SA’s illicit cigarette trade smoking up a storm

South Africa accounts for a quarter of the world's illicit cigarette market‚ with taxes not paid on one in four smokes bought in the country.

Despite this‚ the South African Revenue Service has failed to answer questions this week on how much the country loses in terms of revenue from the illegal trade in cigarettes.

An explosion in the trade of illegal and illicit cigarettes in South Africa over the past five years has seen the country become both a multi-million dollar market as well as a conduit to other African markets for international smuggling syndicates.

In 2015‚ the now chairman of the Tobacco Institute of Southern Africa‚ Francois van der Merwe‚ revealed to The Times that hijacking a vehicle transporting cigarettes was like "striking gold".

At the time‚ he said that between 2010 and 2015‚ South Africa lost more than R22-billon because of illicit cigarettes‚ which are cigarettes which have been either undeclared or incorrectly packaged by the manufacturer to avoid paying tax.

Illegal cigarettes are cigarettes which are either stolen or counterfeit.

A single cigarette on the street today sells for R3 depending where you buy it with hijackers stealing up to 10‚000 in a single heist.

The failure by SARS to respond to questions‚ follows this week's arrest of Mozambican national Enoque Luisa Ricotso‚ 39‚ in Mpumalanga as he tried to flee police and escape into Swaziland and on to Mozambique.

Ricotso‚ who allegedly specialised in hijacking British American Tobacco delivery trucks‚ was arrested for allegedly operating an illegal cigarette empire‚ which is thought to have generated him and his suspected criminal network over R20-million in the past decade.

He is to appear in court soon on 50 charges of armed robbery and hijacking.

His arrest follows the sentencing of two Zimbabwean cigarette smugglers last week in the Mawhelereng Regional Court in Limpopo.

Collen Mkandla‚ 43‚ and Lovers Chauke‚ 35‚ were arrested in January 2012 when they were stopped by police. A search of their Nissan bakkie saw officers recover R178‚794 worth of illicit Remington Gold cigarettes.

They were convicted of contravening the Prevention and Combating of Corrupt Activities Act‚ Customs and Excise Act and the Tobacco Control Act.

The duo were fined R10‚000 or two years’ imprisonment for contravening the Customs and Excise Act‚ R10‚000 or two years’ imprisonment for breaking the Tobacco Control Act and R3‚000 or a year imprisonment for contravening the Prevention and Combating of Corrupt Activities Act.

Mandlakazi Sigcawu‚ BAT's corporate affairs manager‚ said South Africa had one of the highest rates of illicit cigarette trade accounting for around 24% of the total global market.

"Over the last five years‚ the illegal market has gained significant share. One in every four cigarettes smoked in South Africa today has had no excise or VAT paid. This diminishes the industry’s economic contribution to the fiscus.”

He said the trade in illegal cigarettes was not a victimless crime.

"Violent crimes such as armed robberies fuel the illicit trade in tobacco. The proceeds are often used to finance serious organised crime‚ including drug smuggling and people trafficking.”

In 2015 BAT told The Times that 1‚412 of its transport trucks were hijacked annually which equates to four a day‚ with a police report to the Gauteng portfolio committee on community safety in 2014 showing that 20.5% of hijackings in the province involved BAT vehicles transporting cigarettes.

Japan Tobacco International spokesman Nomalungelo Faku said the illegal trade of tobacco products was big business for organized crime.

"Tobacco is particularly appealing to criminal gangs as it is highly taxed‚ easy to transport‚ easily sold and durable.

"One in 10 cigarettes are sold illegally across the world."

She said according to latest statistics‚ nearly 20% of cigarettes sold in South Africa were available at lower prices than the actual tax due to the government for legal cigarettes.

TMG Digital/TimesLIVE