The cigarette gangs that played with fire

Smuggling cigarettes is big business in western Europe. It is also dangerous. And seven bodies found at the weekend in Berlin are testament to the escalation of a new gang war. By Imre Karacs

Seven corpses, their hands and feet tied and their heads punctured by two bullets each, lie in a Berlin mortuary. Only one has been identified by a relative. All that is known about the rest is that they are Vietnamese, aged between 20 and 40, and, judging from the manner of their deaths, they were rubbed out by a professional hit squad.

Six of them were discovered by police on Sunday night in a ninth-floor flat in the city's Marzahn district. The seventh was spotted by riders near a bridle path in Berlin's green belt.

Neighbours living among the paper-thin walls of the Communist-built housing estate at Number 3 Marchwitzastrasse claim to have seen or heard nothing when the executioners called on Friday night. Police appeals for witnesses are likely to fall on similarly deaf ears. Terrified inhabitants of the teeming high-rise slums of east Berlin know all too well that there is a war on, and, as in other wars, careless talk costs lives.

The commodity for which 32 Vietnamese have died so far could not be more prosaic. The Russian and Chechen mafias of Berlin murder for a piece of the action in the prostitution racket, and the Poles may shed blood in defence of their share of the stolen car market. But the Vietnamese kill for nothing more glamorous than contraband cigarettes, leaving serious drugs to the syndicates of eastern Europe.

Until recently, their activities were merely irritating to Berlin's tax authorities. But the days of the lone immigrant loitering around the U- Bahn entrances with a couple of cartons of Marlboro are over. The cigarettes now arrive in juggernauts, and the distribution network is organised with military precision. Some 10 billion cigarettes are thought to have been brought into Berlin illegally last year. Most of the city's 10,000 Vietnamese are believed to be involved in a business that the government estimates deprived the state coffers of DM1bn in tax revenue last year alone.

There are plenty of willing customers. A carton of Marlboro sells for about DM27 (pounds 12), half of what it would cost at a tobacconist. The quality of the smoke is identical; only the government health warning is missing from a packet bought on the streets.

Retribution for freelancers or authorised street vendors who try to bend the smugglers' rules is meted out in martial style. Very few Vietnamese are ever found badly beaten up: punishment comes either in the shape of a samurai sword or, as with the latest unfortunate seven, in the form of a gun with a silencer.

The financial arithmetic has long ceased to be of primary concern to the Berlin authorities. The potential rewards of the contraband market have inevitably attracted the attentions of hard-core criminals, and unleashed a ferocious battle for control of distribution.

The original cigarette sellers were "guest workers" and students stranded without funds after the fall of the Berlin Wall. The Vietnamese, nicknamed "Fijis" by the gangs of racist thugs who preyed on them at night, banded together for protection and laid out their meagre wares under the Brandenburg Gate. Soon a network grew up, spanning the borderless regions of the Wild East to Poland and beyond.

The cigarettes were the idea of their compatriots in Poland and Hungary. Under licence agreements, top brands were manufactured in those countries, and sold for a fraction of their western price. The Vietnamese would buy as many cartons as they could carry, then take them to the nearest hard- currency market: Berlin.

They blended into the city's landscape, casting their net beyond the derelict centre of east Berlin and its faded concrete suburbs into the bright lights of the Ku'Damm. Success and the growing attentions of the police drove them underground, taking up shelter in the rat-infested nooks and crannies of the U-Bahn. They are now as much part of the city's life as the buskers on London's Tube.

But successive police raids, netting 2.2 million packets last year, have put many of the smaller fry out of business, and put a premium on safer sites. Secure places - small patches of tarmac with at least two exits for a quick getaway near by - now have to be bought from the Vietnamese godfathers. A cigarette vendor has to shell out up to DM30,000 (pounds 13,000) for such a location, and, naturally, he is prepared to guard it with his life.

The new conditions have bred a new kind of entrepreneur. The pioneering paupers who used to sell just enough to buy dinner have been driven out by harder elements with money up-front. Many come directly from Vietnam, their pockets bulging with money minted in the country's burgeoning black economy.

Besides the cash, the newcomers have injected another element into Berlin's explosive crime world. Bartering for the most lucrative locations has given way to the law of the gun, increasing the power of the most violent godfathers over more timid groups.

As in Al Capone's Chicago, no gang can afford to lose out in Berlin's cigarette war. The groups, organised in accordance with their members' home regions, are all fighting for total control, knowing that there can only be one winner.

The indications are that the Quang Binh gang, from central Vietnam, is gaining the upper hand. The seven latest victims and several street traders in recent months were all executed Quang Binh-style, probably in retaliation for an encroachment on their territory.

As the war widens, cities beyond Berlin could be hit. Only a small proportion of the contraband now arrives from eastern Europe, usually by rubber dinghy across the river Oder separating Poland from Germany. The main entry point these days is the free port of Rotterdam, where cigarettes from the US are unloaded. Posing as legit wholesalers, the Vietnamese buy them there by the container, and load them on to lorries heading for Berlin. The profit margins on this operation are narrower, because the gangs are only "saving" on excise duty. To maximise earnings, the operation must be on an immense scale. If the precarious balance breaks down in the streets, the losing gangs might be tempted to disrupt the Quang Binh's supplies in a desperate effort to put them out of business.

In the face of spiralling violence, the police are virtually powerless. The Vietnamese gangs are impenetrable, not only because they speak a language unfamiliar to the German force, but also because gang members will not talk to outsiders. Beyond the ties of blood and regional allegiance, the gangs are held together by a strict code of silence that makes the Cosa Nostra appear talkative. The police have set up a 50-strong "tobacco force", but, on the evidence of the latest killings, appear to be making little headway.

The German authorities can only respond by expelling illegal immigrants, but the place of every deportee is quickly taken up by a new arrival. Germany and Vietnam have negotiated a treaty under which Vietnamese immigrants are to be sold back with foreign aid to their country of origin, but so far fewer than 100 have been returned. Apart from the Berlin contingent, there are another 30,000 Vietnamese in other parts of Germany, ready to take up vacancies on the U-Bahn. The contraband cigarette trade has so far only spread to cities in east Germany, but police worry that the saturated Berlin market might force traders to set up stalls further west.

Another fear is that the diverse ethnic mafias that have turned Berlin into Europe's capital of crime might try to take on the Vietnamese. At the last count, there were 10 large organisations - defined as having more than 500 members - vying for a piece of the action. They try to engage in different activities, so as not to come into confrontation with another group.

Their exploits have put the city on top of the European crime league. Last year, a criminal act was committed every 54 seconds in Berlin, resulting in a crime rate that is 50 per cent above London's. Most serious offences were committed in east Berlin, where only two murders were registered in the last year before reunification.

Some gangs are positively wimpish. The Ukrainian group Jibu, for instance, only goes in for muggings. Worse are Solntsevskaya, a Russian gang with 5,000 members specialising in drugs and weapons; and at the apex of the criminal hierarchy are the Chechens, reputedly the fastest guns in the east.

There are indications that some Vietnamese cigarette gangs are looking for muscle outside their own community, particularly among the Chechens. The biggest Chechen group, the Obshina, make their money out of bank robberies, kidnapping and white-collar crime. But Obshina's leader, Nikolay Suleimanov, is believed to covet the cigarette racket.

The Vietnamese are thought to have hired Obshina hit squads in the past, and now there is talk of a link-up, the stuff of nightmares for the city's beleaguered police force. Such a realignment, they fear, would unleash a war to end all wars among Berlin's criminal fraternity, and turn the city into one of the most violent places on Earth.

MAKING A PACKET: A SMUGGLING INDUSTRY WORTH MILLIONS

By comparing the difference between import and export figures worldwide, investigators in Brussels have concluded that more than 280 billion cigarettes of the 910 billion exported annually go missing after being shipped to warehouses in Antwerp and Hong Kong. In 1994-5, smuggled cigarettes deprived governments of more than pounds 10bn in tax revenues, and produced what analysts say was a surge in profits for some tobacco companies.

Outside Germany, the rackets are thought to be organised by crime syndicates in Britain, Spain and Italy, who use front companies or "agents" based in Britain, Belgium or Switzerland to organise the shipments. Antwerp seems to be the hub of cigarette traffic, which may explain why Belgian imports from the US surged from 50 billion in 1993 to more than 70 billion in 1994. Most are re-exported to other destinations, from where, it is suspected, millions are diverted on to the black market.

There is no evidence to suggest that cigarette manufacturers participate in or condone smuggling, but anti-smoking activists maintain that the companies benefit through increased sales and appear to be taking few measures to prevent their products falling into the wrong hands. The fraud already costs the EU more than pounds 1bn a year, but at a time when smoking is falling off in the West because of concerns over cancer, smugglers are seeking to capitalise on the growing demand for Western cigarettes in eastern Europe, Russia, South-east Asia and China. The latter, with 300 million smokers and a thriving economy, is the world's biggest cigarette market, but the illicit trade costs the country up to $1bn in lost revenue a year.