Cigarette Smuggling Funds Terrorists

By Pamela Mortimer

Cigarette smuggling has the potential to generate millions of dollars each year, part of which may be reaching terrorist groups such as Hamas, Hezbollah and Al Qaeda, according to law enforcement authorities. In one documented case, $100,000 was transmitted to the terrorist organization Hezbollah.

On Thursday, a hearing will take place before the House Judiciary Subcommittee on Crime, Terrorism and Homeland Security to address a newly released 15-page report congressional report detailing specific instances of terrorist funding. The report was compiled using information from law enforcement intelligence sources and New York State’s Department of Taxation and Finance.

An excerpt of the report reads: "Cigarette smuggling is generating millions of dollars every year that can be reaching terrorist groups, including Hezbollah, Hamas and Al Qaeda, according to law enforcement sources. In a single case, $100,000 was sent to Hezbollah."

"This is a very serious homeland security issue, one that has gone unnoticed for far too long," said Rep. Peter King, (R-N.Y.), the ranking member of the House Homeland Security Committee, who spearheaded the investigation.

"Cigarette smugglers are able to generate millions of dollars in illegal profits with a great deal of this wealth being sent to terrorist groups overseas – groups that would like nothing more than to inflict devastating harm on our country and its citizens."

The report cites a potential flaw in New York State policy as being a large part of the problem. According to King’s office, there is an official policy in the state of "forbearance", the act of refusing to collect taxes on sales of Native American tax-free cigarettes. The sales may be made to non-Native Americans.

Critics of the law claim it has effectively "created a safe haven" for smugglers. As an example the report states that a well-organized operation can buy cigarettes tax-free on New York’s Indian reservations and turn around to sell them at a large profit in the New York City area. Such sales may generate up to $300,000 per week. This also causes the state to lose approximately $576 million in tax revenues which would have been paid to New York State.

Supporters of the policy may point out that the act of forbearance was a small payment for the Native Americans who had been forcibly disenfranchised from their homes. The property on which many Native Americans lived was seized by the government claiming eminent domain even though the law stated that such an act could never take place.

The report cites information from federal and New York state law enforcement sources, claiming that nearly 60 percent of all convenience stores in New York City are Arab-owned, comprised primarily of families of Lebanese, Jordanian, Yemeni and Palestinian descent. Sources report that while the vast majority of retailers are operating according to the law, some are not.

"The State is losing hundreds of millions of dollars in tax revenue; and given the current budget shortfall, this would seem to be more than enough reason to put the so-called policy of forbearance out of its misery," King said.

"But this is more than just a matter of lost revenue. It is a matter of national security. Cigarette smuggling in New York State must be brought to an end immediately."