Black Market: Dispatches (2016): Season 1, Episode 7 - Cheap Whites - full transcript

With their economy in shambles and a simmering war with Russia, Ukraine's citizens depend on smuggling contaminated, illegal cigarettes into the EU for survival.

This story is about two Europes.

You've got -- one side
is broke-ass Europe --

the Ukraine --

and the other side you have,
you know wonderland,

The European Union.

And they figured out
a black market

to make cheap cigarettes.

I'm on my way to buy
some unmarked, untaxed,

under-the-counter cigarettes.

The job is to get them
over to the European Union

where the taxes are so high.



The reason why the taxes
are so high is

because they want people
to stop smoking.

So Tom Littlewood is
headed to Ukraine

to investigate how smugglers

are finding ingenious ways

to get their goods
across that border.

Our goal is just to simply show
the world a window

as to why people
do the things they do,

where that desperation
comes from.

It's like they say,
when the system fails you...

you create your own system.

**

According to Berlin's
custom authorities,

there are over
350 points of sale



for black-market
cigarettes in the city.

Those are nearly exclusively
in the former East Berlin

and run by the Vietnamese mafia.

I'm about to meet a gang

who sell cigarettes here
in this housing estate.

These vendors sell contraband
cigarettes on street corners

and public parks for half
the price of legal smokes.

Which cigarettes
are you selling?

Marlboro.

Interestingly without
the tax stubs on them.

These ones do have tax stamps.

But this brand is not
officially sold in Berlin.

And how much do you sell a pack

of these cigarettes for?

Do you know exactly
where they come from?

These underground
cigarette dealers

are the end of a supply line

that starts hundreds
of miles away in Ukraine.

Ukraine is a country
on the brink.

Revolution, war,
economic stagnation,

the perfect conditions for
a thriving contraband economy.

And ordinary people
struggling to get by

are increasingly relying
on smuggling products

like illegal cigarettes
to make ends meet.

I'm just walking through
the city center of Lviv

and I'm on my way
to buy some unmarked, untaxed,

under-the-counter cigarettes.

Cigarettes are some of the most

heavily taxed products
in the world.

In some EU countries,
two-thirds of the price

goes to the government.

The big money
in cigarette trafficking

is made here in Eastern Europe,

where underground factories
produce unregulated cigarettes

made specifically
to be smuggled.

They are known on the street
as "Cheap Whites."

Cheap Whites cheat governments
out of billions in taxes

and they also pose
a serious public-health threat.

These half-priced cigarettes
drive up smoking rates,

which leads to more cancer
and heart disease.

And because Cheap Whites are
made in unregulated factories

from the Soviet era,

they contain all sorts
of nasty ingredients.

Public-health campaigns
across the EU

warn people of some of
the surprising ingredients

you might find in Cheap Whites,

from rat feces to toxins
such as arsenic and asbestos.

These Jin Lings,

from the quality,
they look identical.

The thing is that these guys
cost half the price of these.

We're talking 50 cents and $1.

At first glance, these look
incredibly similar to Camels.

Of course you got
a different name on the pack

and importantly a goat
instead of a camel.

That's why a lot
of the smugglers refer

to these Jin Lings
as the little goats.

Ivan is a small-time smuggler

who agreed to show us
how his operation works

if we hide his identity.

First he needs to pick up
the cigarettes.

We just stopped in a town where
Ivan's gonna buy the cigarettes.

There's a local market here.

Is there any way

those cigarettes
are made in England?

Yeah, let's have a look inside.

These are made, manufactured,

designed and sold
all within the Ukraine.

All the writing
and the health warnings,

everything is in English.

And they've even taken the cheek

of putting the Royal Crest

on top of the packet.

And I saw you also have

a box of Marlboros
in there as well.

A handful of
underground factories

in Russia and Ukraine produce

24 billion of these
cigarettes each year.

But with the state
of Ukraine's economy,

nobody makes any money on these,

unless those cigarettes
can make it

over the border
into the European Union.

You're the guy who drives
the car across the border?

And when you're
actually in Poland,

how do you sell them?

Why did you start
smuggling cigarettes?

The car itself --
there's a Polish license plate.

So that car has to be
constantly crossing the border

between Ukraine and Poland.

Do you ever worry
about getting caught?

We're back on the road
and we're traveling to Poland

where those cigarettes
go from being worth

$50 to $300.

Ivan's partner will sell
his Cheap Whites on

to a contact
just over the border.

If all goes according to plan,

he will return in 12 hours

to give Ivan his split
of the money.

The smuggler's partner
safely crossed into Poland,

sold off the cigarettes
and crossed back into Ukraine

without detection.

Together they made about
$150 each for this run.

It might not seem like a lot

for an international
smuggling operation,

but in Ukraine,
it's actually a big payday.

And how long do you think
you'll carry on doing this?

How many people do you know
who live the same way as you,

smuggling cigarettes?

And do you have kids?

And what do you hope
for your kids?

They'd love
to just stop doing this,

they'd love to get out.

But in order for that to happen,

there needs to be
a change in the system,

there needs to be a change
in the country.

And because
of endemic corruption,

both of them just
seemed like they are,

they are not sure they are
ever gonna see that happen.

I'm about to meet
the chief editor

of a local journalist
collective.

She's one of the few people
in the region

reporting on the black market.

Because of that,
she's been the victim

of numerous threats
and intimidation.

So can you tell me
about the organizations

behind the black market?

How important is that
to Ukraine economy?

Galina just told me
this is a good way

to understand Ukrainian
mentality.

Basically a bunch of guys
digging up the road

to fill in the existing
holes in the road.

And that way no one really knows

how much money has been spent
on the whole thing.

And it was frustration
with this corrupt system

that drove millions
of Ukrainians

to the streets in 2013

to demand
a change of leadership.

After months of protests,
they overthrew

the Russian-backed President,
Viktor Yanukovych.

But today Ukraine is isolated.

Cut off from the European
Union to the west

and a war with Russia
simmering in the east.

With the country going broke,
so many Ukrainians

are working
in the underground economy,

the tax revenues are dwindling.

And government officials
have come to depend

on bribes and kickbacks.

Smugglers who can afford
to pay off government officials

can manufacture and distribute
illegal cigarettes

with little risk of arrest.

But to the border
with the European Union,

authorities are waging
a military-style crackdown.

And one of the frontlines
of the battle

between smugglers
and law enforcement

is the border of Ukraine
and EU member Romania.

We literally just stepped
over the border into Romania

and our Chief of Police
got a call saying

some cigarettes have been
seized on the border.

We're heading there right now.

We've just crossed into Romania

and the border patrol claims
they've made a big bust.

The contraband cigarettes
would've been worth

more than $20,000
on the streets of the EU,

but the smugglers escaped
before they were caught.

What kind of punishments
are dished out to people

who get caught with
cigarettes in their cars?

Authorities tried
to discourage smuggling

with violent interdiction
and jail time.

But cigarette syndicates
stand to gain

so much if they can
get across this border

that they are
still not deterred.

More and more money the state
throws at the problem

trying to catch these
untaxed cigarettes,

the more and more creative
the guys smuggling have become.

I'm currently driving through
the Carpathian Mountains

with the boss of a local
smuggling gang.

The boss, who goes
by the name of Legion,

is going to show me
the creative way

he smuggles his cigarettes
to avoid the EU crackdown.

We've just arrived at the boss's
secret mountain hideout.

It's a deserted ski lodge,

the beautiful panoramic view
of the mountains

and there's a little
log fire burning

and these two blondes
that he lovingly referred to

as his babies.

What are their names?

Where did you find them?

Do you think, like, your
business can only exist

because of the high tax
in Europe?

Yes. Yes.

Just getting
real-time translation.

Demand?

Demand, yeah.

Do you see yourself
as a criminal at all?

Cheers!

So, how did you get
into the black market

in the first place?

How old were you?

What was that like,
to be 17 and carry

a huge bag of weapons
over the border?

You're a boss of your own group,
your own gang,

but you have bosses
above you as well?

How about your organization?

How is your organization set up?

The next day we head out
to the secret spot

on the Ukrainian side
of the Carpathian Mountains

where Legion's smuggling
operation takes off.

But just as we start up
the mountain,

he gets a phone call.

The weather has turned,

and his smuggler
is having second thoughts.

I'm with a Ukrainian
cigarette smuggler

who's figured out a way

to avoid the Romanian
border patrol.

So we're all set up
and ready to go.

We're just waiting for
the pilot to give the okay,

the wind to drop
a little bit more,

and then he's gonna
be lifting off

with a nice small amount
of cigarettes

strapped to his machine

and end up flying off over
there straight into Romania.

The pilot will fly one
and half hours into Romania

and drop the package
for a smuggler

on the other side.

Flying over this heavily
patrolled border

is high-risk smuggling.

Just last month,
two of his pilots

were shot out of the sky.

So they were flying
over the Romanian border

and the cops shot them?

What are the main risks
that he's facing now?

How do you feel now
watching him fly off?

How many cigarettes
is he carrying?

How much money
is he gonna make with that?

Do you know who buys
for the Germans?

Flying high to evade
the authorities,

this is the moment where
the pilot crosses the river

that separates Ukraine
from the EU.

And the price of the cigarettes
he is carrying

just went up 300%.

Demand for Cheap Whites
on the streets of Berlin

and across Western Europe
continues to grow.

But since we filmed, the fight
over illegal cigarettes

in Ukraine has heated up.

Right-wing paramilitary groups

began waging
a vigilante campaign

they claim is
to root out corruption --

opening fire on local police

they say are involved
in cheap-white trade.

As a result, Legion says
he has shut down

his entire cheap white
smuggling operation.