(Adds statement from Gibraltar authorities)
MADRID Aug 11 Crime gangs may be smuggling
cigarettes from Gibraltar to Spain, EU investigators have
concluded following a dispute last year over tougher controls
that Madrid imposed on its border with the British territory.
A year-long investigation by the European Union anti-fraud
office (OLAF) conducted at the request of Spain found potential
links between an increase in the size of the Gibraltar market
for cigarettes between 2009 and 2013 and a rise in smuggling and
a larger illicit market in southern Spain.
"The concerns include indications of the involvement of
organised crime," OLAF's press department said in a statement on
Monday, stating it had sent findings to both the Spanish General
State Prosecutor and the Gibraltar Attorney General.
"As OLAF can carry out only administrative investigations,
it is for those authorities to decide what further actions may
be necessary," said the statement emailed to Reuters.
Britain has run Gibraltar, a rocky outcrop off Spain's
southern coast, since Madrid ceded the land 300 years ago. But
Gibraltar, and the waters surrounding it, remain a disputed
territory with Spain claiming it as its own.
A Spanish court official said a High Court investigation
would be opened in response to the OLAF report.
Gibraltar authorities said in a statement they had already
taken steps to control more tightly the tobacco market and
offered to carry out with Spain joint investigations into the
smuggling of cigarettes.
Gibraltar accused Spain last year of using heavy handed
border controls to disrupt day-to-day traffic across the
frontier in reaction to an artificial reef they erected in the
But Spain said the extra checks were necessary to prevent
tobacco smuggling and that Gibraltar does too little to stem
what it calls an increasing flow of contraband cigarettes out of
the territory, which has a low sales tax.
Cigarettes are about 40 percent cheaper on "the Rock" -
Gibraltar's nickname - than in Spain.
In November, European Commission inspectors urged Britain to
improve safeguards against tobacco smuggling and said both sides
should exchange intelligence on the problem.
Britain has said it is working to help halt smuggling. Spain
has kept up the strict frontier checks although traffic
tailbacks have eased with people trying to avoid rush hour trips
and making fewer journeys in general.
(Reporting by Paul Day; Editing by Mark Heinrich and Crispian