Zionist Cigarettes and Legitimate Smugglers

“They buy cigarettes from Philip Polis, which is accused of being Zionist and Jewish,” barked Ayatollah Ahmad Jannati, Chairman of the Guardian Council, to a crowd gathered for Friday Prayers on November 21. “At the very least it’s suspicious. They’ve given people 12 billion single cigarettes from the brand. It’s wrong.”

By Philip Polis, the cleric was in fact referring to Philip Morris, the tobacco company that produces Marlboro cigarettes. Jannati was discussing the matter with Mohammad Reza Nematzadeh, the Minister for Business and Industries, who, over the last few weeks, a number of MPs have threatened to impeach.

According to Fars News Agency, the permit to import Marlboro cigarettes was issued on March 2014 by Iran’s Center for Planning and Supervision of Tobacco Products to Zarrin Cellulose, which manufactures health products and is owned by a company called Mizban Bros. The company proclaimed to be the sole representative of Philip Morris in Iran.

However, Philip Morris denies having ever endorsed the permit. “Zarrin Cellulose doesn’t have permission to sell Marlboro cigarettes in Iran or to act on behalf of PMI in any way,” said Iro Antoniadou, a spokesperson for Philip Morris International (PMI). “PMI hasn’t granted anyone permission to sell or manufacture our products in Iran at this time. We also notified the Iranian Tobacco Company that no one had the authority to apply for a licence to manufacture or sell our products, or act in any other way on our behalf.”

Davis Lewin, the head of policy and research at the London-based Henry Jackson Society, said it was a shame businesses are unable to be more involved in the Iranian market. But given the regime’s current human rights record, it is paramount that businesses play their part by opting out of contracts.

“I think there are a small number of companies that are working in Iran despite sanctions forbidding it but it’s deeply unwise,” said Mr Lewin. “Business needs to stay out of Iran, which is why I’d be very surprised if it turned out that a big company like Philip Morris, which simply can’t afford to take risks like this, was doing business there.”

But Iran’s Minister of Industries recently said that “If a Philip Morris spokesperson officially announces that [Philip Morris] entered the Iranian market and that it has a representative in Iran, no doubt it’ll be fined by Western governments.”

The permit began causing widespread controversy in Iran from November 10 — particularly around claims that the company was “Zionist” — when the Mehr News Agency published a letter by the Minister of Industries and Commerce on the subject. According to Mehr, the Ministry of Intelligence and the Attorney General were opposed to issuing the licence; certain government officials forced the Foreign Ministry to report that the tobacco company was not Zionist. Based on this, the Minister of Industries issued the permit.

Mehr accused officials from President Hassan Rouhani’s administration of benefiting financially from the permit, thereby instigating an investigation into the scandal led by the chairman of the Article 90 Commission. Based on the Iranian constitution, this parliamentary body is responsible for investigating complaints into the government’s different branches.

According to Hamid Rasaei, the deputy chairman of the Article 90 Commission, the commission arrived at a number of important decisions on December 9. First, it came to the decision that Zarrin Cellulose’s permit would be revoked and secondly, that parliament would ask the Foreign Ministry to ascertain whether the allegation regarding Philip Morris being a Zionist entity was true or false. If it found that it was Zionist-affiliated, no company would be allowed to represent them in Iran.

Rasaei also denied that Zarrin Cellulose represented Philip Morris and said that Philip Morris had denied in a letter that it had a representative in Iran.

Then, on the same day that the Minister of Industries said Philip Morris was not Zionist and that it was better to import cigarettes legally than have them smuggled in, it was revealed that four billion individual Marlboro cigarettes are smuggled into Iran every year.

A 30-Year Saga

Iranian officials have been entangled in the cigarette trade for 30 years. In July 2013, influential former official Mohammad Ali Zam said in an interview with the Khabar Online news site that several well-known foundations had benefitted from the smuggling of cigarettes. According to Zam, the activities of groups including the Martyrs Foundation and the Islamic Propaganda Organization had an impact on the cigarette trade in Iran. Tobacco imports from Switzerland in the 1980s meant that attempts to boost the popularity of Iranian cigarette brand Bahman were not as successful as they could have been. Zam believed Bahman could have successfully competed with brands like Marlboro, Winston and Kent, but legitimate institutions engaged in the smuggling business were destroying its chances of success.

Competition for controlling the Marlboro cigarette monopoly goes back to 2007, when government statistics revealed the government made $3,700,000 every month that year through the taxing of Marlboro imports. Zarrin Cellulose applied for a permit that year but when Philip Morris was declared a “Zionist entity” the permit was retracted.

“Philip Morris had a licence via a subsidiary to sell cigarettes in Iran from 2007. The country is a big market for Philip Morris, as the number of smokers has increased despite a government campaign on the adverse health effects of smoking,” says Nazanin Ansari, the diplomatic editor of the newspaper Kayhan London. “An Iranian entity [Zarrin Cellulose] applied and received a licence from the Iranian government to set up a Philip Morris factory inside the country, something I’m not surprised about as many people were expecting a final [nuclear] agreement in November.”

The controversy took a fresh turn in May 2008 when then-President Ahmadinejad addressed a crowd in Qom, referring to a mysterious “gentleman” involved in the tobacco trade. The “gentleman” tried to broker a deal with a a cigarette importer, demanding that he pay $5 billion. When the cigarette dealer offered to pay legal taxes and conduct business above board so that “cigarettes would be acceptable to the health ministry”, the “gentleman” refused. “Unless you pay the money you cannot import cigarettes,” he said, according to Ahmadinejad. Soon after, Ahmadinejad told his audience, the head of Iran’s state-owned tobacco company came to the president and said that the gentleman in question had called and threatened him with legal action if he issued the permit.

The next day, the Raja News site all but named Mohsen Rezaei as the “gentleman” in question. Mohseni, now the secretary of the Expediency Council, is a former Revolutionary Guard commander and twice presidential candidate. Without explicitly naming him, the site reported he was smuggling Marlboro cigarettes into Iran from the United Arab Emirates in partnership with Al-Aghili, a renowned smuggler in Dubai. When the Iranian Tobacco Company cancelled Al-Aghili’s permit to import Kent and Dunhill cigarettes, the “former military man” tried hard to have the decision rescinded but was unsuccessful.

In recent years, Tabnak, a newsite affiliated to Mohsen Rezaei, has published numerous reports on the smuggling of cigarettes and the role of Iranian communists, Zionists and Arab Sheikhs within these operations. It reported that government reformists under former President Khatami, together with Al-Aghili were the basis of “the cigarette smuggling mafia.”

With such a long and complex history, more names will undoubtedly come out in the saga over cigarette imports and smuggling. “Marlboro” has become a code word for the behind-the-scenes economic struggle over the past three decades that has claimed many losers and produced many winners. Who will be the next Mohsen Rezaei? It will be many years before the illegal tobacco business begins to dwindle. The lifting of sanctions will certainly have its effect. But it will be some time before those making big money out of tobacco will kick the habit.