China Tobacco Under Investigation for Smuggling

Romanian authorities are investigating China Tobacco’s main factory in Europe, outside Bucharest, in connection with the possible smuggling of large quantities of cigarettes, reports OCCRP.org.

Prosecutors within Romania’s Directorate for Investigating Organised Crime and Terrorism are looking into operations at the factory, which is run by the China Tobacco International Europe Company (CTIEC).

The probe has its roots in 2014, when border police and customs agents began noticing that containers filled with millions of cigarettes were leaving the facility, but consistently failing to reach their destinations – a tell-tale sign of smuggling.

One incident in particular highlights how such smuggling can occur, reports OCCRP.

In June 2014, a Naples-based businessman, Ali Rashed, placed an order for 4.5 million cigarettes from CTIEC. Rashed paid $38,700 for the shipment.

According to the initial contract, the cigarettes were to be purchased by his company, Ali Rashed Est, and delivered to Jordan.

But before the shipment even left the factory in Romania, Ali Rashed Est changed its plans and sold the cigarettes to a UK-registered company, co-owned by an Irish national considered to be a ‘suspected criminal’.

On paper, the UK company was to send the cigarettes by truck to the Latvian capital, Riga, where a firm called Prodimpekss Logistikas Grupa would receive them. From there, they were to be sent to Moscow, to a company called Komus Arzat.

However, the Latvian company told OCCRP it had never been involved in such a deal and never received any cigarettes from China Tobacco, while the Russian firm appears to be completely fake.

Instead, the cigarettes left the CTIEC factory in Romania and simply vanished.

Under the WHO Framework Convention on Tobacco Control, which has been signed by both Romania and China, CTIEC is required to carry out background checks on its clients.

However, CTIEC failed to check Rashed, or any of the companies involved, according to Romanian court documents.

Irregularities at the factory suggest CTIEC executives willingly allowed the shipment to disappear. Romanian regulations require CTIEC to provide a security escort for trucks leaving the factory, but according to prosecution documents, this didn’t happen.

Romanian investigators have also pointed to the driver who picked up the cigarettes from CTIEC, noting that he failed to provide proper documentation.

Since CTIEC didn’t hire a security company to accompany the truck and track the shipment, Romanian customs never received an alert that it had left the EU. That notification should have come once the shipment left Riga for Moscow.

After failing to receive the alert, Romanian customs agents raided the CTIEC facility.

While the subsequent investigation turned up details of how the alleged scam worked, the final destination of the cigarettes remains a mystery. However, if they had reached the black market, they could have raked in around $900,000, thereby completely dwarfing the initial $38,700 paid by Rashed.