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.
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.