A gang of European Union diplomats have been discovered running a cigar and alcohol smuggling fraud out of an office in south-east Asia.
Olaf, the bloc’s anti-fraud watchdog, said the unnamed envoys were purchasing the items tax-free before passing them to people without the same diplomatic privileges.
“The investigation established that these staff members were actively involved in a scheme to evade VAT and excise taxes at import,” the watchdog’s annual report for 2023 said.
“Alcohol and cigars were ordered, using the name of the EU delegation and subsequently passed on to several persons external to the delegation.
“This practice breached the applicable rules and procedures on placing orders for diplomatic goods and gave undue benefits to persons who did not qualify for diplomatic privileges.”
Orders made in other names
Those involved in the scam would often place orders for alcohol with permission from the host country where they were stationed.
They used the names of colleagues in the delegation, and even that of one retired member of staff, to place the orders, to avoid attracting suspicion.
Diplomats are granted special duty free-style tax exemptions on goods, such as whisky and cigars, for personal use while stationed in foreign countries.
Many embassies and consulates have their own duty free shops, where diplomats can purchase alcohol, tobacco and other goods without paying local taxes.
They are also allowed to import certain quantities of booze and cigarettes for personal use without paying customs duties.
The rules, granted under the Vienna Convention on Diplomatic Relations, are meant to ensure diplomats can maintain a similar standard of living to that in their own country.
EU corruption ‘will continue’
Frank Furedi – the executive director of MCC Brussels, a think tank – said: “Despite constant calls to root out EU corruption, there is no appetite on the part of this institution to deal with EU operatives misusing their diplomatic privileges.
“As long as these privileges are regarded as a perk the smuggling of booze and fags will continue.”
The investigation into the delegation in Asia also uncovered one staff member who had been working a second job without permission for 13 years.
The diplomat had been “intensively engaging in teaching activities during working hours”, released several academic publications and sat on editorial boards, which Olaf said had interfered with their day job.
“The individual abused their position in the EU delegation, [their] email address and the delegation’s network/services for tasks ancillary to these unauthorised external activities,” the report said.
Another member of staff was discovered to be “engaged in similar unauthorised external activity as manager of a private company”.
Disciplinary procedures
Olaf said disciplinary procedures should be opened against the staff involved in the scam, which the watchdog said had “harmed the image and the reputation of the EU institutions”.
Last year, the watchdog concluded some 16 probes into the European Commission, 14 into the European Parliament and 13 into the External Action Service, the EU’s foreign affairs arm.
“Whilst these cases make up a relatively small [part] of Olaf’s overall workload, they’re important in preserving the EU’s reputation,” the watchdog said.
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