Illegal Chinese Cigarettes Flooding Latin America Flow Through Panama
From OCCRP
China Tobacco’s factory in Panama was shut down by authorities after its cigarettes kept making their way onto the black market there. A network of companies sprang up in its place — and have been shipping huge numbers of cigarettes from Panama around the region.
Key Findings:
- Countries from Mexico to Ecuador are seeing spikes in smuggled Chinese cigarettes.
- A network of Panama-based companies connected to China Tobacco shipped large amounts of cigarettes to Latin American countries where there is no legal market for them.
- The Panamanian companies sold cigarettes to at least two firms controlled by accused smugglers.
- One company shipped $34,000 worth of cigarettes to the Chinese Embassy in Ecuador, a country where Chinese brands make up about a quarter of the illicit market.
The Colón Free Trade Zone advertises itself as “a commercial showcase par excellence,” offering exporters an endless array of tax-free goods shipped from around the world to this bustling city at the mouth of the Panama Canal.
It’s also “the Disneyland of smuggling,” according to Daniel Rico, a Colombian expert on criminal economies. “Whisky, cigarettes, medicines –– everything.”
Now, reporters have uncovered a Panama-based network of shell companies sending huge amounts of Chinese cigarettes from the free zone into Latin American countries where there is no legal market for them. The firms have ties to China’s massive state-owned tobacco company, and are selling to accused smugglers.
The China National Tobacco Corporation (CNTC) is by far the world’s largest cigarette company. It controls almost half the global market, selling most of its cigarettes to the approximately 300 million smokers in China. But the sprawling conglomerate –– often referred to simply as China Tobacco –– is angling for an even larger share, and it has been forging new markets from Africa to Europe.
Smuggling is an important part of that strategy, experts say, and Panama has emerged as a key staging point for China Tobacco’s push into Latin America.
Loose Regulations
Colombia is awash with illegal cigarettes once again. But instead of Marlboros, the packs carry names like Golden Deer and Silver Elephant, along with other CNTC brands.
In July 2020, authorities busted a huge shipment of Chinese cigarettes, confiscating almost enough for each of Colombia’s 50 million people to smoke two.
Data obtained by reporters showing cigarette seizures did not name the companies involved, but reporters were able to trace the path of the 96 million cigarettes from CNTC’s Marshal, Golden, and Brass brands into the hands of smugglers in Colombia.
The cigarettes had been manufactured in China, and shipped to Colón, according to a senior Colombian customs official, who requested anonymity as he was not authorized to speak to journalists. They then wound their way through the Caribbean, with stops in Jamaica and Aruba –– a tactic to obscure their origin –– before finally arriving in Colombia’s coastal city of Cartagena. From there, they were transported to a free trade zone in the capital, Bogotá, he said.
While it was Colombia’s largest-ever bust of Chinese cigarettes — or any cigarettes, for that matter — it was only one of many. Cuestión Pública obtained a database of cigarette seizures compiled by Colombia’s Tax and Customs Police, which shows that six of the 10 most confiscated brands in the country between 2015 and August 2020 were produced by China Tobacco.
And the smuggling seems to be growing rapidly. Colombian authorities seized 300,000 packs of Chinese cigarettes in 2016. But more than 6 million packs were confiscated within the first seven months of 2020 alone.
Export Routes of Chinese Cigarettes in the Americas
Credit: Tamas Szemann
