Organized Crime and Coruption Project

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.