opened his IQOS swag in a video posted to his over 10,000 followers on Instagram in early April.
“Cool. Thank you, IQOS,” he says in the video published in a highlights section of the IQOS Ukraine Instagram page, titled “Surprise Allowed,” holding up his quarantine “surprise” to the camera.
Philip Morris Ukraine said it “no longer engage[s] with individuals for the purpose of generating social media posts” and denied having any affiliation with Popsoviy.
“All legal age users (18 years old) of our tobacco or nicotine products are ‘our Consumers,’” said a spokesperson. “We will not differentiate our consumers based on their social media activities or popularity. We treat them equally.”
PMI has advertised its products through more traditional media in Japan, the world’s biggest market for heated tobacco devices. When the outbreak began, they released an advertisement inviting customers to try a new iridescent teal version of their IQOS Duo 3: “Try the latest model, now that you’re spending more time at home! Fast, free shipping!”
Takahiro Tabuchi, a doctor at Osaka International Cancer Center, said he had noted the advertisement and thought it was “dangerous.”
Under rules implemented by a regulatory body formed by the tobacco industry itself, companies have agreed to permit a maximum of 12 product advertisements per year, or up to three per month. However, OCCRP’s Japanese partner Waseda Chronicle found eight advertisements for IQOS in one of the country’s biggest newspapers, the Asahi Shimbun, over the course of March and April.
As well as its marketing push, PMI is also making it simple, fast, and free for people to get their hands on heated tobacco devices, even when they can’t leave home.
OCCRP and its partners found PMI has been offering free trials of heated tobacco products for up to a month in at least 11 countries and free home delivery in 15 during the COVID-19 pandemic. In six countries, PMI offered trials with a refund for customers who did not want to keep the product.
As one ad in Romania, published during lockdown, put it: “Your house doesn’t need smoke and ash. Consider that when you think of going out to buy cigarettes.”
Philip Morris Romania has also jumped on a campaign to raise funds to feed doctors during the pandemic by encouraging customers to accrue ‘points,’ which the company will match, in two ways: Buy a Heets or IQOS product, or invite a friend to start smoking them.
“Take a seat at the Goodness Table and help!” says the advertisement on a webpage for Romania’s IQOS Club, which offers members special gifts and discounts.
“On one side are the chefs, waiters and restaurant staff who were left without a job during this period. On the other hand, there are first-line doctors who need time to take care of us, but also disadvantaged people who cannot afford to buy food,” the website says.
As well as offering new opportunities for PMI to win new IQOS customers, the coronavirus pandemic has also delayed moves to increase taxes on its products.
In March, as COVID-19 was taking hold in Italy, the government approved a decree known as the “Cura Italia” with a series of measures to mitigate the economic and social impact of the pandemic.
A bipartisan group of politicians led by Tommaso Nannicini from the Democratic Party submitted an amendment that would have slashed the tax discount for heated tobacco products from 75 to 20 percent. Eliminating the discount would have allowed the government to collect 300 million euros in 2020, they estimated, adding that such funds could be used to fund home care for the elderly and people with chronic disorders.
As the largest manufacturer of heated tobacco products, PMI would have been hit hardest.
The proposal was rejected by politicians from different parties, including the Five Star Movement and the ruling Democratic Party, whose former leader Matteo Renzi publicly supports IQOS and even inaugurated PMI’s factory in the northern city of Bologna.
The rejection of his amendment felt “like banging against a wall of indifference,” said Nannicini.
“I regret the decision [of] my government, which I hold responsible for the whole majority,” Nannicini said.
The tobacco industry is banned from advertising, promotion and sponsorship under the Framework Convention on Tobacco Control (FCTC), an international treaty laying out rules for governments to curb smoking. But PMI has found other ways of receiving positive attention — by making public donations to charities.
In a shareholder meeting on May 6, the company announced it had made a total of $30 million in donations in 62 countries so far. Anti-tobacco advocates say such donations serve to curry favor from governments that are parties to the FCTC.
“The tobacco industry is once again taking advantage of the vulnerable situation of many of our parties, offering its ‘philanthropic help’ through donations of money, personal protective equipment, ventilators and other resources, in an effort to make the industry look good,” said Dr. Adriana Blanco Marquizo, head of the World Health Organization FCTC Convention Secretariat, in a statement.
Marquizo noted a “paradox” with such donations, saying: “Isn’t this the same industry that produces and aggressively markets an addictive product that kills up to half of its users? Isn’t this the same industry whose products lead to an increase in the incidence of [non-communicable diseases] that, in turn, worsen outcomes of COVID-19 patients?”
PMI’s largest donation was in Italy, where it gave 1 million euros to the National Civil Protection Service, a state body which deals with disasters and emergencies. The donation appears to violate the FCTC, which forbids tobacco companies from using donations to achieve any political impact.
The company also promised to match donations from its customers, based on points accumulated through their purchases, effectively turning its charitable donation into a campaign to boost sales.
The director of the National Civil Protection Service, Piero De Milito, said he was not sure if they had accepted money from Philip Morris. “I don’t have information about big or small individual donors,” he said. “Maybe they’ve made a donation to a hospital, and not to us.”
In Romania, PMI donated US$1 million to the Red Cross to buy ventilators, testing machines and kits, along with protective gear for frontline staff. Red Cross Romania accepted the donation, despite the International Federation of the Red Cross’s pledge not to take money from the tobacco industry.
The International Committee of the Red Cross did not respond to a request for comment from OCCRP, but said in a statement to the Romanian anti-tobacco NGO 2035 Tobacco-Free Romania that its staff are trying to save lives and need money to do so.
“We understand some National Societies may accept some funding exceptionally in unprecedented times in order to be able to best carry out their life-saving activities, which is mandated to them by law,” said Kate Halff, an ICRC representative.
PMI Ukraine has also donated some 10 million hryvnias (around $400,000) to fight COVID-19 via a charity run by former State Secretary of the Ministry of Health Serhiy Shevchuk. He bought protective equipment for the border guards — again, seemingly contravening the FCTC.
“For Philip Morris International in particular, it’s been interesting to watch them try to insert themselves into the coronavirus pandemic,” said Taylor Billings, press secretary from advocacy group Corporate Accountability.
“It feels like they should try to just sit this one out, considering they drive their own respiratory epidemic. But I think PMI has really jumped with two feet in and really tried to get involved in promoting IQOS as the healthier option.”
At least $137 million of public funds was stolen from one of the world’s least developed countries through corrupt arms deals.
Every quarter, members of OCCRP’s Accomplice program submit questions to an OCCRP journalist about one of their investigations. For our first Q&A, Co-Founder Paul Radu answered questions about our recent investigation into a Romanian criminal syndicate that we’ve dubbed the “Riviera Maya gang,” which made over 1 billion dollars from rigged ATMs, mainly in Mexico.