FITA Press Release 10 March 2021

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Press release – FITA – for immediate release

FITA Press Release 10 March 2021

We note, without any degree of shock, the latest attempt by multinational cigarette manufacturer BATSA to deflect and divert attention away from very serious and damning allegations of smuggling, corruption and the indirect funding of terrorism which were uncovered by a report compiled by the Organized Crime and Corruption Reporting Project into smuggling and organized crime by a number of multinational cigarette manufacturers in West Africa, but in particular BAT through its South African subsidiary.

The latest ploy comes by way of attack on its commercial through an apparently independent report they have commissioned on cigarette wholesale and retail prices conducted by IPSOS, which report is being used as a Trojan Horse to do more of their dirty work.

Of course this is not BATSA’s first dance with this particular research institution, following the much-discredited report released in 2018 by in essence the same parties. Independent researchers and academics have repeatedly voiced their concerns about Big Tobacco and how it should not be trusted in respect of its research and studies on the illicit. They have repeatedly been found to have overstated the size and prevalence of this scourge in order to suit their selfish needs, often to the detriment of their commercial competitors and/or the fiscus.

These so-called independent reports are now also being used as ammunition by Big Tobacco for anti-competitive purposes to smear the names and brands of independent local cigarette manufacturers, and as a way to strong-arm retailers into removing the products of smaller independent manufacturers off their shelves in order to maintain the status quo and to keep certain players in the informal trade in order to protect the profits of multinationals in an anti-competitive manner, and to perpetuate the illusion that the brands of local cigarette manufacturers are must be illicit given that they can only be procured from informal traders and not in formal retail spaces.

Further, we find the random calling for a commission of inquiry to be yet another unsurprising and calculated effort to avoid accountability by BATSA. To simply brush-off a report implicating your organization in large-scale smuggling, corruption, the indirect funding of terrorism and the drug trade smacks of arrogance of the highest degree. We are more than perplexed by this suggestion of a commission of inquiry (which idea we would be in support of if we were of the view that it was necessary) as a retort to queries directed at them in respect of these very serious allegations, which allegations come hot on the heels of other allegations of bribery and child labour practices in other parts of the continent against this very same multinational.

We further wonder what purpose a commission of inquiry, in this instance would serve, save to delay processes, when the evidence contained in reports such as the one compiled by the Organized Crime and Corruption Reporting Project into allegations of smuggling clearly implicate BAT, and its South African subsidiary BATSA, together with other multinationals and are readily available?

FITA has been firm in its call, as far back as 28 February 2021, for law enforcement agencies to investigate the aforementioned evidence emanating from the OCCRP report, and the very serious allegations against the multinational without delay.

We have also repeatedly voiced our opinion in as far as enforcement of compliance vis-a-vis the tobacco industry along its value being looked at more holistically without interference from any industry players and/or their agents or proxies.

Any interference by industry would go against the provisos of WHO’s Framework Convention on Tobacco Control which is clear on its position in relation to interference by industry in policy implementation by the state. These provisos have been adopted in order to protect governments from undue influence by a Big Tobacco, armed with deep pockets, which is solely concerned with preserving its large profits.

We continue to implore inter alia SARS and National Treasury to engage with their relevant counterparts in our neighbouring countries with regards to issues of enforcement and exploring the potential of having more cooperation between the authorities in the SADC region. This method of mutual co-operation by revenue authorities of different states has been applied successfully by revenue authorities in other jurisdictions to deal with the illicit trade, and we are of the firm view that it is high time that same is explored by our authorities.

In our engagements with law enforcement agencies, particularly over the last few months, we have also pleaded with them to work hand-in-hand as law enforcement agencies, together with the relevant government departments, in order to shore up our borders, and to protect the sovereignty of this country which is currently being treated as a playground by cigarette manufacturers and traders in our neighbouring countries who act with impunity while legitimate cigarettes manufacturers in South Africa continue to be subjected to ever-increasing regulation.

We have also welcomed the establishment of the inter-agency working group of SARS, the Reserve Bank and the Financial Intelligence Centre working jointly on combating criminal and illicit cross-border activities and we are hopeful that it will yield positive results, and that the criminal syndicates behind the booming illicit trade meet the full might of our law enforcement capacity.

There is therefore clearly no need at present for a costly and protracted commission of inquiry, which will only serve to waste taxpayer money and time. This particularly at a time when the challenges of our country in respect of a host of other more prevalent and serious crimes is well-documented. The SAPS and other law enforcement agencies are slowly implementing mechanisms to enforce compliance and they are capable of investigating allegations of unlawfulness such as those raised by BATSA if the evidence is presented to them without the dramatization of the process.

Our members are all compliant with the relevant laws of this country governing the tobacco industry, and have at all times been co-operative with SARS in as far its efforts in implementing measures to curb non-compliance in the industry along the value chain.

The media should ask once and for all why this particular company goes through such great lengths at any given moment to avoid accountability. We saw similar tactics employed in 2016 when evidence surfaced, via a massive data leak, implicating BATSA in a host of shenanigans such as money-laundering, espionage and corruption. To date the findings of the independent investigation which they commissioned both locally and abroad are yet to see the light of day despite repeated requests for their disclosure.

If BATSA is serious about compliance and transparency they can get the ball rolling by sharing the findings of the above mentioned independent investigations with the public at large given their new-found eagerness to play open cards.

This multinational continues to act with impunity and feels it can call the shots when it comes to some given their financial muscle. We will most certainly never dance to their tune. We continue to urge them to find their conscience and account for the many allegations leveled against them much in the same manner FITA members have accounted for past transgressions.

We are very clear in our position that there is no need for a commission of inquiry, and that the very serious allegations against BATSA can be investigated with immediate effect, without delay. It is very clear from their conduct exactly who is running scared. We do not wish to roll in the proverbial mud any further with those that are experts in that terrain, and our members will only be dictated to by the authorities, not by those who think we live in a lawless state and seek to take the law into their own hands in order to suit their own self-serving commercial needs.

Issued by Fair-trade Independent Tobacco Association Chairperson: Sinenhlanhla Mnguni 10 March 2021

For queries kindly contact Monique Vogel t: 072 720 7919; e: Monique@fita.co.za

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