Page last updated at 23:25 GMT, Monday, 28 July 2008 00:25 UK

How cigarettes funded Balkan wars

In the second of two pieces on organised crime accompanying his Radio 4 series How crime took on the world, Misha Glenny reveals the details of a cigarette-smuggling scam that funded many of the paramilitary killing machines in the Yugoslav wars.

The first counterfeit cigarettes appeared on the markets of the former Yugoslavia just days after the war broke out in June 1991.

These were fake Marlboros, Rothmans, Winstons and other well-known brands that had been manufactured in different parts of the Balkans and beyond.

I was a smoker at the time (readers may be pleased to know I've since given up the dreadful habit) and so I was a willing customer for these staggeringly cheap products.

Home owner outside destroyed house in Serbia
The cigarettes often arrived in the Balkans via Rotterdam and Asia

There was only one drawback - when you drew your first puff, instead of the familiar blend of Virginia tobacco, the back of your throat was assaulted by a taste akin to a mixture of sawdust and goat's dung.

It took a restless Serbian entrepreneur called Vladmir "Vanja" Bokan to provide the market with an improved product a couple of years later.

In a darkened cafe in Belgrade, a former business associate of Vanja's, Mr X, told me how it was done.

My interlocutor warned me that if I identified him, he would soon be dead. "And they'll probably kill you, too,"' Mr X added for emphasis. But after this sombre introduction, he warmed to his subject.


Mr X explained how Bokan would buy cigarettes direct from factories in Western Europe and the United States for export into Europe's two main free-trade zones, Rotterdam in Holland and Zug in Switzerland.

This meant they attracted none of the high purchase taxes imposed on cigarettes in most countries.

German official displays confiscated cigarettes
An Italian crime syndicate distributed the Balkan cigarettes through Europe

The billions of cigarettes were then flown to countries in Central Asia and North Africa before being flown back into the Balkans.

Criminals and intelligence services from all the former republics of Yugoslavia co-operated in the logistics of this trade but the cigarettes' physical destination was the tiny coastal republic of Montenegro that borders on Croatia, Serbia, Kosovo and Albania.

The leading politician in Montenegro - then as now - was the former President Milo Djukanovic.

He went on record long ago explaining that Montenegro did not consider these goods to be contraband and that he was justified in imposing what he styled a "transit tax" on the cigarettes.

In Podgorica, the Montenegrin capital, I heard from Daliborka Uljarevic how as a schoolgirl she watched lorry after lorry trundle out of the factory near her school.

This was the weigh station between the airport where giant Ilyushin transporters dropped off the contraband and the harbour just down the coast at Bar.

Here the goods were loaded on to super-fast speedboats and for almost a decade, 20 of these vessels travelled across the Adriatic to Italy every single night - weather permitting.

The cigarettes were dumped on the coast of Apulia to be picked up by members of one of Italy's youngest organised crime syndicates, the Sacra Corona Unita (SCU).


The SCU distributed the smuggled goods all over Europe - Britain was a particular target because legally-sold cigarettes are subject to very high taxes in the United Kingdom.

The man alleged to be the biggest cigarette smuggler of all is in a Russian jail awaiting extradition

Over a seven-year period, the European Union estimates it lost $8bn in revenue to the Balkan cigarette trade.

Instead, the profits went to a variety of criminal groups often associated with some of the most murderous paramilitary operations that became notorious during the wars in the former Yugoslavia.

Italy and the European Union are still investigating the trade. Meanwhile, Stanko Subotic "Cane", the man alleged to be the biggest cigarette smuggler of all is in a Russian jail awaiting extradition to Serbia.

He may be facing many years in jail but at least he has so far avoided the fate of the man who invented the whole trade, Vanja Bokan. In the mid-nineties Bokan had fled to the Athens from Belgrade in fear for his life, after an assassination attempt in broad daylight on the streets of the Serbian capital.

He swiftly secured Greek citizenship and once again prospered as a master smuggler.

But on 7 October 2000, as he emerged from his Mercedes 500 in front of his villa, Bokan's face was obliterated by 29 bullets fired from a couple of semi-automatics. The killers were never brought to justice.

Misha Glenny is the author of McMafia: Crime without frontiers. You can hear How Crime Took on the World on Radio 4 at 2000 BST.



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