Organized Crime and Coruption Project

Smuggling

This is not always the case, of course. Last fall, a factory turning out illegal cigarettes was discovered in a neglected grass-reed building in the village of Orisare outside Plovdiv. The Internal Ministry press office said police had watched the factory for two months before they raided and found eight workers, 65,000 boxes of cigarettes labeled Melnik, a popular brand in Bulgaria, two tons of tobacco, 700,000 fake excise bands and machinery for producing boxes, labels and cellophane packaging. Two men believed to be in charge of the operation were not apprehended in the raid.

Ciril Grorgiev, chief of the Directorate for the Fight Against Organized Crime, said customs officers last summer were suspected of assisting in the smuggling of some 14,450 boxes that were found in the Dragoman train station near the border of Serbia and Bulgaria. Police found cigarettes with Serbian excise labels under the seats and packed into hollowed-out areas of cars traveling between Niš in Serbia and the Bulgarian capital Sofia.

The four customs officers who initially went through the train discovered only 250 boxes of cigarettes.

“Since Bulgaria entered the European Union at the start of the year, border police have seen a huge increase in tobacco smuggling. In the first six months of 2007, more than 26,000 people were checked and 60,000 boxes of cigarettes confiscated,” said border police boss Krasimir Petrov. Most of those violations were at Dragoman and Kalotina, on the western border of Bulgaria. In previous years, he said, about 30,000 boxes were confiscated annually.

The situation is similar along the eastern border of Bulgaria.

Last April, the prosecutor’s office in Varna asked for the maximum sentences against 25 cigarette smugglers who’d been arrested the previous fall. That group included two border policemen, Milen Dimov and Nachko Tashkov, who are also managers of a radio-location station in Shabla, on the Black Sea coast. Prosecutors said the two were part of a crime group along with Raiko Kristov and Anton Klashnikov from Kranevo, near Varna. Police broke up the smuggling operation and made arrests when the group tried to drive nearly €2 million worth of cigarettes into the country. They were confiscated along with a Turkish sailing vessel, a truck and six cars. Three Turks were also arrested.

The police possessed information that the smuggling operation had been in place roughly two years, but it is unclear what goods and how much the group handled. Prosecutors said they are gathering evidence against the suspected four big bosses of the operation, including three former football players.

Trucks from Russia

In September 2006, officials blocked one of the channels used to smuggle in cigarettes when they confiscated two trucks with Russian registration carrying about €3 million worth of cigarettes. The trucks had arrived to the Burgas seaport aboard the ferry Novorosiisk-Burgas tucked into a cargo of wood.

In February 2007, the Internal Affairs Ministry announced that two police sergeants had been arrested for participating in the sale of contraband cigarettes in shops and storerooms around Sofia where they had moonlighted as security guards.

Containers from China

Police last November discovered a cargo container of contraband cigarettes labeled Superkings in Haskovo. They found that the load had been transported to Thessaloniki in Greece before being placed in a railroad car for shipment into Bulgaria. Police also found that a 39-year-old customs employee had protected the operation.

Smuggling costs to the country

Emil Dimitrov, the president of the Association of Tobacco Manufacturers and Traders in Bulgaria, said that smuggling robs the state of some 100 million levs in lost taxes a year.

He said that with foreign companies controlling nearly 15 percent of the cigarette market in Bulgaria, about 10 percent of the cigarettes of foreign brands that are sold enter illegally via duty-free shops on the borders.

He estimated that the state loses another 50 million levs a year to cigarette sales by small traders that are never recorded and so no duties are collected.

Distributors of the Karelia, Philip Morris and Gallagher brands dispute this, saying that all sales of their cigarettes in Bulgaria include 100 percent of the required taxes and excises.

Customs promise a better job

Customs Director Asen Asenov defends the work his agency has done, but says it will take business and government acting jointly to stamp out cigarette smuggling.

Last year, customs signed documents of cooperation with major tobacco firms pledging just such a united effort. The firms were Philip Morris and British-American Tobacco.
In addition, Japan Tobacco International, a division of the world’s third largest international tobacco manufacturer, signed a memorandum of understanding with the Bulgarian Customs Agency aimed at better control over contraband cigarettes.

Konstantin Fedorov, general manager for export markets for the firm, said an officer would be specifically assigned to monitor the traffic of goods with its trademarks in Bulgaria.

“We cooperate fully with governments, regulators and law enforcement in the fight against contraband in all places where we do business,” he said.