DATELINE

Cigarettes and money

HUGH WILSON April 25 1988
DATELINE

Cigarettes and money

HUGH WILSON April 25 1988

Cigarettes and money

DATELINE

DATELINE: KAHNAWAKE, QUE.

The little shop on the Kahnawake Mohawk Indian reserve just south of Montreal looked like an easy target. But for the Montreal juvenile who tried to break into Stacey’s Cigarette Store in early October, the quest for quick money ended in gunfire and death. The store, like most others on the reserve, is usually manned by an armed Mohawk salesman. That is because it is part of a multimillion-dollar business that has been nicknamed “buttlegging”: the large-scale transport by Mohawks of duty-free cigarettes from the United States to Canada, where they are sold at discount rates to non-natives. That has resulted in millions of dollars in lost taxes for the federal, Ontario and Quebec governments, which say that the trade is illegal. And it has created tensions between smugglers and Mohawk traditionalists who oppose the business. Said Aieh Jacobs, 62: “Where money and cigarettes are concerned, morals go out the window.” The illegal cigarette trail begins in Canada, where Canadian cigarettes are legally sold tax-free to wholesalers in the United States. They are then resold to Mohawk middlemen who transport them back to Canada through the Akwesasne reserve near Cornwall, Ont., which straddles the Quebec, Ontario and state of New York borders. Afterward, the cigarettes are sold at about $18 for a carton that would normally retail for $25, either at Kahnawake and Akwesasne or through a distribution network that includes Toronto and Ottawa. Although smuggling has existed

for years, it has recently become a major issue—and a huge profit-making venture—as cigarette taxes have increased dramatically. Still, police have been slow to act—in large part because of the noninterventionist policy that they have maintained toward the reserves. “There is always a slight hesitancy about going on the reserve,” said Montreal RCMP Insp. Robert Castonguay. “They are very nationalistic.”

But some Mohawks say that the community tensions created by cigarette smuggling can no longer be ignored. “We said that it will cause dissension,” said Jacobs. “That has happened.” After October’s shooting at Kahnawake, police charged Glen Johnson, 25, a member of a Mohawk society called the Warriors, with manslaughter. But that is not the only case of violence associated with the cigarette trade. Some Mohawks opposed to it claim to have been threatened by smugglers. And in January the Akwesasne offices of the anticigarette Mohawk weekly Indian Time were gutted by fire—an act widely blamed on arson. Said editor Douglas George-Kanentiio: “We question the moral and legal implications of cigarettes here and at Kahnawake. The cigarette people did it.”

Canada Customs workers in the Cornwall area also claim to have been threatened in what is clearly a highstakes game. There is no way of knowing how much the Mohawk distributors make—and how much tax revenue is lost. But Steven Sloan, chief of investigations at Canada Customs in Ottawa,

told Maclean ’s that Ottawa may be losing as much as $50 million a year in taxes. And Yves Seguin, Quebec’s minister of revenue, claimed that the province loses at least $25 million annually.

According to Canadian regulations, taxes and duties do not apply on native reserves. As well, almost all Mohawks claim that they have the right to move goods duty-free over the U.S.-Canada border under the terms of the 1794 Jay’s Treaty between Great Britain and the United States. That treaty allowed freedom of exchange within the Iroquois Confederacy, which included the Mohawks. But Ottawa does not recognize that treaty. As well, federal officials cite the 1876 Indian Act that prohibited natives from selling tax-free goods to non-natives.

Some smugglers and distributors defend their business by saying that it brings money into communities that suffer from chronic unemployment. Selma Delisle, a major Kahnawake cigarette retailer, added, “I do not see any negative effects—and probably 200 people are employed by the cigarette businesses.” And Kenneth Deer, spokesman for the Nation Office, which represents the longhouse—the traditional Mohawk governing body—added that distributors give 70 cents from every carton sold to the community, while other donations are often made individually.

But those opposed to the smuggling claim that it enriches only a few of the two reserves’ 14,000 people. And Myrtle Bush, a member of the Kahnawake band council, says that those associated with the cigarette business have become a new and dangerous power within the community. Some Mohawks also add that the trade may jeopardize future government negotiations about enhancing native rights. And GeorgeKanentiio says that official reaction to the smuggling is having an adverse effect on ordinary Mohawks. Previously they enjoyed almost unrestricted border access, but are now increasingly being searched as customs officers try to stop the flow of cigarettes.

But so far Canadian authorities have made little more than a dent in the smuggling. Between May and December of 1987, Canada Customs and RCMP officials seized a mere $1.1 million worth of illegal cigarettes in the Akwesasne area—with about 50 arrests. And although RCMP officials say that the matter is under investigation, Mohawks on both sides of the debate agree that outside interference would be a mistake. “It would come to violence,” said Bush. But without government intervention, cigarette smuggling will clearly remain a lucrative—and potentially dangerous-fact of life on the reserves.

HUGH WILSON