The Nexus of Organized Crime and Terrorism Two Case Studies in Cigarette Smuggling _ Organized Crime _ Smuggling best money laundering businesses

This article examines two case studies that illustrate how two different types of actors were involved in a cigarette smuggling-terror nexus. The first case examines R.J. Reynolds tobacco company’s alleged deliberate sales of its products in iraq in contravention of the UN embargo and U.S. Law. R.J. Reynolds used criminal actors as suppliers and provided financial compensation to the kurdistan workers party (PKK), a r ecognized terrorist organization, and uday hussein (saddam hussein’s son) to facilitate this transport. The second case examines a hezbollah cell operating out of charlotte, north carolina. The cell trafficked cigarettes from north carolina to michigan, reaping significant profits by ex- ploiting the difference in cigarette tax rates between the two states.

The two case studies revealed that terrorist financing occurs in the united states and as a result of the actions of a terrorist support cell and a U.S.-based company.Best money laundering businesses in both cases, a legitimate commodity was used for illicit purposes.

The illicit use of a legiti mately produced commodity to provide terrorist financing. Scholars have studied terrorist funding from such criminal activity as abuse of registered charities, extortion, and document fraud (american foreign policy council, 2005; U.S. Government account- ability office, 2003). Much less is known about the role of legitimately pro- duced commodities in funding terrorist organizations. The diversion and smuggling of natural resources such as diamonds (so-called blood or conflict diamonds) and oil have also been shown to prolong conflict and fund terr orism (campbell, 2004; wahab, 2006; berdal and malone, 2000). However, scholars and law enforcement have paid little attention to terrorist funding by means of trade in manufactured commodities such as cigarettes and compact disks (cds).Best money laundering businesses this paper focuses on the for mer, analyzing terrorist funding through the illicit trade of legitimately produced cigarettes. The illicit trade in cigarettes is significant, both in profits and in the level of involvement of illicit actors. In 2000, the united na tions (UN) estimated the global cigarette market was $USD 16 billion, and approximately 25%, or $4 billion, of this trade was illicit. The unpaid taxes and customs duties, which

Can add an additional $5 to $10 billion in profits for cigarette traffickers, compound the costs of this illicit trade (baker, 2005: 167). A more recent estimate places the worldwide tax revenue losses caused by the illicit counter- feit and contraband cigarette market to be $USD 40 to 50 billion annually (the WHO framework convention on tobacco control, 2007: 6). For decades, the trade has benefited crime groups and corrupt officials; for example, the italian mafia has been involved in this trade since the early- or mid-twentieth century (paoli, 2003).Best money laundering businesses however, the lure of profits from this commonly smuggled and trafficked commodity not only has attracted tr aditional organized crime groups but also groups associated with terrorist organizations. Moreover, participants do not stop at moving legitimately produced cigarettes. The U.S. Government and law enforcement agencies have documented the manufacturing of counter- feit cigarettes in the tri-border region of south america by terrorist organiza- tions (fromme, 2006; hudson, 2003; sverdlick, 2005). Recent criminal and civil cases filed in U.S. Courts demonstrate that the illicit trade in legitimately produced cigarette s by a corporation and by terror- ists can generate significant financial resources for terrorism (european community v. R.J. Reynolds et al., 2002; european community v. R.J. Reyn- olds et al. And phillip morris et al., 2001; unite d states of america v.Best money laundering businesses moha- mad youssef hammoud et al., 2001; united states of america v. Mohamad youssef hammoud, 2004). This illicit activity has significance beyond terror- ist financing as it illustrates important and overlooked aspects of the links between crime and terrorism both in the corporate world and in terrorist cells. The phenomenon we are examining has broader implications. It raises such profound questions as: can a legitimate business be a criminal organization? Why do organizations risk their corporate reputation by associating with ter- rorists? Why do the legalization and regulation of the cigarette tra de not pre- clude its abuse by terrorists? Previous investigations, court cases, research, and news stories have shown corporations deliberately engaging in criminal activity. Nonetheless, the cigar- ette case is distinctive in showing the willingness of a large multinational corporation, as well as local businesses, to engage with terrorists to enhance market share and profits.Best money laundering businesses moreover, the investigatio n of the large-scale inter- state smuggling of cigarettes between north carolina and michigan by hez- bollah reveals how the seemingly ‘ ‘harmless’’ act of selling legitimate cigar- ettes can be accompanied by multiple criminal acts and provide funding oppor- tunities for terrorism. Investigation of this illicit cigarette trade by both local and federal law enforcement provided a window into a terrorist cell and its international links. It also revealed the subterfuge used to support illicit trade in a legitimate commodity. This paper focuses on two contrasting cases of cigarette smuggling that funded terrorism. The first case study involves an american tobacco company, R.J. Reynolds tobacco, and its alleged deliberate sales of its products in iraq using criminal actors as suppliers of its product. The cross-border movement

best money laundering businesses

This case and previous complaints filed by the european community against R.J. Reynolds are publicly available on the internet (see, www.Nyed.Uscourts.Gov, www.Publicintegrity .Org, and www.Ash.Org.Uk). Additional legal documents, complaints, and supporting materials were obtained through internet searches and on-line databases, such as lexis-nexis and findlaw.Com. Court documents for the hezbollah case are available from the memorial institute for the pre- vention of T errorism (MIPT)’s terrorism knowledge base (www .Tkb.Org). Supplementing the court documents, the authors have used commentaries by investigators and prosecutors that are publicly avail able (broyles and rubio, 2004; bell, 2003; billingslea, 2004). Additionally, the junior author inter- viewed the off-duty north carolina sheriff’s deputy who detected and investi- gated the cell’s cigarette smuggling activities.Best money laundering businesses the paper also draws on the limited academic study of the reynolds case and the more extensive body of literature that examines cigarette smuggling in the united states and abroad (see coker, 2003; basler, 2004; von duyne, 2003; von lampe, 2004). Congressional testimony, which provides insight into the investigation of and the threat posed to homeland security (levitt, 2005) by the hezbollah smuggling in the U.S., provides additional informa- tion. Journalistic analyses have helped to understand the public presentation of the problem (see kaplan, 2003; horwitz, 2004; beelman, 2002). Also used was the growing body of literature that looks at the links bet- ween crime and terrorism but pays little attention to the role of legitimate commodities in terrorist funding (see laqueur, 1999; dishman, 2001; makar- enko, 2004). None of this literature looks at the deliberate involvement of a multinational corporation with known terrorists.Best money laundering businesses