China Tobacco suspected of smuggling cigarettes from Romania

Dozens of containers of cigarettes produced at China Tobacco's Romanian factory have reportedly "disappeared" and are suspected of being smuggled into Europe, according to an OCCRP report.

China Tobacco International Europe Company (CTIEC), the European branch of China National Tobacco Corporation (CNTC), is being questioned by Romanian customs and police based on the traceability of numerous cigarette containers. Several million cigarettes produced in its Romanian factory appear to have "disappeared" before reaching their destination, leading investigators to suspect contraband linked to European criminal networks, reports an article from the Organized Crime and Corruption Reporting Project (OCCRP).[1].

Tortuous delivery circuits

The OCCRP article details the case of an order for 4.5 million cigarettes, placed in 2014 by Ali Rashed, a Neapolitan businessman of Jordanian origin, candidate for the Italian Senate in 2013 under the colors of the Northern League. Supposed to be transported and distributed in Jordan under a private label, the merchandise was, on the very day of departure, redirected to a British company, and was delivered to Russia, via Latvia, by an Irish carrier.

The investigation revealed that this Irish relay was suspected in his country of being linked to criminal trafficking and that simple photocopies – falsifiable – were produced in place of the original documents allowing the goods to be released. The Russian company was fictitious, the Latvian intermediary declared that he was not informed of this operation and the British company was quickly dissolved. The cargo is said to have vanished between Riga and Moscow.

These clues and the indirect circuit of the deliveries attracted the attention of the investigators, the CTIEC being supposed to verify the reliability of its sponsors. Moreover, the fact that the CTIEC failed to provide an escort to secure the convoys, as is usually the case in Romania, seems to indicate active complicity on its part. The merchandise, sold for €38,700 US (€36,170) to Ali Rashed, was estimated to be able to be resold for €900,000 $ US (€841,000) on the black market, but its true destination remained unknown.

Other similar deliveries have reportedly taken place since, totalling at least 10 million cigarettes (500,000 packets) and involving 20 to 30 containers that "disappeared" after transiting through Hungary, Ukraine, Montenegro, Moldova or Transnistria, a breakaway region of Moldova. Ukraine often appeared as the transit platform to the various European markets.[2].

An international strategy based on smuggling

The world's largest tobacco operator with 46 billion yuan of global volume, the CNTC, founded in 1982, is a consortium bringing together many cigarette producers and several international entities. Supervised by the State Tobacco Monopoly Administration (STMA), which is also supposed to ensure the fight against smoking, the CNTC is in a monopoly situation in China, where it covers 97 billion yuan of the market. Most of its revenue still comes from the sale of traditional tobacco products, but China Tobacco has also developed heated tobacco systems, exported to Japan and South Korea, as well as electronic cigarettes.

CNTC's international business represents only 1 % of its revenues, but is booming, going from 248 million $ US (231 million €) in 2009 to 722 million $ US (674 million €) in 2019.[3]The CNTC has formed partnerships with the main tobacco majors (Philip Morris International, British American Tobacco, Japan Tobacco International, Imperial Brands), in order to benefit from openings on their own markets.

The CNTC has also adopted the market infiltration strategies developed by these majors, particularly when they have invested through smuggling the Russian and Chinese markets that were forbidden to them. It is on this model that, from its Romanian factory, the CNTC clandestinely distributes its products not yet officially distributed on the European market, before subsequently introducing its brands there legally. Other smuggling operations involving the CNTC have been highlighted in Latin America and to Middle East.

To learn more about the CNTC, read our information sheet.

Keywords: CTIEC, CNTC, Romania, Ukraine, smuggling

©Tobacco Free Generation

M.F.

[1] Ciurcanu A, Romanian Prosecutors Probe China Tobacco for Millions of 'Disappeared' Cigarettes, OCCRP, published January 11, 2023, accessed January 12, 2023.

[2] China National Tobacco Corporation's Global Expansion, STOP, July 2022, 13 p.

[3] China National Tobacco Corporation, Tobacco Tactics, modified July 26, 2022, accessed January 12, 2023.