#OLAF and EU express concern at rising levels of #IllicitTobacco in Balkan states

A consumer rights’ group has voiced concern at rising levels of illicit tobacco in Bulgaria and other Balkan countries.  Speaking at a high-level event in Brussels, Bogomil Nikolov, executive director of the Bulgarian Active Consumer Association, said: “People who buy these products do not realize the cost, not only to their own health but to society generally,” writes Martin Banks. 

Nikolov, who is also a member of the Brussels-based European Economic Social Committee (EESC), was among the keynote speaker at a one-day conference on the fight against illegal tobacco.  The event was organised by OLAF, the EU’s anti-fraud office and held at the EESC.

While the event was heavily focused on cheap whites, the growing trend of illicit cut tobacco caught the attention of the audience.  In 2015 alone, the illicit cut tobacco trade deprived EU governments of nearly €1 billion in tax income.   In the whole of Europe, more than 48% of the total volume of cut tobacco – usually sold in non-branded bags – in 2015 was consumed illegally.

The concerns expressed by Nikolov about levels of illicit tobacco in Bulgaria, including illegally cut tobacco, has particular resonance as Bulgaria is currently at the helm of the EU presidency which steers the EU over the next six months.  The Bulgarian presidency has recently expressed its desire to put the fight against the trade high on their six-month agenda.  Illegal cut tobacco can take many different forms but, normally, it is a product that has undergone basic processing, is capable of being smoked and sold directly to consumers outside the legitimate channels.

It is usually packed in bags without proper labelling and priced by weight. Duty has not been paid and the appropriate health warnings and images are not present. The phenomenon of illegal cut tobacco first emerged in the Balkans region and its consumption is widespread in at least nine member states, including Bulgaria (others are Albania, Poland, Croatia, Kosovo, Serbia, Montenegro and Bosnia and Herzegovina).

Speaking in a session on “how to meet the challenges from illicit tobacco trade,” Nikolov outlined the economic and health costs of the trade in Bulgaria, saying it results in an estimated €100m in lost revenue each year. He said: “You have to remember that this is money that could be do a lot of good in society and for the country, for example, building a new metro line in Sofia.”  “People generally buy products like illegal cut tobacco because it is cheaper but they do not take into account the consequences, both in lost taxation and to their own health. Remember that consumers are putting themselves at much higher risk when they buy such products. They are also indirectly supporting organized crime.”

He said the focus should also be on illicit cut tobacco which, in Bulgaria, accounts for some 75 per of sales of illicit tobacco.  OLAF says that “because of its geographical location, Bulgaria plays a key role in the smuggling routes of cigarettes to the EU”.   Last year, the EU’s Budget Commissioner Günther Oettinger replied to a parliamentary question on the issue by recognising that smuggling of cut tobacco was a “growing and worrying phenomenon”.

While Margarete Hofmann, a senior policy director at OLAF and responsible for the EU agency’s tobacco anti-fraud policy recognised that need to adapt to new challenges in the fight against illicit tobacco, it remains to be seen if the issue of illicit cut tobacco will be a priority for OLAF in its Action Plan.  Some of these challenges were outlined by David Petit, a senior French customs officer with over 20 years’ experience in efforts to combat the illicit trade.

In the past year, he said French Customs had seized 13,500 cases of counterfeit tobacco, equivalent to 238 tonnes, with a further 112 tonnes recovered in foreign countries with French Customs attaches. There are 8,000 surveillance officers carrying out inspections every day.

He also explained some of the sanctions that offenders in France can expect to face, including up to ten years’ imprisonment and a financial penalty up to ten times the value of the goods seized. These sanctions are not harmonised at the EU level. Petit said: “We want to uncover fraud wherever we find it.” However, the lack of progress in the inter-institutional negotiations on the Commission’s proposal for a Directive on the Union legal framework for customs infringements and sanctions, blocked in the Council starts to worry as it will impede the deterrence of smugglers involved in the illicit tobacco trade. Petit also appealed for increased international cooperation, adding, “This is necessary because criminals involved in the trade find new ways of operation including the use of technology.”

Another panellist, Martin Seychell, the Commission official responsible for the EU’s Tobacco Products Directive, said that with 700,000 dying in the EU each year through smoking-related diseases “there can be no bigger public health challenge than tackling the illicit trade.”

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