The Center for Public Integrity in Washington, DC has published the latest report in a series investigating the illicit manufacture and distribution of cigarettes, which casts the spotlight on underground factories in China churning out billions of counterfeits each year. It also also reports that at least half a dozen terrorist groups rely on the trade for funding, including Al Quaeda, the Taliban, the Real IRA, Colombia’s FARC and Hezbollah. The Center for Public Integrity in Washington, DC has published the latest report in a series investigating the illicit manufacture and distribution of cigarettes, which casts the spotlight on underground factories in China churning out billions of counterfeits each year. It also also reports that at least half a dozen terrorist groups rely on the trade for funding, including Al Quaeda, the Taliban, the Real IRA, Colombia’s FARC and Hezbollah. The reports are part of an on-going investigation called Tobacco Underground, which is run by a team from the International Consortium of Investigative Journalists (set up by Center for Public Integrity in 1997) with support from the John Hopkins School of Public Health, the Carnegie Corporation and several other institutional and individual donors. The first, published in October last year, unveiled a network of Russian and Eastern European factories behind at least $1 billion worth of contraband cigarettes pouring into Europe. The cigarette in question – Jin Ling – is the world’s first ever cigarette brand designed and manufactured only for smuggling. According to latest reporthalf of China’s illicit production takes place in Yunxiao, in the south west of the country, where some estimated 200 closely-guarded ‘underground’ counterfeit operations are just that – buried deep into caves and beneath hillsides. This network relies on the Chinese diaspora to distribute the counterfeits around the world, particularly in North America and Europe. According to the report, such is their success that 99% of all counterfeits in the US now originate from China, and 80% of those in the EU. In China, all legal manufacture and distribution of cigarettes is state-owned and state-controlled. The Chinese are the largest cigarette consumers in the world (smoking 2 trillion per year out of a total worldwide consumption of 5.5 trillion) and cigarette sales accounted for nearly 8% of the country’s budget in 2007, proving a strong motive for the state to keep its supply counterfeit-free. Frequently criticised by the international community for its lax IP enforcement, the government has been more aggressive in trying to stamp out the trade but, with little effect it would appear, since counterfeiting has jumped eightfold in the past decade. The full set of reports to date, which also include investigations into the internet trade, trafficking in Eastern Europe and links with terrorism, can be read at www.publicintegrity.org