Tobacco smugglers now head into overdrive to maximise profits during ban

Note: An archive photo from 2017 accompanied the original article but has since been changed. The Citizen apologises for the error and any confusion this may have caused.

As old foes the Fair Trade Independent Tobacco Association (Fita) and British American Tobacco South Africa (BATSA) sharpen their imminent legal challenges to Co-operative Governance and Traditional Affairs Minister Nkosazana Dlamini-Zuma’s overturning President Cyril Ramaphosa’s lifting of the cigarette ban, smugglers are making merry.

Few lessons have been learnt from the complete ban on the use of rhino horn, with billions being poured into the fight against poaching, and in a few short weeks, cigarette smugglers have picked up their pace with gusto.

And much like drug mules being bust with relatively minor amounts of drugs to divert attention away from the big consignments, so too are reports of arrests here and there surfacing of illegal cigarettes being found with occasional arrests.

Yet, for the most part, smokers, in general, continue to quietly puff away, some on dwindling stocks purchased shortly before the lockdown began on 27 April, others on brands they’ve never heard of before.

And now, the extended ban will allow smugglers from Zimbabwe, Namibia, and other countries to refine their methods, settle their routes, and solidify their contacts, according to former Sars group executive Johann van Loggerenberg.

“Post 2014, during the State Capture period, the increase in illicit trade went up by an estimated 30 to 40%,” Van Loggerenberg said.

“Government lost complete control of it, and thanks to the shutting down of Sars’ investigative ability, investigations are moving off a low base in respect of knowledge, capacity, and capability.”

He believed existing tobacco and cigarette syndicates were in overdrive, charging up to R30 million a container and cigarette cartons on the black market going for up to R900.

“If you look at busts from Zimbabwe and Mozambique, existing drug and other crime syndicates have expanded and diversified their products to include cigarettes,” Van Loggerenberg said.

Critically, the ban itself has put people at risk.

“These happen undercover, and in secret, which means any form of tracing, if someone were to test positive, won’t necessarily be completely honest as people try to keep their dealings quiet.”

#TobaccoWars used to refer to the sustained attack on the South African Revenue Services by various players in the tobacco industry however, it’s now gained traction in reference to the billions being lost to the fiscus as smugglers make money hand over stompie, to mangle a metaphor.

And while Dlamini-Zuma poo-poos any idea of collusion with people of less than stellar connections to the illegal trade, BATSA’s announcement it would tackle the ban has been met with little enthusiasm by black market traders, according to Van Loggerenberg.

Whether the two would combine their action remained to be seen, said Fita chairperson Sinenhlanhla Mnguni.

“My understanding from the discussions between our respective attorneys is that they are issuing their application in Cape Town, where their head office is, whereas we will be launching in Pretoria,” Mnguni said.

“My understanding is that there are talks between our respective legal representatives though.”

In its statement, BATSA said it had paid R13 billion to the government in the form of excise, corporate, income and other taxes for 2019.

“The Treasury is losing R36m of vitally required revenue in excise taxes every day that the ban on cigarette sales continues,” BATSA said.

“This explains why Finance Minister Tito Mboweni has publicly stated that he supported President Ramaphosa’s announcement that legal cigarette sales should resume under Level Four.”

In her announcement last week, Dlamini-Zuma said 2,000 individual submissions were the reason for keeping cigarettes off the available list of goods.

“This was, in itself, bizarre and highly irregular, principally because she did not give the tobacco industry, retailers, tobacco consumers and others supporting the lifting of the ban the opportunity to comment on the proposed reinstatement of the ban,” BATSA said.

“This was grossly unfair and unlawful.”

BATSA gave Dlamini-Zuma until 10am today to overturn the ban.

For more news your way, download The Citizen’s app for iOS and Android.