HomeNewsBriefParaguay President Profits From Mexico Contraband Cigarettes
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Paraguay President Profits From Mexico Contraband Cigarettes

CONTRABAND / 9 DEC 2014 BY KYRA GURNEY EN

Paraguay's president has once again been identified as a beneficiary of Latin America's contraband cigarette trade, this time in Mexico, where black market cigarettes finance criminal groups like the Zetas and the Sinaloa Cartel.

According to Milenio, six of the top selling contraband cigarette brands in Mexico are produced by Paraguayan President Horacio Cartes' tobacco company, Tabesa.

Shipments of Tabesa cigarettes -- which make up between 2.5 and seven percent of Mexico's black market tobacco trade -- have been discovered in the cities of Mazatlan, Veracruz, Ciudad Juarez, Chetumal and Mexico City, reported Milenio. One Mexican official told the newspaper that after Asian cigarettes, Paraguayan brands were the most commonly seen on the black market. 

In addition to cutting into the profits of Mexico's tobacco industry and costing the country an estimated $348 million in lost tax revenue every year, the contraband cigarette trade also finances criminal groups like the Zetas and the Sinaloa Cartel, which control part of the country's black market for tobacco.  

InSight Crime Analysis

Although Cartes has long denied any role in facilitating contraband, there's no question that he benefits financially from Latin America's booming black market tobacco trade. Tabesa cigarettes have flooded the Argentinean, Colombian and Brazilian markets and have also allegedly been used by criminal groups in Colombia to launder money. In April, the governor of the Colombian department of Bolivar filed a lawsuit against Tabesa for allegedly promoting the contraband cigarette trade, which costs Colombia an estimated $67 million in lost tax revenue every year. 

As Milenio points out, Tabesa -- which is one of Paraguay's major cigarette companies -- raises suspicions because the country's tobacco industry produces close to 25 times the amount of cigarettes needed to supply the legal domestic market. A significant portion of the remaining cigarettes end up in black markets throughout Latin America.

SEE ALSO: Coverage of Contraband  

Cartes has previously been investigated by the US Drug Enforcement Administration (DEA) for money laundering. According to a 2010 diplomatic cable released by Wikileaks, US officials suspected Cartes was the leader of a transnational criminal organization that laundered money for drug traffickers. The president was also convicted of wire fraud in the mid-1980s and was a fugitive for four years before a judge overturned his sentence.  

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