Companies reporting correctly on seized cigarettes

| January 18, 2016

There has been no evidence of incorrect reporting by tobacco manufacturers in relation to the provenance of cigarettes seized within the EU.

Under agreements between the four major multinational tobacco manufacturers, the EU Commission and member states; it is the manufacturers that are responsible for identifying whether seized cigarettes are genuine or counterfeit. A penalty is applied to the manufacturer if the cigarettes are genuine but not if they are counterfeit.

The French MEP Michèle Rivasi had sought written answers to a number of questions about transparency in the fight against the illegal trade in tobacco products.

In a preamble to her questions, Rivasi said that under an agreement reached with Philip Morris, the company had agreed to pay US$1.2 billion over a 12-year period, of which 90.3 percent was destined for member states that were party to the settlement and 9.7 percent was destined for the Commission.

She asked how this money was being used by the member states and the Commission, and, specifically, whether it was being used directly in the fight against cigarette smuggling.

‘Furthermore, tobacco producers are using the Codentify identification system to carry out examinations by themselves of cigarettes seized by customs agencies in order to determine whether they are smuggled or counterfeited,’ she said. ‘What checks are the Commission and OLAF [EU anti-fraud office] carrying out as part of these evaluations, the results of which determine whether the tobacco producer has to reimburse taxes not collected by the member states?’

In reply, the Commission said that, in accordance with the principle of universality of the EU budget, payments to the EU general budget were not earmarked, while payments to member states were transferred to their national budgets and the Commission did not monitor the use of those funds.

‘The Commission and OLAF encourage member states to use part of their annual budgets for the fight against the illicit tobacco trade,’ the Commission said. ‘The anti-fraud programme Hercule III provides €104.9 million, for the period 2014-2020, to support member states to fight fraud, corruption and other illegal activities. Hercule will finance concrete projects to counter smuggling and other criminal activities against the EU’s financial interests.

‘Seizure payments depend on whether cigarettes seized with the brand of a given manufacturer are deemed genuine (payment), or counterfeit (no payment). This analysis is performed by the manufacturers, but member states and the Commission can make random verification checks. Over 5000 seizures have been notified to date within the framework of the agreements with the four major tobacco manufacturers and even more seizures take place outside the scope of the agreements.

‘It is important to note that there has been no evidence of incorrect reporting by the manufacturers. One particular member state has verified 123 assessments made by manufacturers, and not found any error.

‘The Commission had used an independent laboratory in the UK to test seized cigarettes in the past. The Commission is now setting up a new facility to test seized cigarettes and has contracted its own laboratory in the Joint Research Centre in Geel [Belgium].’

Category: Breaking News

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