Lawsuit Against Liquor Makers Illuminates Drug-War Charade

Occasionally, the U.S. justice system opens a window into the true nature of the drug-war pretense, despite the political rhetoric employed to conceal the hypocrisy.

That is the case with respect to a pending lawsuit that pits the government of Colombia, and its various departments (or states) against two of the world's largest liquor producers, England-based Diageo Plc and France-based Pernod Ricard SA — both of which have major U.S. operations and produce well-known brands such as Smirnoff, Johnnie Walker, Captain Morgan Chivas Regal and Martell.

In the litigation, a civil Racketeer Influenced and Corrupt Organization (RICO) Act case filed in U.S. District Court in Brooklyn, the government of Colombia accuses the giant liquor companies and their co-conspirators, including distributors based in Aruba (a Caribbean island nation just northeast of Colombia), of having “engaged in and facilitated organized crime by laundering the proceeds of narcotics trafficking,” among other acts, according to the court pleadings.

In what can only be described as a real head-scratcher, the government of Colombia is continuing to wage this legal battle against the liquor makers even while it presses for a free trade agreement (FTA) with the United States that, by the terms of the proposed pact (now awaiting approval from the U.S. Congress), would actually make it easier for liquor makers and distributors to expand their business activities in Colombia.

The Office of the U.S. Trade Representative, which is part of the Executive Office of the President, provides the following description of the proposed FTA, dubbed the U.S.-Colombia Trade Promotion Agreement:

    Under Law 788, Colombia assesses a consumption tax on beverage alcohol based on a system of specific rates per degree (percentage point) of alcohol strength. This tax regime discriminates against imported distilled spirits through arbitrary breakpoints that have the effect of applying a lower tax rate per degree of alcohol to domestically produced spirits. Under the CTPA [U.S.-Colombia Trade Promotion Agreement], Colombia committed to eliminate this discriminatory element of the excise tax for imports of distilled spirits within four years of entry into force of the agreement. Additionally, under the national treatment principle of the CTPA, Colombia committed to eliminate discriminatory practices that have restricted the ability of U.S. distilled spirits companies to conduct business in Colombia. [Emphasis added.]

Simple economics seems to dictate that if sales of foreign liquor products increase in Colombia under the trade pact as proposed, so too would the opportunity to launder money via the sales of those products.

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