HomeNewsBriefReport Breaks Down Paraguay to Brazil Cigarette Smuggling Trail
BRIEF

Report Breaks Down Paraguay to Brazil Cigarette Smuggling Trail

BRAZIL / 22 AUG 2017 BY JAMES BARGENT EN

A new investigation into the cigarette smuggling trail between Paraguay and Brazil lays out the inner workings of a criminal economy that generates huge profits for everyone from sophisticated organized crime networks to the president of Paraguay.

The report by news site Nós examines the smuggling dynamic in the eastern Brazilian state of Santa Catarina, where authorities seized 7.7 million packets of cigarettes in 2016 and 11 million so far this year.

Nós traces these contraband cigarettes to Tabacalera Del Este, a factory owned by the family of Paraguayan President Horacio Cartes, which produces an estimated 50 percent of the contraband cigarettes sold in Brazil.

According to Nós, only 10 percent of cigarettes produced in Paraguay are sold on legal markets -- 5 percent for domestic consumption and 5 percent for legal exports.

The contraband trade is highly attractive due to the huge discrepancy in taxation levels, with Paraguay only charging a 16 percent in tax rate compared to Brazil's 80 percent, reducing the cost to the consumer from around $2.20 a pack to around $0.95, Nós states.

Many of these cigarettes enter Brazil through the contraband hub of Ciudad del Este, where numerous smuggling networks and corrupt security forces ferry them across the border.

The contraband packs are then transported to their destination by Brazilian drivers who commonly earn between $220 and $630 a trip. The drivers often move their loads using stolen vehicles; seven out of ten vehicles police have seized from smugglers were stolen and there are now car theft rings dedicated exclusively to stealing vehicles for cigarette smugglers, according to Nós.

If the drivers get caught, they rarely spend long in prison, instead skipping bail and returning to work, Nós reports.

It is even rarer for police to work up the chain to the criminals that finance and coordinate the smuggling networks, as the drivers know little and talk less. Nevertheless sources in the security forces told Nós that these were no small-time criminals, but rather extremely wealthy individuals who have built criminal empires on the back of the trade.

InSight Crime Analysis

The combination of high profits with low risk compared to more traditional criminal activities such as trafficking drugs or arms has seen smuggling of contraband cigarettes emerge as a major criminal economy in countries around the region, from Mexico to Chile.

SEE ALSO: Coverage of Contraband Smuggling

The huge profits on offer have attracted not just smuggling rings but a whole range of underworld actors including organized crime networks, insurgent groups and money launderers.

As Nós documents, Paraguay is the epicenter of this trade, producing far more cigarettes every year than domestic and legal export demand can justify. However, with President Cartes and his Tabesa company among those profiting the most from the business, it seems unlikely the government will take serious action either to crack down on smuggling networks or to alter the low-tax regime that creates the economic incentive underlying the trade.

share icon icon icon

Was this content helpful?

We want to sustain Latin America’s largest organized crime database, but in order to do so, we need resources.

DONATE

What are your thoughts? Click here to send InSight Crime your comments.

We encourage readers to copy and distribute our work for non-commercial purposes, with attribution to InSight Crime in the byline and links to the original at both the top and bottom of the article. Check the Creative Commons website for more details of how to share our work, and please send us an email if you use an article.

Was this content helpful?

We want to sustain Latin America’s largest organized crime database, but in order to do so, we need resources.

DONATE

Related Content

BRAZIL / 13 JAN 2014

Prisons in Latin America have abandoned any notion of rehabilitating inmates, warned the United Nations' Special Rapporteur on Torture, highlighting…

BRAZIL / 9 OCT 2012

In a particularly blatant example of vote buying, a candidate running for town council in an Amazonian town was arrested…

BRAZIL / 4 JUN 2012

A recent joint air force exercise is supposed to herald a new era of border security cooperation between Brazil and…

About InSight Crime

THE ORGANIZATION

Who Are Memo Fantasma and Sergio Roberto de Carvalho?

24 JUN 2022

Inside the criminal career of Memo Fantasma  In March 2020, InSight Crime revealed the identity and whereabouts of Memo Fantasma, a paramilitary commander and drug trafficker living in…

THE ORGANIZATION

Environmental and Academic Praise

17 JUN 2022

InSight Crime’s six-part series on the plunder of the Peruvian Amazon continues to inform the debate on environmental security in the region. Our Environmental Crimes Project Manager, María Fernanda Ramírez,…

LA ORGANIZACIÓN

Series on Plunder of Peru’s Amazon Makes Headlines

10 JUN 2022

Since launching on June 2, InSight Crime’s six-part series on environmental crime in Peru’s Amazon has been well-received. Detailing the shocking impunity enjoyed by those plundering the rainforest, the investigation…

THE ORGANIZATION

Duarte’s Death Makes Waves

3 JUN 2022

The announcement of the death of Gentil Duarte, one of the top dissident commanders of the defunct Revolutionary Armed Forces of Colombia (FARC), continues to reverberate in Venezuela and Colombia.

THE ORGANIZATION

Cattle Trafficking Acclaim, Investigation into Peru’s Amazon 

27 MAY 2022

On May 18, InSight Crime launched its most recent investigation into cattle trafficking between Central America and Mexico. It showed precisely how beef, illicitly produced in Honduras, Guatemala…