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8th Aug 2022

EU admits parts of tobacco deal too bureaucratic

  • Olaf: 'Investigative needs ... dictate much faster means of enquiry than formal requests with a deadline of 45 days' (Photo: dearanxiety)

The EU's anti-fraud agency Olaf has said that an agreement the EU signed with tobacco company Philip Morris International (PMI) in 2004 has given PMI an incentive to cooperate in cigarette smuggling investigations, but also indicated that some of the inquiry tools the EU acquired under the agreement may have been too bureaucratic to work in practice.

The EU-PMI deal, which ended a legal struggle and cemented a cooperation to combat cigarette smuggling and counterfeiting, will expire next year.

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EUobserver has looked at various aspects of the agreement, and uncovered PMI's annual compliance reports via a freedom of information request.

The reports showed that Olaf had made little use of several of the investigative tools it was given under the agreement.

For example, the deal gave Olaf the power to interview PMI employees, but PMI said it never received any request for such interviews during the 11 years the agreement has been in place.

According to the reports, Olaf also blindly trusted PMI's promise to hold due diligence probes into the company's business partners – Olaf never requested the due diligence reports despite the right to ask for them.

Olaf was unavailable for comment before publication of the article about its investigative tools under the agreement, but their press office has sent this website an e-mail with comments since.

Responding to questions why Olaf never used some of the options given under the agreement, its press office said “the specific situations envisaged in certain clauses have not arisen in the context of Olaf investigations”.

Although Olaf did not specify how or quantify how often, the spokesperson wrote that PMI “has on multiple occasions provided national investigators and Olaf with information of direct investigative value”.

“This information has regularly led to seizures by Member States' enforcement authorities, and in many cases to arrests and criminal indictments,” it said.

“Transnational criminal organisations were dismantled and potential losses to Member States' and the EU budget of many million euros were prevented. PMI and other companies also provided assistance to dismantle illegal cigarette production facilities in some EU Member States and neighbouring countries,” the e-mail continued.

Olaf noted that “on several occasions Olaf has addressed requests to PMI for information in relation to on-going investigations”, but also hinted that not all the inquiry tools put in place by the deal were considered effective.

“Investigative needs will also frequently dictate much faster means of enquiry than formal requests with a deadline of 45 days for replies, such as when a container with a suspicious load is already en route,” said Olaf's press office.

The European Commission has promised an assessment of the agreement before the end of the month. Based on that assessment, a decision will be made whether or not to start negotiations for a possible renewal of the deal.

EUobserver has published a four-part series of articles about the EU's agreement with tobacco company PMI

Part one: Will EU renew $1.25bn deal with tobacco firm PMI?

Part two: EU sleuths ignore special powers on tobacco smuggling

Part three: Scant evidence EU tobacco deal curbed smuggling

Part four: How did the EU spend its €110 million in tobacco money?

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