Cleopatra: Made Outside Egypt
Greek Authorities seized a cargo ship sailing in its territorial waters without permission, and the captain cites bad weather. After inspecting the ship, authorities found 11 containers loaded with 146 tons of Cleopatra cigarette packs, a famous Egyptian brand.
Although shipping documents suggest that the ship was on its way from Port of Bar, Montenegro to Port of Tobruk, Libya, the export company is Liberty FZE a company based in, Ras Al Khaimah, UAE, and the import company is Tasharokiya el Libo, Tobruk, Libya, the cigarette packs were labeled “Made in Egypt”.
This was not the first time the Greek authorities seize a smuggled shipment of the Egyptian Cleopatra cigarettes. In December 2012, another cargo ship was seized loaded with around 50 million Cleopatra cigarettes, on its way from Montenegro to Libya. The import and export companies were the same two companies, according to the documents.
Production of Cleopatra cigarettes started in 1961 by the Armenian tobacco company “Matossian” in Cairo, before it was merged in the Egyptian Eastern Company S.A.E. for tobacco, following the nationalization decree. Cleopatra became an Egyptian trademark.
Now, the state owns 55% of the shares of Eastern Company, while the Labour Union owns 5.8% of the shares, and the rest of the shares are publicly traded in the Egyptian Stock Exchange, according to company's financial statements, which are supervised by the Central Auditing Organization (CAO), the highest regulatory body in Egypt.
The Egyptian government plans to list around 4.5% of its share in the Egyptian Stock Exchange in 2019, as part of the share listing government between the government of Egypt and the International Monetary Fund.
Eastern Company is a primary resource of Egypt’s treasury, with 56 billion Egyptian pounds in 2017/2018 balance sheet. This is worth of the state’s profit share of custom taxes and tariffs, according to the company’s board of directors' report sent to the stock exchange.
In Eastern Company’s Cleopatra magazine, October 2017 annual issue, the company’s officials confirmed fighting the smuggling of Cleopatra cigarettes. Because of smuggling, the State of Egypt lost about 3 to 5 billion Egyptian pounds per year.
However, Mohamed Hassan, director of Analysis and Targeting Department, Central Administration for Combating Tax Evasion, Customs Authority, who is in charge of Cleopatra case, told us that Eastern Company failed to take legal actions against manufacturing and smuggling networks in foreign countries, which would save public money, and that they were complacent with destroying the seized shipments.
Over two years, we tracked dozens of shipments, and investigated the origins of those companies, which are scattered over six different European, Asian and Arab countries. We aimed at exposing an organized network of businesspersons and politicians of different nationalities that protect foreign companies that produced Cleopatra cigarette packs labelled “Made in Egypt” and smuggling them to Egypt and other countries. Those packs are in fact “Made outside Egypt”.
Montenegro: The First Clue
In southern Europe, the Republic of Montenegro is well known for being a hub for cigarette smuggling, according to the European Commission (EC) report issued in 2017. Italy’s prosecutors charged the most powerful man in Montenegro, Milo Đukanović, who rules the country since 1991, as president and prime minister, with smuggling cigarettes, between 1994 and 2002. But it was impossible to hold him accountable before the Italian judiciary due to his immunity as president.
Our journey started from “Duvanski Kombinat Podgorica, DKP” in Podgorica, the capital of Montenegro, where we obtained a packet of Cleopatra labeled with all details like the one made in Egypt including: “Made in Egypt” and the hotline number to get help quit smoking, and a “tax-free” sticker imposed by the Egyptian Ministry of Finance in 2012 to prevent evasion of sales tax.
In our interview with some of the factory’s workers, they confirmed working in successive shifts producing types of cigarettes requested by Liberty FZE after the later told the factory that it had a legal license to produce it.
Production records of the factory, between 2011 and 2013, stated the production of Tunisian Mars 20, Algerian Rym, Libyan Riyadi cigarettes on behalf of Liberty FZE, but the biggest share was for Cleopatra cigarettes in both paper and hard cartoon packets.
Production was proceeded between 2010 and 2015 under three contracts:
The First Contract
It was signed, in November 19, 2010, with one year of validity, between Liberty FZE, represented by someone named Sayed Ali, and DKP Tobacco factory, represented by Vaseline Ryswicz, director of bankruptcy competent authority- as the factory had filed for bankruptcy by that time. The contract provided for the production of three brands in the factory on behalf of Liberty FZE, but Cleopatra was not one of them.
The Second Contract
It was signed, in November 23, 2012, by Liberty FZE, represented by Ramy Ziad, and DKP tobacco factory, represented by Slavoljub Vukasinovic. This contract showed that they replaced types of cigarettes to be produced with any kind of cigarettes requested by the company, with a requirement to introduce license for production.
The Third Contract
It was signed, in October 30, 2013 with validity until the end of December 2015, by Liberty FZE, represented by Sayed Ali, and DPK tobacco factory, represented by Slavoljub Vukasinovic. It provided for increasing the monthly production to 75 tons of hard cartoon cigarette packs and 75 tons of paper packs of the types requested by the company, with a requirement to present a production license.
In light of the European customs authorities combat against the smuggling of cigarettes in the world, especially by the British, and French customs authorities along with the European Anti-Fraud Office (OLAF), the British customs authority sent a letter to the Egyptian customs authority in May 2015, stating the month production size of Cleopatra cigarettes by DPK tobacco factory, which enabled us to calculate losses of the Egyptian state, as a consequence to those counterfeit operations.
DPK tobacco factory produces 100 million of Cleopatra cigarettes in 5 million packets monthly. As the pack is worth of one USD approximately, the monthly market value of the factory’s production is worth of five million USD.
Over four years, from the beginning of 2012 to the end of 2015, the market value of Cleopatra monthly production was worth of at least 240 million USD.
In our interview with Slavoljub Vukasinovic, the former executive manager of DKP tobacco factory, he denied any fraud. He said that Liberty Company presented him a trademark registration of those brands in another country, and consequently they produced those cigarettes in the factory.
According to documents published on Intellectual Property Office in Montenegro website, Liberty Company requested to register Queen Cleopatra, Cleopatra Golden King, and Cleopatra King Size brands in April 2015. They were registered in February 2016, and the brands became legal properties of the company in Montenegro. Eastern Company requested to register Cleopatra brand in August 2016 but their request was denied.
Eastern Company confirmed, in a written reply to us supported with documents, that they did not grant a license to Liberty FZE or DPK factory to produce Cleopatra cigarettes, and mentioned that they demanded the involvement of Egyptian Ministry of Foreign Affairs to address the Ministry of Foreign Affairs of the Republic of Montenegro to stop illegal production there. However, they didn’t comment on the delay in registering the trademark Cleopatra there.
In January 2016, a letter sent by the Egyptian Ministry of Foreign Affairs to Eastern Company stated that an MFA official met the ambassador of Montenegro, who is a non-resident of Egypt. The latter confirmed receiving Cairo’s correspondence to halt production back in 2012.
But it is hard for Montenegro officials to give an explanation since it is possible that possible some company shares are owned by Montenegrin officials.
Later, this was confirmed in another letter sent by the Egyptian Ministry of Foreign Affairs to the Egyptian Customs authority in November 2018. The officer for the Egyptian affairs at the Ministry of Foreign Affairs in Montenegro confirmed studying the Egyptian demand at the meantime and coordination to resolve the crisis, citing the complexity and sensitivity of the case due to some Montenegrin government officials holding shares of this company, and demanded Egypt not to take any measures or action in this regard.
Officials in Montenegro refused to reveal the person behind Liberty FZE, but then we obtained documents from in their Parliament, for discussions about a partnership agreement between DKP factory and Liberty FZE, where the latter company has been described as the “Greek partner”.
Greece: Boss Level
Threads of the story pointed to Greece, as the discussions of the Parliament of Montenegro about cigarettes production in Podgorica factory described the company as the “Greek partner”. We tried to obtain registration data of Liberty FZE, but we discovered that it was registered in the UAE where confidentiality on the data of such companies is protected, as a bonus asset within a large number of facilities to attract as many offshore companies as possible. However, we accessed registration data in the UAE using search tools, including the address and its registration number as follows: Al-Hamra Island, Ras Al Khaimah, PO 31291, with a mobile number starts with the international code of Greece.
We tracked the Greek phone number through Truecaller app, where you can lookup callers’ names. It was recorded under “Cg SEKAP Jan Kostas”. The abbreviation “Cg” resembles “Cigarettes”, the word SEKAP is a famous Greek tobacco company, and the last two words seem to be a person’s name. We knew the owner of the number, who is called “Konstantinos Fyrogenis”. Then, after obtaining the company's document of association, we discovered that he is the owner of Liberty FZE which was founded in 2009.
Back to Montenegro, in our interview with Nebojsa Stankovic, the manager of Human Resources at the time of production, said that the CEO of Liberty FZE is a Greek businessman called Loannis Zinas.
One of the leaders of Duvanski Kombinat Podgorica, DKP tobacco factory, who refused to mention his name, confirmed that Ioannis Zinas is the actual manager of Liberty FZE and the supervisor of Cleopatra production procedures in the factory, but he definitely refused to sign any papers or documents. We showed photos of Fyrogenis and Zinas to one of the workers, who confirmed seeing both of them many times in the factory, and he said that they call Zinas “The Boss”.
By searching Facebook and Instagram, we found out that they were university colleagues. We also found photos for them in a meeting with the main group that produces Cleopatra cigarettes in Duvanski Kombinat Podgorica, DKP, Montenegro.
We started our search journey for Loannis Zinas and found out that he is the former import manager in SEKAP Tobacco Company, which is the biggest Greek company for production and distribution of cigarettes. He has been questioned previously for smuggling cigarettes in the European Union, and for using Egypt as a “fake destination”. He was given a suspended prison sentence of four years in 2015, but he was acquitted later by another court. The court questioned him and Zinas in the same trial. According to the Greek law, it is prohibited to try a person in front of two different courts with the same charges, so he could get acquittal.
Until 2012, SEKAP company was owned by the Greek government, until they decided to offer it for sale according to Greek media. At that time, Zinas was one of the most important supporters for the Indian businessman Raja Bommidala, the executive manager of BBM Bommidala tobacco company, to buy SEKAP. Nevertheless, the deal wasn’t made after the Russian-Greek businessman Ivan Savides has showed up, and acquired 82% of SEKAP early 2013.
Zinas left SEKAP, and then showed in a photo published on his Facebook profile, wearing a suit with the tag of BBM Bommidala Tobacco Company, during the events of the World Tobacco Middle East exhibition that was held in UAE.
BBM Bommidala Tobacco Company also supplies tobacco and production materials for many tobacco companies including Eastern Company. In their response to us, the company denied hiring Zinas at all, clarifying that they contracted with him previously as a consultant for the project of acquiring SEKAP Greek Company, but the project stopped after withdrawal of the offer.
Facebook proves a strong relationship between Zinas and the owners of shipping and customs clearance companies in Egypt who also call him “The Boss”. In addition, there is a photo of him with the President of Montenegro Milo Djukanovic. We tried to contact Zinas to respond to our inquiries, but never heard from him.
The Office of the President of Montenegro, responded to our inquiries saying that Milo Djukanovic has nothing to do with this subject. They confirmed that he was not notified about illegal production procedures in Montenegro, or he would have asked authorities to investigate about it.
Regarding his relationship with Zinas and the photo gathers them together, they said that the President knows Zinas and he dined in Zinas’s restaurant in Greece many times, but denied any knowledge of his business activities whether it was legal or illegal.
In June 2015, during the Greek trial of Liberty Company, on charges of smuggling Cleopatra cigarettes to Greece, against the background of the seized shipment, Eastern Company took the chance and stepped for the first legal action against smuggler companies that work since 2012 between Montenegro and Libya. Eastern Company filed a lawsuit against Liberty FZE as the producing and exporting company, and the Libyan company Libo as the importing company. The Egyptian company demanded destroying the shipment seized in Greece in March 2015, and to stop the two companies from dealing within the Greek territory, as well as demanding a compensation from them.
The Greek authorities destroyed the shipment in 2016, but the court issued a decision in February 2017 acquitting the ship crew of smuggling charge for lack of evidence proving that the shipment was smuggled to Greece, since the ship was on its way to Libya not Greece.
But according to new documents we obtained, Cleopatra shipments continued to flood until February 2016 with bigger amounts between Montenegro and Libya through Liberty and Libo companies.
Montenegro wan not the only country where Cleopatra was being produced and smuggled to Libya. We obtained a document from the British Custom Authority states that there is a factory in Albania that produces Cleopatra, and outsources the whole production process to Libya.
Albania: A New Production
In the Office of Analysis and Targeting Department at the Central Administration to Combat Customs Evasion, for two years, Egyptian customs authorities were receiving official letters from the British customs authority to inform them about Cleopatra production in Albania, in Albania Tabak factory and they continued warning that Eastern Company - the brand owner- should help stop those production processes completely.
The first letter: May 2015
The English customs authorities informed their Egyptian counterpart that they “temporarily” closed Albania Tabak factory that produced Cleopatra cigarettes in Albania, and that Eastern Company, the legal owner of the , should help stop those production operations completely
The second letter: December 2016
This letter stated resumption of Albania Tabak factory to produce Cleopatra cigarettes and eight shipments were shipped from Albania to Libya. The shipments were exported by “Eques Holding Group” company, which is registered in the British Virgin Islands, and imported by “Almostakbal” company in Misurata, Libya.
The third letter: March 2017
This letter stated that the production still continued in the factory. It also had a very important specific piece of information about 11.5 million cigarettes shipment left “Doris” seaport in Albania in the 16th of March 2017, anchored in Malta at the 19th of March 2017, to reach its final destination in Libya in March 21, 2017. The British customs authority also attached documents, date back to the 7th of September 2016, for Cleopatra registration in Albania by “Worldwide Spirits Supply Inc.” company, which is registered in the British Virgin Islands.
In May 2015, the Albanian authorities suspended production in the factory temporarily for a year, started a criminal investigation into the production operations, and requested info regarding the establishment records of the contributing companies from authorities of the British Virgin Island. They also requested some information from the Egyptian authorities regarding establishment records of Eastern Company, as well as the records of Cleopatra brand ownership, and whether they registered the brand in Albania or not. The Albanian authorities also sent pictures of Cleopatra packs that have been seized in the factory and asked for pictures of the ones being produced by the Egyptian company to compare them.
We contacted the Albanian authorities to know the results of the investigations. Attorney general “Armanda Javieri” said that investigations were shut in 2016, but they were reinitiated in 2017 after the Ministry of Justice in Albania received responses and documents from the British Virgin Islands. However, investigations are not finished yet, because no response is received so far from the Egyptian side.
We obtained records for registration of “Eques Holding Group S.A” company from the Albanian authorities, and we found that it has been established in September 2012 in British Virgin Islands. It is owned by “Mr. Faris Rashied Mohammed Said Al-Rifai”, son of the departed Iraqi politician and diplomatic “Rashied Mohamed Al-Rifai”. “Rashied” was a Minister of Oil and Planning, Communications and Transport, and finally the Ministry of Works and Housing, between 1968 and 1976. His son, “Faris Rifai” lives now in the United Arab Emirates.
We also obtained documents that indicate that “Worldwide Spirits Supply Inc” of the British Virgin Islands, as being the owner for the brand Cleopatra, contracted for a renewable 5 year term with “Eques Holding Group S.A” company, as the beneficiary. This contract authorizes Eques company to use the brand Cleopatra for production, distribution and export, as well as the authorization to grant using the brand by any third party. That was the permission Eques used to legalize its contract with Albania Tabak factory to produce and export Cleopatra cigarettes. It provided copies of the contract and the permission, as well as certificates of registration of Cleopatra as private property of “Worldwide Spirits Supply Inc.” company in the EU.
The documents reveal that “Worldwide Spirits Supply Inc.” registered the brand in the European Union Intellectual Property Office of the European Union, as a private property since June 2013, a few months before entering the contract with Eques.
In 2014, Eques made a contract with Albania Tabak factory to produce 3500 tons of Cleopatra cigarettes per year (300 million cigarettes per month), worth 15 million EUR, while the market value of production at Egyptian market prices is worth of 151 million EUR per year.
According to estimates by the Egyptian customs officials, the amount of money the Egyptian state lost is about 2.2 EGP billion a year, or 125 million USD, of fees and taxes were those quantities produced in Egypt.
Moreover, another registered company surfaced in the Virgin Islands under the name Eastern Company, which is the same name of the Egyptian company. Through an official letter in January 2015, this company granted Eques Company the right to use its name on all their products and for all transactions the way they choose, including emails, correspondence and fax, throughout the validity period of this letter till 2020 or until further notice.
After almost one year, in February 2016, the Egyptian Eastern Company took its first official move. It submitted a complain before the European Union Intellectual Property Office against “Worldwide Spirits Supply Inc” company, to prove its ownership for Cleopatra trademark and to cancel its registration in the EU, since it is being used for producing and exporting Cleopatra cigarettes in Albania.
In March 2018, many correspondences and sessions were held between legal representatives of the two companies asking them to provide all documents prove ownership of Cleopatra brand, in relation to prove the right to use the disputed brand in the country, where it was registered five years prior to the date of filing the claim against the opponent. However, the committee formed by the European Union's Office, decided to reject the request of the Egyptian company and demanded 450 Euros as fees.
One of the reasons for the decision made by the European Union Intellectual Property Office, was that the Egyptian company did not provide proof of ownership and authority to use the brand of Cleopatra cigarettes. In May 2017, they sent a request, to the Eastern Company, stresses the need for providing all evidences no later than August 2017. The Eastern Company requested to extend the period to November 2017, and it was accepted. However, Eastern Company provided its file on the last day of the timeframe requested, but it was not enough according to the decision.
After this decision, “Worldwide Spirits Supply” company was officially authorized to produce, distribute and export Cleopatra cigarettes to the EU. We tried to reach “Faris Al-Rifai, the representative of “Eques Holding Group” company, and the person who represents “Worldwide Spirits Supply” company as well, to obtain a reply, but none of them responded.
The Directorate General of Albanian Customs said, in a reply to us, that they knew about the investigations in relation to production operations and property right violations at Albania Tabak factory, and that they were awaiting the results.
However, according to the database and info they have, “Worldwide Spirits Supply” company is the one authorized to use Cleopatra brand registered currently in Albania, which was authorized by “Eques Holding Group” company for production and export of Cleopatra cigarettes, through contracting with Albania Tabak factory. So, they are committed to allow the factory to export those cigarettes.
Documents also suggest that the company that ships the cigarettes from Albania Tabak is Ujori company, which is owned by the wife of the mayor of Elbasan, where the factory is based. “Serv Dauti”, manager of the factory said, in an interview with us, that Eques Company asked them to increase the production of Cleopatra. He clarified that the factory is responsible only for packing and preparation for export as per the contract, and Eques company is the one responsible for bringing them tobacco and packing materials. He confirmed that all the procedures in the factory are legal, since Eques is licensed for Cleopatra production and has registered the mentioned trademark in Albania as well.
Searching “Panjiva” specialized database for import and export trade movements; we found more than 24 shipments that were sent to Albania Tabak factory during the period from 2016 until June 2018, from the Indian “Bommidala” tobacco company (previously mentioned as the supplier of tobacco to the Egyptian Eastern Company).
Eastern Company ignored any questions related to what happens in Albania, despite our repeated attempts to correspond through official letters since November 2017. However, the response was to delay the interview due to lack of time. At the beginning of November 2018, after the board members of the company have been changed, we sent detailed questions to be answered for the company via registered mail, but most of them have been ignored. We sent them another letter with the remaining questions to respond no later than November 27, 2018, but it has been ignored as well.
Albania was not the only country where Eques Company produces Cleopatra cigarettes. In our search journey, we found documents prove using Eques for Vinataba factory in Vietnam.
“Vinataba Company in Vietnam, is producing counterfeit versions of our Egyptian Cleopatra products since 2012, and import it to Libya. After that, they are being re-smuggled and re-sold in the Egyptian market.”
This was the response of Eastern Company to an inquiry from the Egyptian Customs, in April 2015, regarding actions taken, by the company, towards Cleopatra cigarettes production sites and counterfeiting abroad.
We started searching the database of the National Intellectual Property Office of Vietnam, and found a document states that “Eques Holding Group” company of the British Virgin Islands, attempted to register Cleopatra as its private property, in September 2012. Eques is the same company that manages operations of Cleopatra production and smuggling in Albania, and is registered in the name of the Iraqi businessman “Faris Al-Rifai”.
The request of Eques Company to register Cleopatra trademark, in Vietnam, had been denied due to its prior registration on behalf of the Egyptian Eastern Company and using it for the last five years. However, Eques company filed a suit before the National Intellectual Property Office of Vietnam to drop the registration belongs to Eastern Company, and to register Cleopatra in its name.
“Worldwide Spirits Supply” company supported the previous step, as being the owner of Cleopatra brand registered in the EU, in June 2013. The company informed the Office of the European Union Intellectual Property, in September 2013, that they are about to start production of Cleopatra cigarettes in Vietnam, and the Vietnamese authorities asked for an official ownership document for Cleopatra brand.
Unlike its previous actions, “Western Company” responded quickly this time. After one month only, it contracted with “Dai Tan” Vietnamese law firm to prove its ownership of Cleopatra in Vietnam.
In our interview with a lawyer from the law firm, he said that Eastern Company provided documents that proved the registration of Cleopatra in Vietnam since 2000, in addition to other documents that proved using Cleopatra cigarettes in Vietnam before 2013. In June 2014, they were given a decision to reject a claim filed by Eques to register Cleopatra brand in Vietnam, and that it stays owned by Eastern Company.
The lawyer confirmed that the issued decision does not mean necessarily halting production. He explained that Eques company and “Vinataba” factory continue producing Cleopatra, which gives the right to Eastern Company to sue them before Vietnamese courts to demand shutting down of the factory and compensation.
Documents sent by Eastern Company, in response to us, indicate that they sent complaint in two letters to the Ambassador of Egypt in Vietnam, in October 2012 and June 2014, to address the Vietnamese authorities to halt production. He replied to them in June 2014, saying that he addressed the Vietnamese Ministry of Industry and Trade that responded and confirmed that they would investigate.
However, in Cleopatra magazine October 2017 issue, Eastern mentioned that the Egyptian Customs destroyed a shipment of Cleopatra cigarettes, in October 2016, coming from Vietnam and is worth of 30 million pounds, which confirms continuity of production there. We tried to contact “Vinataba” factory officials and the Vietnamese authorities to comment, to find out whether the production has been stopped or not, but they did not respond.
Another letters belong to the Egyptian Eastern Company indicate that the Jordanian businessman “Awni Mutie Issa” is the one behind networks of production and smuggling in Vietnam and other countries.
Jordan: The Escape
In July 2010, Eastern Company leaders celebrated opening of a new factory for production of tobacco and Cleopatra cigarettes in Zarqa, Jordan, as a joint venture with “Taj” company for tobacco, cigarettes and molasses, worth of 14 million USD.
The company said, in a press statement, that it was for the purpose of expanding and increasing the volume of exports of Cleopatra cigarettes. According to a registration document on Jordanian Companies Control Department’s website, the owner of the biggest share of “Taj” company is the Jordanian businessman “Issa Youssef Mutie Issa”, and that it was established in February 2007.
But, according to the external manufacturing agreement documents signed between Eastern Company and “Taj” company in October 2009, the representative of the latter was the Jordanian businessman “Awni Youssef Mutie Issa”, who signed as the CEO of the company on behalf of his brother “Issa”, the acting owner of the company.
Eastern Company also granted him an exclusive license to produce some of Cleopatra brands and other products. In addition, they granted him the right to distribute in some countries listed in an additional annex to the license agreement.
The partnership did not last long. In the middle of 2011, Eastern Company legally notified “Taj” company with termination of provisions of the agreement, explaining that the latter had breached its obligations under the terms of the contract.
However, Eastern Company stated other reasons in its letter to the Egyptian Customs Authority, mentioning that “Taj” company produced quantities of Cleopatra cigarettes without being notified, as well as smuggling other quantities to the Egyptian market. Then, it filed a suit before the Jordanian courts against “Taj” company -case no. 29292/2012- which is still pending before the Jordanian judiciary.
Despite the decision to terminate the partnership, “Taj” company did not cease production of the cigarettes. So, Eastern Company, in August 2012, published an English written warns of dealing with “Taj” company, in “Tobacco International” magazine. This warning stated termination of partnership and production license of “Taj” company. However, it continued to do business in some brands owned by Eastern Company without a license.
Many documents belong to Eastern Company, that we obtained copies of, point to accusing the businessman “Awni Mutie” of being behind operations of Cleopatra production and smuggling to many foreign countries, especially Vietnam, using the revoked license granted to him after the agreement between the two companies to produce products of Eastern Company in Jordan and export it to other countries. However, we were not able to confirm these accusations.
In July 2018, a new Jordanian cabinet has been reshuffled under the leadership of Dr. Omar Al-Razzaz, and following a complaint made by MP Musleh Al-Tarawneh in the confidence-giving session of the new government, the Jordanian authorities issued an arrest warrant and a travel ban for 30 people. On top of which was “Awni Mutie”, his sons “Bashar and Yousef” and his brother “Issa”, the owner of “Taj” company that contracted with Eastern Company, because of charges of illegal production and smuggling of cigarettes. After breaking into four factories owned by “Awni Mutie”, he escaped to Lebanon only one day before the arrest warrant was issued.
In the beginning of August 2018, the Jordanian authorities issued a search warrant for “Awni Mutie” that stated accusing him of committing economic crimes and practicing illegal activity in Jordanian lands, represented in producing large quantities of counterfeit cigarettes and smuggling it illegally. The defendant was sentenced to payment of customs duties and fines for the state treasury worth of about 177 million Jordanian dinars (about US $250 million) between 2004 and 2014.
The International INTERPOL issued an international red notice looking for Awni Mutie, stating possibility of his presence in Lebanon and Turkey.
“Mutie” owns many companies for tobacco trade and manufacturing in European countries. In Romania, he has a company under the name “Bashrom 2000”, of which documents of registration clarify that it started business in 2001 in bakery, pastries, sweets, coffee and beverages. He added tobacco trade and manufacture in 2002. He also owns another company under the name “Golden Taj for Investment” established in Georgia, in 2017. Its main area of activity is to trade and export of tobacco leaves.
We contacted “Wasfy Abu Roman”, lawyer of the businessman “Awni Mutie”. He said that he is not a general attorney for him, but only he defend him in a new case related to committing economic crimes and illegal activity within the territory of Jordan. He also mentioned that he knows nothing about any litigation with Eastern Company, and he pointed out difficulty of communicating with his client -”Awni”- to respond to the investigator meanwhile. But, in mid-December, “Awni” was arrested in Turkey with the help of the International INTERPOL.
However, one of the documents sent from Eastern Company to the Egyptian Customs Authority in 2005, stated that “Awni Mutie” is still producing counterfeit Cleopatra cigarettes through a Libyan partner in Emsaed, Libya.
Libya: Assembly Point
Choosing Libya by people involved in production and smuggling operations was not random. Libya is the perfect place, as it lacks security control since 2011, and conflicting armed groups share control of different parts of the country, which facilitate movement of smuggled cargo ships of cigarettes in and out of the country. These circumstances also facilitate delivery of cigarettes to smugglers who take it through the desert routes to reach Egypt, which shares land borders.
A document submitted by Eastern Company for tobacco to the Egyptian customs in April 2015, asking for help to stop production operations, stated that a person called “Hatem Farag Arhoma” is behind manufacturing and smuggling in Libya. He owns a factory in Emsaed, on the Libyan border, where he produces Cleopatra cigarettes and prepares it for smuggling, with the Jordanian businessman Awni Youssef Mutie Issa.
By searching for the Libyan businessman, we discovered that “Arhoma” has considerable influence in Libya, especially in sea and land ports. He has many nicknames. He met Marshal “Khalifa Hafater”, commander of the Libyan National Army, and was elected as a member of the founding committee of the Libyan free zone in Emsaed in April 2016.
“Libyan businessman secures loading operations of cargo across the sea to the Libyan territory, storing it, and then smuggling it to Egypt via the Western Desert”. Those were some of the words said by the Major General “Ahmed Omar”, manager of the General Directorate for Drug Control at the time, in a phone call with the interviewer “Amr Adib” in February 2017. He was talking about a Libyan businessman without mentioning his name, after seizing a big shipment of drugs carrying 75 million tablets in container ship destined for Port Said, and then to Libya.
However, in December 2017, Port Said Criminal Court stated that his name was “Hatem Faraj Arhoma“. He received a life sentence in absentia, and was fined 500,000 pounds and paying customs’ compensation of 80 million pounds. We tried to reach “Hatem” to get an explanation for information obtained, but we could not.
In October 2015, the Egyptian customs Authority sent an email to the Libyan customs officials, informing them of the counterfeit Cleopatra shipments on board of a ship sailed from the port of Bar city in Montenegro to Tobruk, Libya, and they demanded to seize those shipments and to take legal actions.
Then, Libyan customs officials responded that it was necessary that Eastern Company take legal actions through an attorney in Libya.
However, in August 2016, Eastern Company for tobacco responded to the inquiry of the Egyptian customs regarding the actions taken by the company to stop operations of manufacturing and smuggling of Cleopatra cigarettes in Libya, as follows:
“Due to the state of war in Libya, the company was unable to appoint an attorney to take legal action against counterfeit shipments that enter Libya”
However, the series of producing and smuggling Cleopatra did not end at arrival of shipments to Libya then to Egyptian market.
But, the absence of legal prosecutions against producers and smugglers encouraged these companies to expand their production sites to start a new chapter of conflict between them.
The time when Eastern Company for tobacco was only demanding to destroy seized shipments without taking required actions, or prosecuting the producers, they were planning and choosing their new steps to expand production operations.
After seizing a shipment of Cleopatra cigarettes in Greek ports destined to Libya, in March 2015, produced by Liberty FZE, the documents stated that Liberty was executing this operation for another company called “Melfinco Sociéte Anonyme” registered in Liechtenstein (one of the taxes havens). “Melfinco” registered the trademark of “Queen Cleopatra” as its property in Greece, in July 2015, because Greece lies on the shipping route of ships carrying counterfeit Cleopatra from the country of production, Montenegro, to the country of export, Libya.
Then, the company could secure its shipments against any future attempts to be seized. The company has previously registered another 3 trademarks which are: “Cleopatra Melfinco”, “Cleopatra Super Star” and “Cleopatra Golden King” in Greece, in mid-2013.
The same steps were taken by “Worldwide Spirits Supply” company that authorized Eques to use Cleopatra, as mentioned before, that in turn used it for production in Vietnam and Albania, based on the registration of the brand in the European Union Intellectual Property Office in 2013 by “Worldwide” company.
To secure Cleopatra shipments, “Worldwide Spirits Supply” registered about 4 trademarks in Malta, from November 2015 to October 2016, which are “Cleopatra King Size”, “Cleopatra Golden King”, “Cleopatra King” and “Queen Cleopatra”. The company chose Malta, because it lies on the navigational line of ships carrying counterfeit Cleopatra from the producing country “Albania” to Libya. Therefore, it can secure its shipments, from any future attempts to be seized, when docking in ports of Malta. Then, in June 2015, the company registered “Cleopatra Queen” and its design in the European Union Intellectual Property Office.
To increase the legal protection of production operations in “Albania”, “Worldwide Spirits Supply” company registered about 6 brands, which are: Cleopatra, “Queen Cleopatra”, “Cleopatra Queen”, “Cleopatra King”, “Cleopatra Golden King” and “King Cleopatra” in the General Directorate of brands in Albania between January 2016 and January 2017.
However, in September 2015, the conflict started between the two companies in the EU, since Greece and Malta are members of it, to prove ownership of Cleopatra brand and accuse the other of counterfeiting. “Melfinco” company filed a complaint of illegibility against “Worldwide Spirits Supply” before the European Union Intellectual Property Office, accusing it of counterfeiting its trademark “Cleopatra Queen”. “Melfinco” provided documents of the brand registration in Greece, in 2013 and 2015, as an evidence for its precedence to register the trademark. The decision of the Office in September 2016, confirmed eligibility of “Melfinco” company.
Not only that, but “Melfinco” company filed a new complaint before the Office at the End of 2017, regarding its eligibility of owning the packet’s design of “Queen Cleopatra”, and provided pictures of Cleopatra packet it produces.
“Worldwide Spirits Supply” company response to the lawsuit was that “Middle East Tobacco - METCO” is the parent company, and its products of cigarettes and tobacco are present in the market since many years. They claimed that “Queen Cleopatra” packet’s design differs from the one being produced by “Melfinco”.
However, Melfinco” said that the packets being produced by “METCO” are identical to the ones they produce, and demanded the European Union Intellectual Property Office to decide illegibility of “Worldwide Spirits Supply, and its parent company “METCO”, to use the brand. Then, a final decision had been issued in August 2018, to approve eligibility of “Melfinco” in pack’s design of “Cleopatra Queen”.
We obtained documents of these lawsuits from the website of the European Union Intellectual Property Office. We found out that pictures of Cleopatra packets, provided by “Melfinco” company, are identical to the ones produced by Eastern Company in Egypt, including the face of Queen Cleopatra, and English and Arabic phrases on the pack. In addition, the same warnings are written on the lower part of the pack along with the hotline number for help quit smoking.
By mining the database of “MT view” specialized website for displaying details of brands, it was obvious that Eastern Company lagged behind “Worldwide Spirits Supply Inc.”, to register Cleopatra brand, for seven months in “Albania”, and a year in “Malta”.
Eastern Company applied to register nine Cleopatra trademarks in “Albania”, in September 2015, but the registration was suspended after the appeal against the request. In “Malta”, it applied to register nine Cleopatra brands in January 2016. Eight of them were refused and the ninth still under inspection until the time this investigation was published.
Eastern Company sent us a written reply responding to some of our inquiries, stating that nine Cleopatra brands are registered internationally in World Intellectual Property Organization (WIPO), in accordance with “Madrid Convention and Protocol” in several countries. It also mentioned that there are ten Cleopatra brands locally registered in 155 countries, where some of them are still completing registration procedures.
Regarding brands registered by “Melfinco” in Greece, in 2013, under the names “Cleopatra Melfinco”, “Cleopatra Superstar” and “Cleopatra Golden King”, the company said that it filed three lawsuits to cancel those brands in Greece since June 2015, and they are still pending until the moment. However, the company did not respond to our inquiries regarding registration of “Queen Cleopatra” brand by “Melfinco” company in July 2015 in Greece, nor the reasons for delaying to taking legal actions against that company.
Surfing the website of World Intellectual Property Organization (WIPO) made it clear that Eastern Company already registered a number of Cleopatra brands, but it did not register “Cleopatra Queen”, until the moment, although being the most famous mark being produced and smuggled in foreign countries.
We also found out that “Worldwide Spirits Supply” company registered Cleopatra, “Cleopatra Queen” and “Queen Cleopatra” in the organization as well, by introducing documents of registration from the European Union Intellectual Property Office.
But, “Melfinco” sent decisions issued in its favor of those brands from the Office, so the WIPO dropped the ownership of “Worldwide Spirits Supply Inc.” company.
Mark Lemley, Professor of Law at Stanford University and an expert in intellectual property, says that the first one to register a trademark in a certain country and use it, gains full rights in this country. However, registering a trademark does not authorize its owner to sell it anywhere other than the country of registration.
“If another company owns Cleopatra trademark in Montenegro, while Eastern Company owns it in Libya, then importing Cleopatra from Montenegro represents violations of the international laws”, he added.
Despite the continued flood of smuggled Cleopatra shipments to Libya since 2012 till now, especially “Cleopatra Queen”, Eastern Company only registered “Cleopatra Super” and “Cleopatra King Size” trademarks in Libya, according to a letter sent from Eastern Company in response to inquiries of the Egyptian customs regarding registration of brands as trademarks in Libya, and taking legal actions against smuggled shipments.
Apart from the conflict between European companies over the ownership of Cleopatra brand, Eastern Company mentioned, in an internal report issued in June 2015- that we have a copy of- that the strong motive behind the increased production of Cleopatra cigarettes abroad and smuggling it to the Egyptian market is the successive increases of taxes on cigarettes sold in the Egyptian market.
The counterfeit cigarettes represented 0.3% in 2010, and reached 20% in 2012, but decreased in 2014.
But, in February 2015, with the taxes increase, there has been a qualitative and massive shift in smuggling and counterfeiting operations.
These pieces of information are being supported with what have been published on the page of the military spokesman of the Egyptian army, between December 2013 and March 2018, regarding the volume of smuggling operations.
This was when the western border guards were able to seize several smuggling convoys from Libya to Egypt loaded with cigarettes, weapons and drugs. Cleopatra cigarettes had the biggest share of seizures, in addition to some other cigarette brands being manufactured also in the same factories that produce counterfeit Cleopatra.
According to a document published by Eastern Company on cigarette prices after the new tax increase in July 2018, the basic selling price of Cleopatra packet is 3.40 EGP, 0.20 USD, which is equivalent to the cost and profit of the company, plus 12.60 EGP, 0.70 USD, as taxes and fees for the state treasury. So, the final price in Egyptian market reached 16 EGP, 0.90 USD.
For two years, we were trying to reach owners of the major companies involved in illegal production in European countries. Eastern Company failed to protect Cleopatra brand, bringing the conflict between the European companies over the ownership of the brand, they continued expanding production operations and increase its volume to deliver it to a bigger number of consumers.
Producers (”Eques company” and Albania Tabak factory) did not only continue to produce 3,500 tons of Cleopatra cigarettes annually as per contract, which will expire in 2020, but also “Serve Dauti” (representative of the Albania Tabak factory) and “Faris Al-Rifai” (owner of Eques Holding Group) created a new company named “Eques Trading Company”, as a preliminary step to establish a new factory in Albania, in order to increase the production of Cleopatra there.
Producers of Cleopatra cigarettes showed up once again, but in a more powerful way. In June 2017, Liberty FZE was established and located in Bar city. As per the registration record, it is owned by Liberty FZE in the UAE. Its official representative is “Konstantinos Fyrogenis”, and the MD is “Slavoljub Vukasinovic”, who was the executive director of the tobacco factory “Duvanski Kombinat Podgorica, DKP” at the time of contracting for the partnership with Liberty in 2013, during production of Cleopatra cigarettes in the factory.
“Hatem Arhoma” is still the one behind smuggling operations across Egyptian-Libyan borders, and he has his influence over the Libyan territory. In spite of the 25-years sentence imposed by an Egyptian court against him, on charges of bringing and smuggling drugs, “Hatem Arhoma” showed off leading a big donated food convoy for the Battalion 309 of the Libyan army under the leadership of “Khalifa Hafater”.
The Egyptian government decided to increase taxes revenue for the public treasury by raising prices of Cleopatra cigarettes in the Egyptian market from 4.5 EGP (0.75 USD) in 2011, to 16 EGP (0.89 USD) in 2018. However, at the same time the public Egyptian treasury was losing more than 5 billion Egyptian pounds annually, due to operations of production and smuggling of Cleopatra cigarettes in several countries, and because Eastern Company delayed to take legal actions to stop production and demand compensations for the losses.