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So it wasn't an "Indian problem" after all.

By Paul Barnsley

Windspeaker Staff Writer


Executives of an American-based cigarette company pled guilty in late 1998 to funding and directing cross-border cigarette smuggling in the early 1990s.

Despite the fact the First Nation community of Akwesasne has been tagged by the mainstream press as Canada's smuggling capital, Northern Brands International, an affiliate of Canada's number three cigarette-maker, Montreal-based RJR-Macdonald, Inc., the manufacturers of Export "A", accepted a plea bargain recently that saw the company agree to plead guilty to smuggling charges and pay a $15 million (U.S.) fine. The federal indictment alleged that Northern Brands sold more than one million cartons of Export "A" to smugglers.

With the Mitchell case slated to be heard in the Supreme Court of Canada sometime in the near future, the politics of tax-free trade -- or "smuggling" if you don't have the right to be tax-exempt or an Aboriginal right to carry goods across the Canada/United States border-- in this border community is once again primed for public discussion.

Cigarette smuggling has been the most visible example of the friction between competing Indigenous and colonial jurisdictions, but it certainly isn't the only example. Other sore spots for First Nations leaders and provincial or federal bureaucrats include: GST regulations covering deliveries to reserve territories; cigarette quotas, and gasoline voucher systems. Native leaders say the issue that never gets examined in the mainstream media is one that should be, if one is to take any discussion of this issue seriously. Native people, whether other Canadians like it or not, have rights that are recognized as legal, proper and necessary by any and every court in the land. When bureaucrats seek to find ways to isolate these pockets of special rights, which exist within their own jurisdictions, they tend to treat the problem as if it is an "Indian problem."

Instead of constructing regulations or laws that aim to prevent non-Native people from buying tax-free cigarettes, for example, the regulations or laws are always focused on telling Native people they can't sell to non-Native people. It's a subtle but revealing difference.

Native people have to contend with a web of complicated, arcane rules and regulations designed to prevent non-Native people from sharing in the special rights of Native peoples. The bottom line is, when non-Native people seek to avoid (or evade) taxation by crossing into Native territories, the authorities, rather than spending the money it would take to enforce non-Native laws on non-Native people, instead create more rules that complicate the lives of Native people.

Native leaders have objected to this for a long time. This isn't really an Indian problem, they say, but the federal and provincial governments have made it an Indian problem. They argue the mere existence of federal GST regulations or provincial cigarette quotas or the gasoline voucher systems can be seen as active, government-sponsored discrimination.

Akwesasne Grand Chief Mike Mitchell says his community has been traumatized in many ways by the actions of governments and smugglers. He said that now that smugglers have changed the commodity they are smuggling to more dangerous substances like drugs, weapons and illegal aliens, his community has decided to implement its own brand of justice on community members who participate. A community vote was scheduled after our deadline, could result in a decision to impose traditional punishments. But Akwesasne, once again, is butting heads with federal officials as the community attempts to take some concrete action to assert its jurisdiction so it can control smuggling. Mitchell suggested any attempt by his community to assert jurisdiction against smugglers was seen as a challenge by Ottawa, and that's the real reason smuggling flourished.

"We're looking at banishment and things like that. There's very severe measures," he said. "As one government official noted, there's many elements which are contrary to many elements in the Canadian Charter. Many of our residents just shrug their shoulders and say, `What's new? They're certainly not helping us here on our territory.' I don't know if this is called taking matters into your own hands but they mean to stop it."

Tribal officials on the U.S. side of the border are looking at their own, similar measures.

Mitchell said Canadian authorities, unlike American authorities who have made the investigation and prosecution of smugglers their first priority in this unique region, are putting obstacles in the path of local attempts to crack down on illegal activity on the reserve.

"On the Canadian side they're more concerned with: `Well, you don't have that authority. We didn't give you that right. We didn't acknowledge that you had that right.' Meantime, your community's going through hell and they're not helping," he said.

Steve Williams, the former band council chief of Ontario's Six Nations of the Grand River First Nation, is now the president of Grand River Enterprises (GRE), an on-reserve cigarette manufacturing company that has had more than its share of trouble with governments and law enforcement agencies. When he was chief, Williams' council fought Ontario's cigarette quota system in court and won -- but found the win to be of no value because the government's response was to simply change the wording of the law.

"Actually, the elected system paid $300,000 for the court costs, fighting the province's quota system on Indian reserves," Williams explained. "We fought it on the grounds that they don't have jurisdiction and it was an illegal system. We won the court decision. The government appealed it and when they appealed it, they changed the word from `quota' to `allocation.' So, our lawyers suggested there's no reason to keep fighting it because you're just going to spend `X' number of dollars again and they'll just change the wording again."

After the court told Ontario there was no legislative hook on which to hang its cigarette quota regulations -- that there was no justification for the quota system in any law -- the bureaucrats simply changed the wording of the regulation so the fight would have to be waged one more time, Williams said, adding the only reason his legal advisors could see for this was to financially outlast the band council and deny justice by making it too expensive for Six Nations to continue to challenge the quota system.

"So now here in Ontario you have some communities under a quota system which was proven in court to be illegal and you have some under the new allocation system. Most of the other provinces won't call it a quota; they call it an allocation. But if it looks like a duck and quacks like a duck, it's a duck," he said.

Williams says it's extremely undemocratic and an abuse of power for a government to change the rules after the fact when that government loses a legal battle, just so the government can continue to do what it wants regardless of what the courts say. But it's something that happens regularly when governments deal with Native sovereignty issues.

Now that Williams is president of a Native-owned cigarette manufacturer, he says he sees even more bizarre government manipulation. In many cases, he said, the rules imposed by the various levels of government seem to be aimed at making it impossible for his company to do any business at all.

"We've applied to the province for a license to sell cigarettes off-reserve," he said. "They've said `no.' Then they explain to us about the quota system or allocation system and they say the reason they have a quota system or allocation system or whatever you want to call it, is because there's too many non-Native people coming to the reserve to buy cheap cigarettes. I think everybody can understand that. So I said, `All right then, issue me the license to mark the cigarettes so I can sell them off reserve and keep it in their stores and they'll have no reason to come to the reserve.' And they say, `Oh no, we can't do that. We don't trust you to be collecting tax money. You won't submit it to us because we don't have jurisdiction on the reserve."

The federal government has licensed GRE, but the provinces, because the Indian Act gives very little power to provincial governments on Indian land, won't issue provincial licenses. So a company owned by people who are tax-exempt under Canadian law can't conduct a legal business because people who aren't tax exempt might buy their products. Provincial governments, whose job is to issue licenses and collect applicable taxes on manufactured products, can stop a Native-owned business from getting off the ground because the province isn't willing to spend the money to do its job and enforce the payment of taxes by non-Native people. Williams and many other Native business leaders call this discrimination.

"Our position would be, `We aren't tax collectors for any provincial or federal government.' The whole point of it being, if you want to stop these non-Natives from coming to the reserve and buying our products then you sit on the boundary line and you collect the taxes from them," he said. "But they came back with the answer that it's unconstitutional for them to stop taxpayers. So, we'll mess with you guys because you don't pay taxes. That's just totally discriminatory. Everything they do to us is discriminatory."

GRE has run into government opposition as the company attempts to find new markets for Sago, its cigarette brand.

"We got the federal license. The federal legislation says you have to apply to the provinces to get a lower rate of excise. So we did that. We wrote to every province and applied like we're supposed to. They say they can't look at our application until we have a license from our host province. I've got the acts. I've read them. There's nothing in the regulations or the tobacco tax act for B.C., Manitoba, Alberta, any of the provinces, saying we have to get a license from our host province first. They say `it's not written down but it's a protocol we have between us'. I said if I took them to court their protocol would be shot down. They say `yes, we'd have to give you a license but we'd probably audit you every other week.' They do things that aren't legal but they're the ones who make the laws so I guess they can do anything they want. It just doesn't make sense to me."

While his company is mired in a tangle of government red tape, one major tobacco company was allowed to aggressively break the law to protect its markets and its profitability. Northern Brands International's guilty plea proved it, Williams said.

"That's the whole situation. We told them that from day one. The reason [smugglers] were getting so many cigarettes from the states and shipping them back was because the big companies were doing it. They said, `No, they don't do that.' Then it got proved they did!" said Williams.

Most of the 10 original partners who formed GRE, before Williams was involved, have been in trouble with the law. The company operated for three years without a license and was charged by the RCMP, but the charges lost momentum when the company acquired its federal license. Williams was chief at the time the company began operations. He supported the company despite the fact the partners stated they were going to operate without a Canadian license. He knew how difficult the mainstream governments make it for Native businesses to operate and he couldn't blame the partners for being impatient.

"They make you act like that," he said. "You try to do something legitimate like we're trying and they put roadblocks up every which way you go."

Mitchell also believes that federal and provincial governments are going to have to change their approach if poverty and economic stagnation are going to disappear from First Nations.

"I want to make this statement. I've made it before; I repeated it in Ottawa," Mitchell told Windspeaker. "We don't have an economy to speak of that would provide for our people. With low employment, it's easy to entice iron workers or anybody else that's out of work. It's easy to approach someone who has a boat and say, `Take this across.' I've been watching with some interest the way the law enforcement officials have exercised their enforcement policies. A lot of undercover work, a lot of waving a carrot in front and enticing and those that have bitten were rounded up. It's like one of those traffic police that has a quota, speeding tickets that he's got to hand out. So they've achieved the desired result. But I look at the majority of the people that got involved in some capacity in this and they're no big time smugglers nor are they even crooks. They were victims of economic enticements."

While some observers suggest the big cigarette companies couldn't have gotten away with the scheme that led to the charges against the RJR-Macdonald affiliate without at least some compliance with federal officials, Mitchell isn't prepared to make that accusation without concrete proof. But he says federal inflexibility -- whether there was an ulterior motive or not -- caused the smuggling problems that engulfed his community.

"Canada can complain that it has suffered greatly monetarywise from Akwesasne's boundary. But when this whole thing started I proposed certain laws be created and recognized and supported. That didn't happen. I proposed a Mohawk border patrol program to protect our interests as well as any abuses," he said. "Back in the middle 80s when this thing started there was a non-Native person who put me on that path. He said there's collusion here between the cigarette manufacturers, the government and the people involved in this trade and your people are going to be used. So I tried to follow his logic. It was pretty hard to believe -- until almost 16 years later -- the people who are directing this operation are the cigarette manufacturers themselves. If you look at it, at the time -- which was 1986-87 -- they were sending thousands of cartons of cigarettes and it was escalating monthly and Canada had no problem with it," Mitchell said. "As a matter of fact, it was Akwesasne that flagged it. We had meetings with Ottawa on this. Any regulations that our community's leadership tried to put on -- that's both the traditional and elected leadership -- was stifled by Ottawa. Two dozen community laws, bylaws, that were passed were all rejected by Ottawa. Their rationale was that the laws that we were trying to address were ultra vires. They already existed in Canada's laws and they were more than equipped to deal with it. If Akwesasne was any First Nation within the boundaries of Canada . . . but we were dealing with a very different situation. The oddity of it all is that five, seven years later, when it was really out of control and Canada was losing over a billion dollars a year, all fingers pointed back to Akwesasne. People were saying look at that criminal community. It was quite an experience. I have very strong feelings about the treatment they put this community through."

That frustration and bitterness is what prompted Mitchell to launch his challenge of the border-crossing laws that, after two victories in Canadian courts, is on its way to the Supreme Court of Canada.

Mitchell spoke to the standing parliamentary committees on Justice and Aboriginal peoples, hoping to convince legislators to pay attention to the issues of onreserve poverty and economic stagnation as well as the jurisdictional issues that all combined to create an atmosphere that smugglers could exploit.
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Author:Barnsley, Paul
Publication:Wind Speaker
Date:Apr 1, 1999
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