Covid-19: Smoking

'It could be old stock': Tobacco firms deny they're behind illegal cigarette sales

Familiar brands on sale despite ban, say researchers

12 July 2020 - 00:00 By GRAEME HOSKEN
“When we moved to level 4 on May 1 there was an agreement between the state and the tobacco industry that they may produce cigarettes in SA for export.
“When we moved to level 4 on May 1 there was an agreement between the state and the tobacco industry that they may produce cigarettes in SA for export.
Image: Supplied

The government’s seeming inability to stem the flow of cigarettes onto SA’s streets has raised questions of when, or if, the long arm of the law will reach the main suppliers.

Professor Corne van Walbeek, director of the University of Cape Town’s (UCT’s) research unit on the economics of excisable products, said of the illegal sales: “It raises the question of whether the government is too scared to go after the source of these cigarettes.”

Police this week did not respond to questions on what measures were being taken to clamp down on the sales, how many cigarettes had been confiscated and how many arrests had been made.

The UCT research unit has been tracking cigarette sales under the lockdown, looking at brands, prices and how cigarettes are bought. It surveyed about 12,000 people.

“These sources [of cigarettes] are well known, and include the multinationals like BAT [British American Tobacco],” Van Walbeek said. “We see their brands and the local brands in the market.”

He said it was “wasteful” for the law to pursue small traders.

According to the survey, the brands prominent during the lockdown have been those affiliated with the Fair Trade Independent Tobacco Association (Fita).

“When we moved to level 4 on May 1 there was an agreement between the state and the tobacco industry that they may produce cigarettes in SA for export.

“It could happen that the products physically leave the country and go to a neighbouring state, and are then smuggled back. More often than not these are ghost exports. They [manufacturers] fill out the documentation as though they will be exported but the cigarettes never leave our borders.”

Fita chair Sinen Mnguni.
Fita chair Sinen Mnguni.
Image: Supplied

Fita chair Sinen Mnguni, representing local manufacturers, disputed this. “A lot of foreign brands are being sold in the country, which are brought into SA from countries such as Zambia, Zimbabwe, Lesotho, Malawi and Mozambique.

“We see cigarettes legally purchased in neighbouring countries smuggled into SA.”

He said many brands being sold were cigarettes that had not been seen before in SA. “Sars [the South African Revenue Service] strictly controls export productions.”

Gold Leaf Tobacco, which makes the Sharp, RG and Voyager brands that have been sold in the lockdown, said it did not know where the cigarettes were coming from. “There could be a lot of counterfeit, or a lot of old stock,” said Raees Saint, a lawyer for the company.

He said the company exported cigarettes and had increased export volumes.

A lawyer for Amalgamated Tobacco Manufacturing (ATM), Neran Ramadhin, said its local sales had been before the lockdown. ATM makes CK, Carvela and Peterman.

“ATM predominantly trades in the informal sector and also export products.”

Ramadhin said Sars officials were present in all the company’s facilities.

He said the ATM cigarettes being sold were either old stock or counterfeit, and ATM had complained to the police and Sars.

Some of its brands were  manufactured in neighbouring countries but might be smuggled into SA. He said police had stopped trucks bringing counterfeit ATM cigarettes into SA.

British American Tobacco SA (Batsa) spokesperson Johnny Moloto said a significant percentage of cigarettes sold in SA had foreign languages on the packs and tax stamps that were not used locally. This suggested that those cigarettes were being smuggled into the country.

in numbers

• 12,000 - The number of people surveyed on how they buy cigarettes under lockdown

• R664m - Excise duties lost on beer sales during first month of lockdown

• R1bn - Estimated revenue lost monthly through the cigarette ban

He said Batsa had been exporting cigarettes since the lockdown regulations were amended.

“Sars recently introduced stringent processes for production and export. We have Sars officials at our factory controlling production volumes, auditing export declarations, verifying container loading and sealing containers.”

Moloto said Batsa had noted that some of its brands were being sold during lockdown.

“We are unable to confirm whether the brands are genuine Batsa products, supplied prior to the lockdown commencing, if they are counterfeit, or from where they have been sourced.”

He said though small-scale criminals could be buying cigarettes outside the country and smuggling them into SA, “it’s clear there is wide-scale and industrial-level criminality occurring”.

In May, Sars commissioner Edward Kieswetter told parliament’s finance committees that in April, the first month of lockdown, customs officials recorded 43 cases of illegal sales, which included 17 related to alcohol, tobacco and other counterfeit goods.

— Additional reporting by Jeff Wicks

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