Late 80s movie. Fantasy genre? Cigar-smoking men in suits seem to need them to survive. At some point, one of them is "executed". He climbs onto some place, for his trial or something. His cigar is removed from him, and then he looks down. The floor is full of cigar butts. He starts to disappear when the cigar is removed from him. It seems that these pale men in suits were after children, specifically a girl and a couple of friends. I recall a trunk popping open with toys in it. There is some "amphitheater" in the movie (that's where I learned the word). Probably the children were running away and going to hide in it. It's not "Bugsy" or "City of Lost Children" Could be some obscure B movie? European? I did watch it in a normal theater, for what it's worth.
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Chosen answer: That just might be "Momo", a film of a book by Michael Ende (Neverending Story). http://www.imdb.com/title/tt0091537/.
Ioreth