Yes! We Have No Bananas

When Italian authorities stumbled upon a suspicious merchant ship sailing in the Mediterranean two years ago, they were sure they had captured a key part of an international drug-smuggling ring. Instead, when they stormed the ship at gunpoint all they found was ... a boatload of bananas from Ecuador.

"They must have peeled peeled almost every single banana before they realized there was no cocaine," an official of the European Anti-Fraud office, OLAF, told NEWSWEEK. "Even then it took a while to sink in that the contraband was the bananas."

Who would have guessed? Smugglers have learned, says the OLAF spokesman, that they can get higher payments from their bosses for trafficking in bananas rather than hauling the cocaine, arms or even humans that are all standard cargo in Italian waters.

The trade is big enough now that the Italian authorities are becoming concerned about lost revenue. When officials completed a two-year probe into illicit fruit smuggling this week, they found the trade represented losses of more $80 million in customs fees and more than $2 million in unpaid sales tax on bananas alone. "It [the cargo] is not about the bananas," says Gianfranco Ferranti, a spokesman for Italy's tax police, the Guardia di Finanza, in Rome. Ferranti told NEWSWEEK that anything subject to high tariffs under the European Union's import laws is subject to smuggling. "In fact, Italians aren't particularly fond of bananas," he says. "This is about falsifying documents, evading taxes and breaking the law."

In the case of the Ecuadorian bananas, the ship operators had falsified the import documents to say the content had come from Africa rather than South America. Officials in Catania, Sicily, grew suspicious after being unable to trace the ship to Africa. The destination, too, was suspect. Several tons of bananas were going to a tiny greengrocer in a Sicilian village. "It just didn't add up," says Ferranti. Together with OLAF, Catania's Guardia di Finanza uncovered an illegal banana ring that operated in Spain, Belgium, France, Portugal and Monaco-all countries where banana import tariffs are high. Investigations uncovered about 156 tons of illegal bananas being smuggled into the region through a tiny fruit store. So far, 10 men have been arrested in connection with the smuggling ring; their trials will begin this fall. Ferranti says those charged face large fines and long prison terms. None of them have yet entered a plea.

What makes the trade so lucrative? EU law makes it particularly expensive to import bananas. South American growers-Ecuadorians in particular-are the world's largest banana exporters. But because Europe wanted to protect its relationship with former colonies in Africa and the Caribbean, it put lower tariffs on their bananas than on those from producers whose bananas are distributed by American companies. Ecuador would normally be squeezed out of the European market as a result, since the tariff imposed on its bananas is 100 per cent of their value. All of this has been a major source of debate-and sometimes threats-in the World Trade Organization, which has sided with the United States in supporting the Latin American producers.

But what's a brainteaser for the bureaucrats was clearly seen as a boon by smugglers. Although banana imports from Africa and the Caribbean are subject to smaller tariffs than those from South America, they cost more in European stores because they are more expensive to supply and produce.

Ferranti says cheaper bananas in the marketplace is what led them to the scope of banana smuggling in the first place. "We kept wondering how they can be selling these Ecuadorian bananas so cheap," he says. "That certainly won't be the case now."

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