Organized Crime Research (kvl-homepage) The Nicotine Racket
Trafficking in Untaxed Cigarettes: A Case Study of Organized Crime in Germany
by Klaus von Lampe

A guest lecture given at the Institute of Criminology, University of Oslo, Norway, 6 May 1999

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The Concept of Organized Crime: Definition vs. Model
The Trafficking in Untaxed Cigarettes and Organized Crime in Germany: An Overview
The Sale of Untaxed Cigarettes
The Smuggling and Wholesale Distribution of Untaxed Cigarettes
The Extortion of Vietnamese Street Vendors
Conclusion: The Illegal Cigarette Trade in Germany from the Point of View of a General Theory of Organized Crime

The trafficking in untaxed cigarettes has taken on enormous proportions in Germany since the early 1990s, especially in the territory of former East Germany. The involvement of ethnically homogeneous criminal groups, the international cooperation of criminals, the occurrence of gangland style killings and the sheer volume of the business with some 450 million Deutsche Marks (230 million Euro) in illicit profits annually(1) makes the "nicotine racket" in the eyes of many a prime example of organized crime. The purpose of this paper is not to argue for or against the appropriateness of this label, but to describe and analyze the trafficking in untaxed cigarettes in Germany within the framework of a general analytical model of organized crime.

Data for this study were obtained from a systematic review of newspapers(2) and the criminological literature as well as from semi-structured interviews conducted with customs officials(3) and informants knowledgable of the lower levels of the illegal cigarette business(4).

The Concept of Organized Crime: Definition vs. Model

Every student of the subject knows that substantial differences exist in the basic understanding of organized crime. (Slide: The Concept of Organized Crime: Common Approaches). Some equate organized crime with certain types of criminal activity, namely the provision of illegal goods and services, regardless of who the perpetrator is. Some focus on the organizational structure of criminal groups, regardless of their involvement in predatory or victimless crimes. Others view organized crime in essence as a social condition in which legitimate and criminal structures are integral parts of one corrupt socio-political system, regardless of either the types of crime promoted or the degree of organization of the groups supporting the system. Still others believe that all of these characterizations hold some truth and that it is possible to combine them in a single definition of organized crime.

The problem, however, is always the same: the breadth and the depth of the public and scientific debate on organized crime is arbitrarily narrowed down, perhaps with the exception of a catch-all definition that equates organized crime with non-impulsive crimes committed by cooperating criminals. Though appropriate this definition may be, it faces criticism of being too broad and therefore of being almost meaningless.

In contrast an analytical model, as it is proposed here, (Slide: An Analytical Model of Organized Crime) provides a broad frame of reference while at the same time it highlights the intricacies of the subject. It can do so because it is not based on a predefined understanding of the nature of organized crime in the sense of an ontological entity. The underlying assumption instead is that organized crime is first and foremost a construct combining various aspects of the social universe in an inconsistent concept that is the result not so much of empirically grounded theorizing but of a complex and contradictory cultural process(5).

In an analytical model of organized crime the various aspects adressed in definitions and descriptions of organized crime are translated into concepts and variables. The question is not if or when an ideal typical constellation is reached but how the individual elements of the model generally develop and what linkages exist between them. In this sense organized crime is not the label for a specific phenomenon but merely the title of a research program.

The design of an analytical model of organized crime depends on how the pertinent key properties of the social world are classified. This is not only a problem of selection but also one of the adequate level of abstraction. In any case, in the light of the present paucity of empirically grounded theoretical concepts, only tentative, conjectural models can be constructed.

As a point of reference for the analysis of the trafficking in untaxed cigarettes I will use a rather abstract model that takes into account personal characteristics of criminals, their criminal activities and the organizational patterns of criminal cooperation in the context of a given social setting highlighting social conditions, the quality of law enforcement, and media influences.

The model stresses the importance of differentiating the concept of "criminal organization" by breaking it down into two basic categories, networks and groups, and by distinguishing social from economic patterns of cooperation as well as a micro level from a macro level of criminal structure.

The Trafficking in Untaxed Cigarettes and Organized Crime in Germany: An Overview

The trafficking in untaxed cigarettes in Germany has three characteristic features: 1. the street sale operated by male and female Vietnamese nationals, 2. the small and large scale smuggling of untaxed cigarettes by various individuals and groups, and 3. violent conflicts between ethnically homogeneous groups of Vietnamese criminals who extort Vietnamese street vendors. These three components do not make up a closed system. Untaxed cigarettes are not exclusively sold by Vietnamese and they are not only sold on the street, just as some of the individuals and groups involved in the smuggling and distribution of untaxed cigarettes and in the extortion of street vendors are also active in other criminal endeavors(6).

The trafficking in untaxed cigarettes is only part of a broader picture of organized crime in Germany. Organized crime in Germany is usually described either in terms of illicit markets and areas of crime or in terms of ethnically defined criminal structures.

Based on profit estimates from the early and mid 1990s, the nicotine racket is the third largest illegal business in Germany behind drug trafficking with alleged annual profits of 2 billion Deutsche Marks and illegal gambling with annual profits of 1 billion Deutsche Marks. Profits generated from the trafficking in stolen motor vehicles are estimated at 100 million Deutsche Marks annually(7). (Slide: Profits in Selected Illegal Markets in Germany) The prostitution industry may also rank high on this list but it seems impossible to give profit estimates particularly for the illegal portion of the market.

No other area of crime is as intricately linked with a specific ethnic group as the street sale of untaxed cigarettes with the Vietnamese. Usually, ethnicity and organized crime are combined in the image of ethnically defined "Mafias" which are seen to be active in various illegal businesses, like the so-called Russian, Italian, Chinese, and Yugoslavian "Mafias" in drug trafficking, fraud, counterfeiting, alien smuggling and extortion.

The Mafia image promoted by the media is, of course, an exaggeration and oversimplification. According to official statistics provided by the federal police agency BKA(8), German nationals form the largest group (39.9 % in 1997) of all suspects in organized-crime proceedings. Also, most organized crime cases involve suspects of different ethnic backgrounds. In only 26.1 % of all cases investigated in 1997 all suspects came from one specific country(9). Of these 155 proceedings 64 were directed against exclusively German groups of criminals. Vietnamese make up the fifth largest group of all non-German suspects in organized-crime cases (259 out of 4,865 or 3.2 %) (Slide: Organized-Crime Suspects and Nationality) and hold the third largest share of ethnically homogeneous organized-crime groups under investigation in 1997 (11 out of 155 or 7.1 %). (Slide: Ethnically Homogeneous OC-Groups) Considering the low absolute number living in Germany(10), Vietnamese are significantly overrepresented in organized crime cases and seem most likely to operate in ethnically homogeneous groups. Vietnamese criminals also stand out with regard to the propensity for violence. They rank second among all organized-crime suspects in the possession of firearms. (Slide: Organized-Crime Suspects and Possession of Firearms)

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