Scandal Overseas: Sex, Lies and Cigarette Smuggling

Sex, lies, the Italian mafia, millions of packs of Marlboro cigarettes, and billion-dollar profits are all rolled into the plot of one of Europe's largest smuggling operations in recent years, where trials in both Italy and Switzerland are under way.

In this file photo, Montenegro Prime Minister Milo Djukanovic of the ruling Democratic Party of Socialists (DPS) addresses the media in front of a polling station on March 29, 2009, in the capital Podgorica

(Andrej Isakovic/AFP/Getty Images)

At the center of it all: the head of state for one of Europe's smallest but most beautiful countries, the coastal nation of Montenegro, the backdrop to the 2006 James Bond film, "Casino Royale."

Based on hundreds of pages of wiretap transcripts, law enforcement reports, and indictments, the scandal sounds like a screenplay. Between 1994 and 2002 tobacco smuggling became a state enterprise of Montenegro, allegedly controlled by Prime Minister Milo Djukanovic and an inner circle of Montenegrin officials, according to newly released Italian court records obtained by the International Consortium of Investigative Journalists (ICIJ), a project of the Center for Public Integrity in Washington, D.C.

Related

Cheap High: Cocaine Prices Still Falling

Cocaine Highways: Post-NAFTA, Most Drugs Cross U.S. Borders in Trucks

More from Brian Ross and the Investigative Team

Almost every night dozens of pilots steered a fleet of large speedboats crammed with cigarettes- most of them Marlboro and Marlboro Light -across the Adriatic from the Montenegrin port of Bar to the Italian coast. Once in Italy, the untaxed cigarettes were sold by the mafia on the black market, according to Leo Sisti, the author of the ICIJ report.

Two of Italy's mafia syndicates managed distribution of the cigarettes and laundered more than $1 billion in profits in Switzerland, court documents show.

Italian prosecutors have accused Prime Minister Djukanovic of "having promoted, run, set up, and participated in a mafia-type association."

Djukanovic was dropped from the indictment in March of this year thanks to diplomatic immunity. He has denied all of the allegations in Italy.

Nevertheless, his critics say he was directly involved, and his family's vast fortune likely was boosted by the illicit trade.

"He is a criminal, no doubt about it," said Ratko M. Knezevic, a former Montenegro government insider who now lives in London. Knezevic had at one time lobbied Washington on behalf of Djukanovic, but he says he and the Prime Minister had a falling out and no longer communicate.