Secrets are hard fought for in the impoverished Albanian town of Librazhd, particularly when jobs are at stake.

But the controversial activities of a cigarette factory on the edge of town with a 50-strong workforce appear to have passed largely unnoticed since it began quietly churning out millions of cigarettes in packs bearing the profile of the last Ptolemaic ruler of Egypt – Cleopatra.

Cleopatra is the most popular brand of cigarette in Egypt and one of the world’s top sellers.

Albanian court documents, leaked British customs reports, contracts and interviews with the factory management reveal that since 2014 around 22 million packs of the cigarettes have been produced annually in the Albania Tabak factory in Librazhd, near the central city of Elbasan, before being shipped to Libya.

According to the owner of the Cleopatra brand – Giza-based Eastern Company – cigarettes arriving in Libya are frequently smuggled across the desert border into Egypt, where one pack of 20 can fetch almost a dollar on the legal market.

British customs authorities have been tracking the Librazhd output and flagging it as counterfeit. Their warnings prompted a criminal investigation in Albania in 2015 which halted production for a year. The case was then put on hold as prosecutors awaited information from foreign jurisdictions.

Relieved of its immediate legal troubles, the factory signed a new deal in 2017 with the British Virgin Islands-based firm Eques Holding Group to produce up to 175 million pack a year, according to a contract obtained by reporters.

Albanian prosecutors have now revealed that they reopened the case in 2017.

Undeterred, the men behind the operation are looking to expand.

They include figures from the Balkans, the Middle East and Cyprus, some of whom have been tied to earlier smuggling cases, and some whose involvement in this operation has been concealed through offshore structures that reporters from Balkan Investigative Reporting Network, BIRN, and Arab Journalists for Investigative Journalism, ARIJ, have unpicked.

Those benefiting from the booming Cleopatra business also include the wife of a powerful Albanian political figure from the ruling Socialist Party, although she insists she was unaware of the allegations against the operation.

Organised crime and the rule of law are major issues facing Albania as it tries to make progress on the road towards European Union membership, having joined NATO in 2009.

The manager of the factory, Servet Dauti, said the factory operated wholly in line with Albanian law and what happened to the cigarettes after they left Albania was not his concern.

“The moment that the product leaves Albania we have no responsibility or obligation to know what happens with it,” he said.

Eques Holding Group declined to comment for this story.

Made in Librazhd

The Egyptian Army regularly reports seizures of counterfeit Cleopatra. Here, 4,200 packets were intercepted in December 2016 on the desert border with Libya. Photo: Egyptian Army.

Produced more than a thousand miles from the land of the pharaohs, the allegedly counterfeit packs nevertheless carry the unmistakable profile of Queen Cleopatra, lover of Julius Caesar, and claim in Arabic script to be ‘Made in Egypt by Eastern Company S.A.E..’ The packs are emblazoned with Egyptian health warnings.

Eastern Company S.A.E. created the Cleopatra brand for President Gamal Abdel Nasser in the 1960s as an Egyptian take on the smuggled American Kents he liked to smoke. It has been in production ever since, largely for domestic consumption.

Increased taxes on cigarettes from the 2010s onward created a booming black market for the product; lawlessness in neighbouring Libya since the 2011 overthrow of dictator Muammar Gaddafi has turned the country into a smuggler’s paradise.

These Albanian “counterfeits”, as they are described by British customs in a May 2015 letter to Egyptian customs and obtained by BIRN/ARIJ, are produced for Eques Holding Group, a British Virgin Island company owned by a 38-year-old Iraqi businessman called Faris Al-Rifai.

Eques Holding Group boasts a licence  to use the Cleopatra brand in the European Union and Albania, obtained from another British Virgin Island firm, Worldwide Spirits Supply.

Eastern Company has been unsuccessful in overturning these trademarks as the Egyptian firm has been unable to prove that it has recently been using the brand in those countries.

But trademarks work on a strict geographical basis, and Worldwide’s do not cover Libya or Egypt, where Eastern Company has registered their brand.

Despite this, a BIRN/ARIJ investigation has uncovered that the Albanian-produced Cleopatra were exported via the Albanian port of Durres to Libya and a firm called Al Zain International Company. Calls to the firm went unanswered.

And an internal report from Eastern Company, obtained by BIRN/ARIJ, describes how Cleopatra cigarettes arriving in Libya from countries such as Vietnam and Montenegro are smuggled across the Sahara into Egypt, where they can be sold alongside authentic Cleopatras, which cost just under $1 each.

Although there is no direct evidence of Albanian-made Cleopatras finding their way to Egypt, officials have reported regular seizures of the brand in the North African country in recent years. Revenues for Eastern Company and the Egyptian government have also been badly hit by smuggled counterfeits.

The Albanian-made cigarettes also purport to be produced by “Eastern Company S.A.E”.

A page from the prosecutor’s investigation shows close-ups of the Cleopatra cigarette packets produced at Albania Tabak. Photo: BIRN

This right was supplied by a company of the same name but based in the British Virgin Islands at the same address as Eques Holding Group. There is no apparent connection to the original Eastern Company headquartered in Giza, home of the Giza pyramids southwest of Cairo, although the firm did not respond to requests for comment.

The letter  confirming the production rights was issued a matter of months before Albanian prosecutors opened an investigation into the factory’s operations, prompted by intelligence from British customs, HMRC.

The criminal investigation into “Violation of Industrial Property Rights”, “Laundering the Proceeds of Criminal Offence or Criminal Activity” and “Illegal production of industrial and food items/commodities” was opened in early 2015.

According to news reports from the time, nine million “counterfeit” cigarettes were seized in a raid on the factory but the articles failed to note the brand – Cleopatra – despite being clearly visible from the press photos issued.

Following the raid, the case was suspended while prosecutors awaited responses from various foreign jurisdictions, including British Virgin Islands and Egypt.

This allowed Albania Tabak to restart production, despite contact between Albanian customs and the Egyptian ambassador to Tirana, according to an Eastern Company report, and the concerns of British customs and its continued monitoring, according to official letters obtained by BIRN/ARIJ. Britain is one of the biggest markets in Europe for counterfeit and contraband cigarettes.

In correspondence with Egyptian customs in May 2015, not long after the raid, HMRC described how an employee based in Sofia but with regional responsibility for Albania “has recently been successful in closing a cigarette production factory producing counterfeit Cleopatra brand cigarettes.”

“It is HMRC’s intention to eradicate the counterfeit production of Cleopatra brand cigarettes with the help of The Eastern Company, the legitimate license holder for the brand,” the letter added.

To date, neither Albania Tabak, Eques Holding Group, Worldwide Spirits nor any employee of those firms has been accused of any crime.

Production restarts and expands

Dauti, the factory manager, said the factory was shut for roughly a year while the investigation was ongoing, after which they were allowed to reopen.

Then, in December 2016, HMRC informed their Egyptian counterparts that eight shipments of Cleopatra cigarettes had been sent to Libya for Eques Holding Group.

In March 2017, it again reported  to Egypt that 11.5 million Cleopatra cigarettes were due to be exported to Libya, via Malta.

The latest contract, signed in March 2017 and obtained by reporters, states that Albania

Albania Tabak cigarette factory in Librazhd, near the central city of Elbasan, is one of the town’s main employers. Photo: BIRN

Tabak will produce up to 3,500 tonnes of cigarettes a year for two years which, at approximately one gram a cigarette, means 3.5 billion cigarettes every 12 months, or 175 million packs. The document places a value of 15 million euros on the order.

In an interview with BIRN/ARIJ, Dauti denied doing anything wrong.

“We perform and proceed with our work in full compliance with Albanian law,” he said.

“The trademarks are registered in Europe and Albania, hence legally nothing impedes us from producing it. But even if it was not registered in Albania, there is nothing that stops us from producing it according to Albanian legislation as we function as a production company and all the inflow and outflow plans are monitored.”

Eques Holding Group agreed to pay Albania Tabak 0.014 euro cents a pack, or approximately 300,000 euros a year.

“According to the contract, we only have to package them and send them to Durres,” Dauti said.

Dauti said the machinery at the Librazhd factory was outdated and capable of producing just 1.8 million packs a month, or 21.6 million per year.

He and the official owner of Eques Holding Group, Al-Rifai, have set up a new company, Eques Trading Company Shpk, in nearby Elbasan where they have applied to open another factory.

“We have a capacity of three containers a month,” Dauti said of the current factory. “We can’t do more than this even though the contractor asks for a larger quantity. We cannot do more because we don’t have better equipment at our disposal.”

Interviewed a second time, Dauti played down the plan to open a new factory, saying they would revisit the idea in six months.

Links to smuggling

Albania Tabak factory has been under the ownership of the Jashari family since December 2010, having been bought by father Ilir for three million euros before passing between his wife and son, Darjo.

Ilir Jashari was convicted of drug trafficking in Italy in June 2010 and handed an initial sentence of more than 15 years, which was later reduced, although he only began serving it upon his arrest in 2014.  In 2016 he was transferred to an Albanian prison and was released in 2017, according to a source close to the process.

Contacted by phone, he declined to comment.

Ownership of Worldwide Spirits, meanwhile, is shrouded in secrecy in the British Virgin Islands, and no clues were provided in the information released to BIRN/ARIJ from the tax haven.

But a trawl of trademark applications lodged at the EU’s intellectual property office revealed that the firm is owned by another company called Middle East Tobacco Co, METCO, based in Cyprus and with a turnover of almost $28 million in 2014, according to company accounts.

According to documents from a 2008 London High Court case between UK cigarette producer Gallaher and a Cypriot firm called Tlias, over 18 months from May 2002, 20,000 cases of Gallaher cigarettes were shipped to Belgium, Montenegro, The Netherlands, Singapore, Slovenia and Tenerife by Tlais’s main distributor to METCO without any restrictions on their final destination, in breach of Tlais’s contract..

Cigarettes then sold by METCO ended up being smuggled into the UK and resulted in five people being convicted. The judge said: “I shall assume that Metco had nothing to do with the criminality.”

An employee of METCO, who declined to identify himself, said they were “not interested” in receiving or responding to BIRN/ARIJ’s questions on the Cleopatra trademark.

According to a contract signed between Eques Holding Group and the British Virgin Islands-based “trademark” holder Worldwide Spirit Supply, Eques agreed to pay Worldwide one USD for every 10,000 cigarettes produced. This works out at approximately 44,000 dollars a year.

Another company cashing in on the cigarette boom in Librazhd is the Elbasan customs agency Ujori, which is owned by Xhuljana Sejdini, wife of Elbasan mayor Qazim Sejdini, an ally of Socialist Prime Minister Edi Rama.

According to the Albanian prosecutor’s report, obtained by BIRN/ARIJ, factory manager Dauti told prosecutors that “the whole imp-exp procedure [is] through the customs agency Ujori”.

Dauti told BIRN/ARIJ that Ujori was given the task because “it is the only company that does everything in Elbasan so we signed a contract with it”.

It is not known how much Ujori has made from the shipment of allegedly counterfeit cigarettes.

Sejdini told BIRN that she was unaware of the investigation into Albania Tabak, explaining that her firm was involved only in the paperwork.

“We do not open any trucks and we do not know what is inside them and there is no reason why we should know that,” she said.

Librazhd’s mayor, Kastriot Gura, said he knew little about the activities of the factory in his town, beyond breathing much needed life into the ailing local economy.

“I know they produce cigarettes and that they have brought jobs to the town,” he said. “They regularly pay their municipal obligations and for us that is all that matters.”

No, I do not know because I was not interested to know. For us, it is important and what really matters is that they pay tax to the city and have created jobs.

Gura said he was not interested in any allegations of wrongdoing. “That’s the responsibility of other parts of the state.”

On December 12, shortly prior to publication of this story, Prosecutor Armanda Xhaferri revealed in a written statement to BIRN that her office in Elbasan had reopened the case in 2017 after new documents were received from the British Virgin Islands, but that the case was still waiting on information from Egypt.

“Under these circumstances, our investigations have not been completed yet,” Xhaferi said.

Responding to questions about why customs allowed a firm under investigation to export goods claiming to be “Made in Egypt” to Libya, Albania’s custom said in a statement that Eques Holding Group was operating with an Albanian trademark for “Cleopatra”, although it also conceded that Eastern Company had registered “Cleopatra Lux” as its brand.

It added: “The case continues to be under investigation by the Prosecution of the District Court in Elbasan while the General Directorate of the Customs awaits the results of the investigation.”

Editing by Matt Robinson.

With additional reporting from Ivan Angelovski.

Find out more about our Smoke and Mirrors series, investigating allegations of counterfeiting and contrabanding of cigarettes in the Balkans.

Read our investigation into how a state-owned factory in Montenegro produced billions of “Made in Egypt” Cleopatra cigarettes.

This investigation is produced by BIRN as a part of Paper Trail to Better Governance project