The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THERE is a “tangible” link between the smuggling of tobacco products and organised crime, it was stated yesterday, with one executive claiming that smugglers were likely to sell at prices 50 per cent below legitimate vendors as they are not paying taxes.

Rhys Campbell, head of corporate and regulatory affairs for Carisma Marketing Services, a subsidiary of British American Tobacco, said smuggling and counterfeit goods were a big issue not only for the Bahamas but the entire Caribbean.

“One of the things that the Bahamas Customs Department and the Ministry of Finance have done is the implementation of a tax Stamp system, and we are working with them to see how seamlessly we can transition the products that are existing in the market into the new Stamp regime,” Mr Campbell said.

“The hallmark of our operations has been partnership to really get this done, and really ensure that we can identify products that have paid their taxes coming into the Bahamas to ensure that there are no revenue losses.

“When you look at our biggest risk, in terms of loss of Government revenues, in terms of loss of industry volumes, our biggest impact has been from tobacco products that have not paid duty and are counterfeit.

“They have used our brand equity we have established to market their products, and they are probably cutting half of the cost because they are not paying the taxes alone, so it has significant impact in the Bahamas well as the broader Caribbean,” added Mr Campbell.

“The only way to tackle this problem is to not look inward but to also focus on our Caribbean partners. Panama is one of the key transhipment points for all products coming into the Caribbean, so it’s very important that we have a joint strategy with our partners in Panama, so that they share information on products that are coming into the region.

“It will help Bahamas Customs in terms of being able to predict, preempt and prevent these smuggled cigarettes from entering the island.”

Mr Campbell added that there was a significant link between tobacco smuggling and organised crime.

“It’s very concerning to us in the Caribbean,” he said. “Given the increased anti-drug efforts in the US, it has become a lot harder to ship drugs had substances through the country, and they have instead turned to tobacco on which the margins are high - especially if you erode the taxes. What our experience has shown is that it is a very important thing and it is funding organised crime,” said Mr Campbell.

Christopher Martin, of the Fiscal Crimes Liaison Office in the UK’s Revenue and Customs agency, and speaker at the two day smuggling and counterfeit workshop, said the UK had implemented a strategy 13 years ago that helped to reduce the market penetration of smuggled tobacco products from 21 per cent to 10 per cent.

“It’s been our experience win the UK that tobacco smuggling funds a range of other organised crimes, including terrorism, and there is certainly tangible links between UK tobacco cases and funding of terrorism throughout the European Union,” he said.

“It’s a threat which deserves better understanding, and the recognition that profits generated through tobacco smuggling and other intellectual property crimes are substantial. Of course, those profits can be turned to other criminal uses.”