Source: Folha de S. Paulo, 12/07/2009

MARINA WALKER GUEVARA
MABEL REHNFELDT
MARCELO SOARES
COLLABORATION FOR THE SHEET IN WASHINGTON (USA), ASSUNÇÃO E SALTO DEL GUAIRÁ (PARAGUAY), SÃO PAULO AND GUAÍRA (PR)

In April, the government increased the IPI (Tax on Industrialized Products) of cigarettes by 30% to offset the car tax cut. Since then, it has been easier to spot packs of exotic brands in São Paulo, almost all of them from Paraguay. Sold by street vendors in the vicinity of bus terminals, they are the tip of one of the most lucrative organized crime schemes in Latin America. For a year, the International Investigative Journalism Consortium, which brings together reporters from around the world, has verified cigarette smuggling in 16 countries. In South America, the focus is on the triple frontier, which, according to international authorities, has become one of the main points of illegal trade in the world. Profitability is high. Each packet, which hits the streets at R $ 1,20, costs cents at Paraguayan factories. The cheapest legal pack costs R $ 3 in Brazil. In a report for the first quarter of 2009, Souza Cruz points out that the higher price "will further increase the attractiveness of the illegal trade". For the Federal Police, the problem has grown. “From January until now, with the fluctuation of the dollar and the increase in the IPI, we beat last year's record of seizures,” says Érico Saconato, head of the PF Police Station in Guaíra, on the border with Paraguay. According to him, smuggling cigarettes is already more profitable than drug trafficking. Most of the smuggling has passed through Guaíra since 2006, when the inspection in Foz do Iguaçu was reinforced. Cigarettes, weapons, drugs and other products are taken by speedboat to the more than 300 clandestine ports in the region. Guaíra is strategic because it has discrete ports, side roads and few police resources. Smuggling pays many residents. Criminals give up to R $ 10 per day per box to keep them in family homes. Brazil is the largest market for smugglers. The IRS estimates that the country receives up to 30 billion Paraguayan cigarettes per year - almost half of the production of the neighboring country in 2006, according to Uruguay's Ciet (Tobacco Epidemic Research Center). The whole of Brazil consumes, according to estimates, 150 billion cigarettes per year. Paraguay accounts for an estimated 10% of the global consumption of illegal tobacco.

Traffic dynamics

Born in Guaíra, businessman Roque Fabiano Silveira, now wanted by the courts, made a fortune with the smuggling of Paraguayan cigarettes, according to the police. Son of a mayor, he saw his business take off in Paraguay. For the Public Ministry, its history shows the dynamics and global reach of Paraguayan cigarette smuggling. The rise of Silveira, 44, started after he left the Brazilian city in 1996, accused of organizing the murder of a businessman. He crossed the border and started living in Paraguay. In 1999, it opened its cigarette factory, Tabacalera Central. It has become the basis of an international smuggling network, police say. According to local dealers, Silveira buys cigarettes from several factories and organizes deliveries in Brazil. In late 2006, a year after being indicted in the USA, Silveira was indicted in one of the largest investigations into cigarette smuggling in Brazil. Operation Fireball arrested more than 90 people in 11 states. According to the Public Ministry, he controlled three chains that distributed contraband cigarettes in several states. He escaped to Paraguay. Summoned by Justice several times, he never answered. Through his lawyer, he refused an interview request.

"It's not our problem"

The most sold brand by street vendors in São Paulo is Tabesa's “Eight” (Tabacalera del Este). In Operation Bola de Fogo, she appears as a supplier of cigarettes smuggled through Silveira's nets. Horacio Manuel Cartes, registered in Paraguay as the main shareholder and director of Tabesa, started his career two decades ago, distributing cigarettes. Since then, it has acquired a bank, one of Paraguay's biggest football teams, Libertad, and several agricultural businesses - none in its name. José Ortiz, current president of Tabesa, says he does not care about the company's illegal sale of cigarettes in neighboring countries. "We sell our products in Paraguay and pay all local taxes," he says. According to him, the company sells only to Paraguayan wholesalers. “We don't know where our cigarettes are consumed. It is not our problem. ” In recent years, through entities such as ABCF (Brazilian Association to Combat Counterfeiting), cigarette multinationals have been collaborating with authorities in the fight against smuggling. The machine that shreds 500 illegal packs a day at the Federal Revenue headquarters in Foz do Iguaçu was provided by ABCF, which also donated funds for the renovation of the building used by the PF in Guaíra. For lawyer Fernando Ramazzini, director of ABCF, what makes this collaboration more difficult is the fact that most of the contraband cigarette does not fake Brazilian brands. “You can't catch who makes these cigarettes in Paraguay, because they are produced legally. What we do is catch those who counterfeit cigarettes like Derby, ”he said.

Report produced by the International Investigative Journalism Consortium.

Read more: publicintegrity.org/investigations/tobacco