Insulated by intermediaries from the dirty work, tobacco executives described theirs as a “gray market” business, Thompson recalled. They supplied middlemen, who supplied the smugglers, court records show. The tobacco companies themselves didn’t do the smuggling. distributors, were smuggled back into Canada, without the baggage of more than $3 a pack in federal and provincial taxes. The Canadian cigarettes, exported tax-free to U.S. Americans had not suddenly developed a taste for Canadian brands. In the early 1990s, cigarette exports to the United States from Canada rose more than tenfold. This is the scenario that played out in Canada, where the government waged war on smoking by imposing tax increases that nearly doubled the price of a pack. At the same time, the firms have used smuggling as a powerful argument against cigarette tax hikes. The company called the charge “absurd.”Īs for their purported role in cigarette smuggling, tobacco companies have vigorously denied responsibility, saying they sell their products legally and can’t track them through every twist and turn of the distribution chain. In addition, cigarettes have been used around the world as common currency for laundering profits from drug trafficking and other crimes, allegedly with the collusion of tobacco companies, according to a suit filed last month by the European Union against R.J. This cheats governments of tax revenue and encourages smoking by keeping supplies of cheap cigarettes on the market.
“But it’s important to me that the story doesn’t end with Les Thompson.”Įxperts say a quarter to a third of cigarette exports worldwide winds up getting diverted from legal channels and smuggled across international boundaries. “I’m not asking anyone to pass me a handkerchief here,” he said. If Canadian authorities bring new charges against tobacco executives, Thompson could be a key witness - a situation he would relish. But he cautioned against taking the word of “a convicted felon” who took kickbacks. A spokesman for Japan Tobacco, Guy Cote, said the company could not comment because of the Canadian investigation. Reynolds referred questions about Thompson to Japan Tobacco International, which acquired Reynolds’ international business in 1999. Prosecutors on both sides of the border have said the same thing. There was no way a mid-level executive could fill multimillion-dollar orders for cigarettes without the approval of superiors, he said. Interviewed at his home in Canada, Thompson portrayed himself not as a renegade but as an obliging cog in a wheel of corruption. Thompson, who traded a good career and the promise of a bountiful retirement for a rap sheet, said he has never stopped wondering: Why only me? Thompson has also told his insider’s story to Canadian investigators in a probe that is expected to result in criminal charges against tobacco firms, officials and suppliers - possibly including his former superiors at RJR-MacDonald. court, is expected to be refiled in Canada. Information provided by Thompson was central to a lawsuit by the Canadian government that sought to recover $1 billion in lost taxes and law enforcement costs from RJR. “I’m looking forward to going to court and telling the story under oath,” he said in an interview. He has been cooperating with investigators from the United States and the European Union. Released from prison in January, he has emerged as a key figure in civil suits and criminal investigations into the global trade in contraband smokes. Though he was hauled off in disgrace, Thompson didn’t really go away.
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