Published at 3 and 4 January 2001

By Stanimir Vaglenov

According to data announced by Coalition 2000 only 14% of the cigarettes sold on the Bulgarian market in 1998 were legal imports.

In 1999 the amount of the levied customs duties, respectively of legal tobacco imports dropped by 30%. This means that only 10% of the imported cigarettes were not smuggled. There was some improvement in 2000, though the picture remained much the same.

Expertso estimates show that during the transition period, due to illegal imports, Bulgaria has lost about USD 1 billion, the equivalent of 10% of the countryos foreign debt. This means that each year in this transition period cigarette smuggling 'eats up" approximately USD 100 million out of the treasury. If the rest of the contraband goods are added to these losses, it may turn out that the country could have repaid its foreign debt only with the customs duties.Even if we assume that only 10% of this statistics is true, all these facts point out to smuggling of enormous scale. At the same time not a single person has been sentenced for cigarette grafts in Bulgaria.

Even for the presumably most scandalous affair - the cigarette channel through Novo Selo border checking point - there are charges brought only against four people: Dimitar Valchev (former customs officer), Rosen Kouleshev and his father Dimitar Kouleshev (businessmen), and the truck driver Dimitar Petrov. At the beginning of July 1998 a secret operation carried out by the National Service for Combating Organized Crime revealed a channel for illegal import at the Bulgarian-Greek border at Svilengrad. The special agents followed three trucks loaded with LM, Marlboro and Parliament, which entered the country without being checked and registered for import; the officer on duty was Valchev, who is under investigation now. The trucks were unloaded in an illegal storehouse in Haskovo, and the police arrested the driver and the two businessmen.

MP Georgi Shishkov (UDF), former head of the Customs Office at Svilengrad announced the names of BSP top functionaries as organizers of the channel, and more specifically that of Lyuben Gotsev - former Head of the Intelligence Department of the Committee for National Security. However, Lyuben Gotsev started legal proceedings against Shishkov, and there is no evidence to prove the charges of the MP.There are no facts to prove the illegal channels of Hristo Biserov - former UDF Chief Secretary, whose name has also been connected with affairs and suitcases over the last years.

It turns out that there is either no smuggling at all, or it is well protected by a political umbrella. This protection includes the grafts of the former rulers, as well.Informed sources, however, state that the mythical channels for smuggling, some of them dating back to the years before 1989, have been operating at full capacity ever since. Especially on the eve of the new parliamentary and presidential elections. The scheme money - power - moneyo is being fueled again.

Imported cigarettes are only part of the goods smuggled along the channels. For they are businesses: in order to bring good profits they must operate at full capacity. In this connection the so-called cigarette channel arealso used for drugs, arms, white slaves...

But the main illegal import comprises the cigarettes produced in Western Europe.

24 Chassa sources from Bulgaria, Kosovo, Macedonia and Montenegro claim, however, that only a small part of these cigarettes remain on the local market. The biggest part of these quantities is returned back to Western Europe. Another two large contraband channels start in the USA and China and they are directed to Western Europe too.

The aim of this complicated scheme is to avoid duties and taxes levied on cigarettes all over the world. China is one of the leading producers of tobacco and is flooding the world markets with forgeries of worldwide brands.

In Great Britain the price of a packet of cigarettes varies between 13 and 17 DM, while the smugglers buy it from the producers for 5-7 DM. The profits are quite considerable in Germany, Belgium, Italy, Spain, etc. Experts claim that the annual turnover amounts to USD 7 billion.

What is the organization of the scheme?

Usually the big Mafia bosses live in Switzerland, where they are not persecuted by the law for cigarettes smuggled into third countries. The bank secrets facilitate money laundering. From their head offices in Switzerland, the bosses buy cigarettes from the USA, Western Europe or China, mostly through off-shore companies based in Cyprus. Thus the producers themselves do not pay any excise duty on the cigarettes, since they are to be exported. The off-shore companies, in turn, do not pay taxes on goods they sell in one of the Balkan countries. Another option is to declare the goods for transit trade and thus they do not have to pay customs duties either.

Formally, most of the goods vanish on the Balkans, and with them the producerso responsibilities to the future victims of diseases, caused by smoking. In fact, however, the cigarettes are loaded again, and with falsified documents they are dispatched to Western Europe.

The smooth functioning of the system is guaranteed with the aid of top politicians and magistrates. In Switzerland, in the Italian canton of Ticino, the Head of the Criminal Court Franco Verda was arrested.

He was charged with collaboration with the Godfather Geraldo Guomo, partner of the notorious Mafia boss Francesco Prudentino, who is regarded as Capo di Capi in cigarette smuggling worldwide.

In the spring 1999 Magistrate Verda passed a sentence, according to which Prudentino was to be returned the sum of 1,5 million Swiss Franks on the grounds of lack of evidence proving the criminal origin of the money.

A short while after this sentence was pronounced, the magistrate and his girlfriend Desire Rinaldi went abroad Guomoos luxury yacht. They were cruising in the Mediterranean, when someone managed to take quite interesting pictures of them. The fact is that the judgeos girlfriend happens to be Guomo's solicitor; and now the magistrate could be sentenced to 5 yearso imprisonment.Guomo was arrested in Zurich. The Italian newspaper Republica wrote that Prudentino had been spotted several times in Bulgaria and Poland. Libero newspaper (published in Milan) also wrote that he was hiding in Bulgaria or Montenegro.

The Swiss Mafia boss Saverino Benvenuto, one of Prudentinoos associates, was shot dead in Athens in August. He is said to have transferred to Guomo the money from smuggled cigarettes into Swiss banks.

Prudentino himself was arrested in Greece, and was sentenced to 19 monthso imprisonment. However, the local legislation provides, that he can be released, provided, he pays USD 1360, which he did on the spot. The only remaining hope is that the order for his extradition will come into effect before he is released after the legal term of 40 days expires, which is the beginning of February. An international order for his arrest has been issued.Probably his misfortune is that he was arrested in Greece. Previous data show that if this had happened in Bulgaria, Prudentino would have got away without any sentence.

Go! NATO's soldier waves away and our car takes the first meters of Kosowo's road, along an endless line of trucks. Most of them are loaded with good prepared for Kosowo, at least according to the accompanied documents. Quite a lot of it however, mainly cigarettes, leaves the country bootleg and continues through Monte Negro towards Western Europe, explains our Macedonian source.

We are passing the border between Macedonia and Kosowo together at Blatze frontier post. According to our source this is one of the principal ways of bootlegging, which we have decided to track out: through Greece and Bulgaria, towards Macedonia, and then through Kosowo towards Monte Negro. "Monte Negro is the black hole in a cigarette bootlegging which starts there and Podgoritza makes money of that to invest in his government budget." says Pierre Luigy Vinia, chief of the Italian Prosecuting magistracy "Antimafia". If a large part of the traffic is sea born in Monte Negro, this means that Bulgaria, Macedonia and especially Kosowo are parallel black channels by land further on.

A part of the cigarettes /predominantly from China/ enter into Balkans from Black sea, but the biggest quantity of western and American tobaccos - from Adriatic and Mediterranean sea - through Greece or directly into Monte Negro. Formally everything is legal, at least in the beginning -offshore /mainly firms registered at Cyprus/ buy the cigarettes from the American or Western European companies to be sold in Balkans. The great mass of the blends has no market in this region at all. They are in the trade network just by implication. According to a non-official data last years at Balkans have been delivered as many imported cigarettes as every smoker here should have been consumed approximately 5-6 boxes daily. The truth is that most of the cigarettes sold are home produced and imported ones are bootlegged to Western Europe and are sold at three times higher prices that they have been bough, because of avoiding the high acsices. Even if we refer to the official statistic only 10-15% of the sold in Bulgaria and Macedonia imported cigarettes are bootlegged. That's why nobody can count the illegally exported quantities. Experts consider that they exceed 5 to 10 times the quantities of imported cigarettes sold legally and illegally on the Balkan market. Who runs the "business" in this region? For a long time the big cigarette boss in Skopje was Dancho Shuturkow, an ex deputy chief of "Macedonia tabac". Macedonian media stated that he has robbed the government budget with 40 billions DM by means of fictitious documents. Nowadays Shuturkow thought is a "modest" pensioner, who has lived in London for a couple of months. Naturally nobody makes any effort to investigate his shady affairs and to look for the missing billions.

It is unlikely Shuturkow to has taken the billions in his own pocket - it is not a secret that most of the cigarette business money are infused into a parties cash-boxes "Over 1300 trucks loaded with bootlegged cigarettes have passed from June to September 2000 through Macedonian-Kosowo border. Everything is organized by Macedonian government, the Kosowo-Albanian leader Hashim Tachy and the president of Monte Negro Milo Jukanovic", states Pavle Trayanov, ex Macedonian Minister of Internal Affairs. In Macedonia, as well as in Bulgaria the media writes, broadcast and in general there is much information regarding cigarettes jobberies and smuggling channels. And as in Bulgaria nobody has been convicted so fare. As we talk about Kosowo it is difficult to speak about control and justice at all, if we do not consider the single strokes against smugglers by the UNO employees. Going out, the Macedonian border guards scarcely glance in our luggage-carrier.

The soldiers from UMNIC are not overzealous too when we are coming into Kosowo - they are peacekeepers first than a border guards. It is logical Kosowo to be a center of the contraband because of its specific status and by reason that it is populated by Albanians. They are in close contacts with the representatives of the same ethnose in Greece, Macedonia and of course in Albania, itself.

In Greece they are immigrants, but in the remains three countries /Kosowo is mostly a separated country neve rmind that it has been considered as a part of ex Yugoslavia/ they participate directly in power. It is normal to have no problems with the organization and with the security of the channels through which the tracks with the good pass without ending. Part of the contraband remains in Kosowo - practically there is a need of everything. However the biggest part of the cigarettes proceeds through to come back as a solid profit. Otherwise the huge building in the country provinces of houses, oil-stations, services, and warehouses, cannot be explained. Here nobody takes the pain to ask many questions - otherwise they found him shut rapidly. For almost entire Albanian community is valid the low of the omerta. Our source is a rare exception and speaks after thousands of reservations that he will remain anonymous forever. He explains us how part of the contraband from Kosowo enters into Albania, where the local Mafia clans are totally subordinate to the Sicily Mafia. Part of the smuggled quantities takes towards Italy by sea. More go over into Monte Negro by the Adriatic coast nearby Black sea resort Ultzin. This town together with port town of Bar located several kilometers from Ultzin are the main distribution centers of the Balkans cigarette contraband. From here there are two ways - by land through Serbia towards Slovenia and then by land and by sea to Western Europe. And the most commonly used - by sea towards Italy. From where loads are taken and distributed through out Western Europe by the Italian Mafia itself. There is also a channel in the opposite direction - by sea towards Slovenia, from there to Monte Negro and through Bar towards Italy. There is nothing strange in that -the channels are just controlled by different Mafia groups. We choose the roads through the pass of Rojai - between Kosowo and Monte Negro, because the infrastructures, as well as the habits in Albania are not safe at all. Though all the way we are leaving behind heavily loaded tracks. At the pass of Rojai this is already impossible - compared with its curves and abysses the Bulgarian pass Shipka is like pleasant spin. In fact the biggest threats for the smugglers come not from the authorities but from the dangerous roads in Monte Negro, especially when the weather is bad. But the risks are generously paid for everyone of the chain. In fact there isn't a border between Kosowo and Monte Negro. The Monte Negro policemen do not even try to play customhouse officers as NATO`s soldiers do - uncountable column of trucks are passing without hindrance. 150 kilometers after the pass of Rojai we are passing through the capital of Monte Negro - Podgoritza, from there along the lake of Skadarsko we are going across the last mountain chain with dreadful curves and abysses to reach the beautiful Adriatic seaside. From there to Bar is less than a half an hour. Even now the port is divided into two - military, where the ships of Yugoslav Army are located and civil section with merchant vessels, caters and splendid yachts. "In the past the cigarettes were unloaded in the military section of the port", explains our local source of information. According to him in the beginning Slobodan Miloshevich and Jukanovich share the contraband profit. But bit-by-bit chipped off "the business" completely in his favour. And when NATO by itself bombs pressed Miloshevich Lujanovich splitted off the "bussiness" entirely in his favour. The Serbs of course, were fuming because of the spoiling the "contract". In July the Yugoslav navy arrests near Bar two Italian caters, full with contraband cigarettes. The scandal erupted in a moment when the relationships between Miloshevich and Jukanovich reached its critical point. "Now the ships with smuggled cigarettes arrive at the civil part of the port. There they are unloaded and lately turn the goods back again on fast moving caters, which reach Italy cost only in three hours", states our source. He also says that in some nights incredible thinks in the port of Bar could be seen. The other part of the contraband cigarettes are loaded on the numerous picturesque bays between Bar and Ultzin. After Miloshevich fall from power isn`t are even one case of capturing of cigarettes. But Jukanovich proceeds to be hesitate if Monte Negro to be a part from Yugoslavia anymore. Our source thinks that everything depends on how the new power holders in Belgrade will treat his "business". It is clear that it is a big and valuable deal and the trump with the Monte Negro autonomy will be played over and over again. We proceed towards the Ultzin resort, near to the Albanian border. On the hills along the road stand out white magnificent white country houses up to several floors. "In many of them Italian criminals live, some of them captured from the prisons there. Here nobody bother them." explains the source. He states that Ultzin proper has become twice bigger than 15 years ago because of the hundreds of beautiful hotels, country-houses and places of resort have been built. We menage to reach a nice hotel with the name of a bird, literally a few kilometres away from the Albanian border. Our source tells us that this are the headquarters of the Albanian-Italian Mafia in the region and the bay under it - one of the places for loading and unloading of the contraband cigarettes. Actually in the elegant building with approximately 200 beds reigns a strange atmosphere - there is no tourists at all. It is true that the season has passed but otherwise the hotel looks completely in work. By the bar and the leather furniture of the lobby about ten people in a luxury costumes are sat. They look at us suspiciously close to a threat, that is why we are hurry to disappear. It is clear that the huge contraband they are talking about in Monte Negro is impossible if police does its job well - in the last twenty kilometres before reaching Ultzin they stopped us for a check five times exactly. So everything happens under the wind of the authorities or there is no contraband. The Italian anti mafia Luidgy Vinia, as well as the journalists, suffers from a morbid imagination? Sofia-Skopjie- Prishtina-Podgoritza-Sofia.

Cigarette smuggling would not have reached such a large scale, if producers fought against it. However, facts prove that some of them not only favour it, but also facilitate the activities of grafters in order to keep their own profits.

Probably they have no other option as they are risking the failure of their multimillion dollar businesses. On 14 July 2000 a Jury in Miami, Florida, sentenced the five largest US tobacco companies to pay compensations of the amount of USD 145 billion to almost half a million citizens of the state, victims of smoking. Philip Morris alone has to pay approximately USD 74 billion. The companieso lawyers have appealed, of course, but it is clear that the companies will have to pay massive compensations.

This may be one of the reasons for some of the giant companies to neglect the activities of smugglers. They may even be assisting them: in July the European Commission announced that it is starting legal proceedings against several American cigarette companies in order to recover the losses of several billion Euro caused by cigarette smuggling in Europe. After a two-year investigation the specialized bodies of the EC have come to the conclusion that some companies have organized networks for illegal import of cigarettes into Europe from the USA.

In August Newsweek announced that a Grand Jury in North Carolina is investigating charges of connections between large cigarette producers and aworldwide operation for the smugglingof enormous quantities of cigarettes without paying any duties and taxes.Obviously the cigarette industry is finding it more and more difficult to keep its business and operate legally. Only in the US its profits amount to USD 50 billion annually from the sales of cigarettes, cigars and chewing tobacco. 350 000 farms in 21 states produce the needed tobacco, North Carolina and Kentucky provide 80% of the products.

The tobacco industry provides jobs for 500 000 people and cannot be closed just like that, in spite of the evidence that cigarettes seriously damage the health and threaten the life of millions of people.The smokers in the USA amount to 46,5 million with a population of 275 million. The giants in the sector are R G Reynolds and Philip Morris. Reynolds has a 25% share of the American market with its Winston and Camel. Every second cigarette sold in the USA is produced by Philip Morris, the owner of the brands: Marlboro, Merit, Virginia Slims and Chesterfield.

The claim for USD 145 billion is not a small sum even compared with the profits of the tobacco concerns. And the wanted compensation is just for some of the citizens of one of the 50 states in the USA. Similar claims have been lodged in other states and on other continents, too. In November the EC lodged a similar claim against two of the biggest US companies. Russia has also started legal proceeding against tobacco producers for caused damages.

Obviously this will be the practice from now on, since about 430 000 smokers die each year only in the USAof diseases caused by smoking: heart diseases, lung cancer and another 18 related diseases.Tobacco companies can no longer play the part of innocent players, as it has been proved that smoking is an addiction. This means that cigarettes not only seriously damage peopleos health, they are also a kind of drug, which makes people addicted to them.But how can one put an end to a business that brings billions in profits? The only solution is to find a way to wash your hands. In this case this is a scheme in which all the liabilities of the producers simply vanish. The Balkans, including Bulgaria, with their unstable and ineffective legal systems have proved to be an exceptionally good channel for smuggling cigarettes into Europe. In the first place they are still a territory where tons of goods can be smuggled with hardly any problems. Concerning cigarettes, they are a very convenient place where imported cigarettes statistically simply disappear and no one is ever likely to prove that the same phantom cigarettes appear a little later on the Western markets. In a few words - at the moment the Balkans are an enormous laundry for smuggled goods. Obviously, there are some rather influential parties which are interested in keeping the status quo.Why is this scheme still working even in the developed countries in spite of the measures their government are adopting? Because the business resembles very much the type of business favoured by Milo from Catch 22: everyone is interested in participating in it because everyone profits from it. In the first place producers profit from it, then come the smugglers, then - part of the politicians and magistrates from the countries with illegal traffic, and in the forth place - part of the people in power in the country where the cigarettes are sold. And finally the consumers also profit from it since they buy a product at a price equal to a third of its real price.

Then, who loses? The state budgets and everybody depending on them lose. The 4 million smokers, who die annually due to smoking-related diseases, are also among the losers. According to MBMD statistics for the year 2000, in Bulgaria 2/3 of the active population are smokers, 52% are women and 48% - men. According to the same statistics 24% of the smokers are aged between 19 and 29; 36% of the smokers are above the age of 50.

One billion people died, in the 20th century, due to smoking-related diseases, such as cancer and heart diseases. 900 000 of them were men and 100 000 - women. This information has been announced by the World Health Organization. Forecasts show that for the 21st century this figure will be 1,69 billion people. Nowadays there are about 250 000 people under the age of 18 who are smokers.This is one of the reasons why WHO has started preparing a convention for control of tobacco; the convention is expected to be ratified in 2003. This convention provides for liabilities connected with the production of tobacco and tobacco products, border and customs control and guarantees against passive smoking.

However, the effect of all these measures will be very limited unless the enormous traffic of smuggled cigarettes is stopped worldwide.

- On 12th January, 2000 at the Greece island Lemnos is captured Ukrainian vessel - which by documents transports 583 000 cardboard boxes of cigarettes for Western Europe. The cigarettes are loaded at port Varna, where are imported from Greece. But on board have been founded only 5 boxes of cigarettes.

- On 18th May France press announces that between February and November 1996 several consignments "Marlboro", "Merit" and "Winston" estimated at 15 billion dollars have arrived in Romania. After they have been loaded on more than 30 trucks, the cigarettes leave Romania to the Hungarian direction masked under "glass articles".

- On 18th April at the custom of Banijasha airport the ex chief of the Duane Mihaela Bidila has been arrested because of supporting the contraband during 1996

- On 9th July the Yugoslav Navy hold up two Italian caters loaded with 700 cardboard boxes, carried from port Bari in Monte Negro towards Italy.

- On 19th July three men's bodies have been founded in concrete block on the bottom of Danube River near the middle age fortres hold Golubatz in East Serbia. According to the media the victims have been a key figures in cigarette contraband in the region.

- On 24 July at the Spanish port Alhesiras are detained 400 000 packets of contraband cigarettes from Chine, covered in a container with sport stuff.

- On 4th August in West Germany a band from Litva is defeated a mafia and some natives, in attempt to import a truck with 8000 master boxes of cigarettes in the country.

- On 4th August in Zagreb is catch group of cigarettes bootleggers, connected with Slobodan Miloshevich`s son - Marko.

- On 14th August at the port Pirea is seized Ukrainian ship with 833 master boxes of cigarettes, loaded at port Bourgas, with destination Monte Negro.

Authorities consider that the contraband consignment has something in common with the Italian trafficant Lino Benvenuto, shutted two day ago in a Greece resort settlement of Varkiza.

- On 16th August military police in Kosowo captures 550 000 packets of cigarettes for about 278 000 dollars meant for the European market.

- On 28th August near Creta island is holed up a ship with 950 000 boxes - the biggest consignment, detained from the Greece authorities.

- On 5th September in Thesaloniki are seized 700 000 boxes with cigarettes delivered at the local market from Yugoslavia.

- On 7th October in Athens is shut Yugoslav cigarette dealer Vladimir Bokan. He has been living in Greece for 10 years, was sympathizing to Slobodan Miloshevich, and in his house the Miloshevich`s son - Marko has put up.

- On 9th November in Genoa has been hold up a truck with Bulgarian registration together with Italians Mario Rozato and Djanluidgi Giringeli, popular as bootleggers with an international reputation. The truck came from Bulgaria loaded with cigarettes "Soveren" and "Mayfair", hidden behind a load of glasses.

- On 31th March in warehouse in Chelopechene quarter in Sofia are seized 3000 master boxes English cigarettes, masked is building insulating flat nesses for export.

- On 18th May at Kalotina is hold up truck with 340 master boxes English cigarettes masked in poplar beams for UK.

- On 22 June in Vidin is seized a truck with 360 master boxes cigarettes "Regal" made in England, hidden in timber for England.

- On 1st July on a ferry in Vidin has been averted export of English cigarettes "Super king" and "Regal", hidden in furniture for England.

- On 7th August at the port of Bourgas is detained a truck with 589 master boxes "Regal" and "Soveren" came from Asia for 500 000 DM, masked in wood toys for export.

- On 6th October in Suhodol quarter in Sofia is seized a big quantity of cigarettes "Suveren", masked in insulating pipes for Belgium

On 19th December 2000 from the Head Customs Center announced that from 1st January until 19th December 2000 are stated 104 violations and has been confiscated 3 936 998 boxes of cigarettes for 6 645 589 DM.