Alleged cigarette shipments to company close to Assad may violate economic sanctions

EU probes JT over exports to Syria

Kyodo

The European Union is probing alleged illicit cigarette shipments by Japan Tobacco Inc. to a firm close to Syrian President Bashar Assad in violation of the regional body’s economic sanctions on the Middle Eastern country, EU officials said.

The European Anti-Fraud Office is investigating whether the cigarette maker, half owned by the Japanese government, has aided the Syrian government, which is now engaged in a bloody civil war after a crackdown on antigovernment protesters that began in March last year, they said.

A JT official in Tokyo said the company halted cigarette shipments to the Syrian company after it discovered an Assad family member who is the target of sanctions was a shareholder in it.

The Wall Street Journal reported Tuesday that JT’s cigarette sales to the Syrian firm “provided the regime with a cash infusion at a time of growing economic isolation” because the cigarettes could be resold for much more than they cost.

The newspaper also reported that the regime “uses cigarettes as a form of payment for the irregular military forces and militias” that are playing a central role in the conflict.

The U.S. daily quoted a spokesman for Japan Tobacco International SA, a Geneva-based subsidiary of JT, as saying the cigarette company has not processed any sales to the Syrian firm since May 19, 2011, four days before the European Union imposed sanctions, and is cooperating with the investigation by the antifraud office.

The spokesman, Guy Cote, also said “JTI stopped all cigarette sales to anyone in Syria this past February,” the report said.

The paper says JTI delivered 450,000 cartons of cigarettes via a Cyprus-based distributor to Syria Duty Free Shops Ltd., which it acknowledged was then at least partly owned by the Makhlouf family, first cousins of Assad.

The cartons were shipped after the EU slapped sanctions on Assad family member Rami Makhlouf, a businessman widely regarded as the richest person in Syria, the newspaper said.

JTI also delivered 4.2 million cartons of Winston cigarettes to General Organization of Tobacco, Syria’s state-owned tobacco firm, on the same day its cigarettes were shipped to the Makhlouf-linked firm, the daily said.