Former SA Revenue Service (Sars) investigations head Johann van Loggerenberg can’t be too popular at British American Tobacco’s (BAT) glass-fronted offices at Cape Town’s V&A Waterfront right now. Last month, he released his third book since leaving Sars in 2015, Tobacco Wars, which dismantles the rather quaint notion that BAT is a benign force for good, driven by the noble goal of seeking to ensure everyone just pays their fair share of tax.
BAT is SA’s largest cigarette manufacturer, reportedly accounting for more than 80% of the market. It is also a driving force behind the Tobacco Institute of SA (Tisa), the umbrella body representing Big Tobacco.
But in his book, Van Loggerenberg accuses BAT and its security arm of "regulatory capture" for having manipulated law enforcement agencies such as the Hawks, the State Security Agency (SSA) and the National Prosecuting Authority to torpedo Sars’s efforts to reclaim tax owed.
"The dirty tricks of the tobacco wars in this country have their origins in the big boys club and not, as some may believe, in the independents," he writes.
He should know. As he tells it, not only did BAT shut Sars out of the government-led multi-agency illicit tobacco task team, but at least two of BAT’s "spies" were instrumental in his own premature departure from Sars in 2015: Belinda Walter and Mike Peega.
The story begins in 2013, when Van Loggerenberg met Walter, then a lawyer representing the umbrella body for small independent tobacco players, the Fair-Trade Independent Tobacco Association, which includes companies such as Adriano Mazzotti’s Carnilinx.
Only, unbeknown to most at the time, Walter was also secretly working for BAT, which paid her £30,500 to spy on rivals. (Bizarrely, Walter was also on the payroll of the SSA, making her a unique triple agent.)
In his book, Van Loggerenberg writes that the way BAT paid Walter amounted to "a prima facie case of corruption and money-laundering in SA, and/or bribery and money-laundering in the UK".
Walter fell out with BAT, and launched a series of legal claims against it. Then something weird happened: in May 2014, Van Loggerenberg writes, the illicit tobacco task team met with Walter and persuaded her to drop the claims against BAT — in exchange for which she "was to be assisted by these fine gentleman of our law enforcement agencies in her attack on me and, later, Sars".
In other words, the task team made up of people in the Hawks and SSA would help Walter target Sars, simply to protect BAT. It was an astonishing deal with the devil.
At the time, a romantic relationship between Walter and Van Loggerenberg had just ended, and she wanted revenge. Which led her to the door of the incoming Sars commissioner, a man called Tom Moyane.
As luck would have it, Peega was a disgruntled Sars employee (who also, in 2011, spied for BAT) pushing a fake intelligence dossier called "Project Snowman", which was built around the idea of a "rogue unit" spying on people. He and Walter formed a loose alliance attacking Sars, using the far-fetched rogue unit story as ammunition. All it took was a receptive ear — like Moyane’s.
BAT, needless to say, benefited magnificently from the chaos — in the months before the rogue unit fracas, the Sars team had reassessed the company’s tax, going back to 2006. They came up with a bill: R2.1bn.
Unless the new CEO, Jack Bowles, deals with the bribery claims, he’ll be in for a horror ride
It’s telling that not much has happened with BAT’s tax dispute since Van Loggerenberg left. Quite how much of the tobacco giant’s good fortune in this regard was opportunistic, and how much was by design, is an intriguing point of discussion. In Tobacco Wars, Van Loggerenberg reflects on this point: "The proverbial planets had aligned in such a manner that each set of protagonists would ride the wave of attacks on Sars, one advancing and leading the others. Sars had to fall. And it did."
The problem is, it doesn’t seem that BAT cares.
Damningly, Van Loggerenberg details a meeting he had with BAT’s lawyers, Norton Rose Fulbright, in 2017. "[I] provided them with evidence of industrial espionage, racketeering, bribery, fraud and a host of other criminal offences that implicated the company … since that meeting, I have not heard from them again."
In other words, it reeks of a cover-up.
Sent a series of questions by the FM this week, BAT’s media team called back and said: "We have no comment." They "don’t comment on books", it seems.
Perhaps BAT thinks it has bigger problems to worry about — its share price is down a quarter within a year, and 39% over the past three years, and just last week it announced it was slashing 2,300 jobs across the world.
But unless the new CEO, Jack Bowles, deals with the bribery claims, and BAT stops thinking it’s too important to respond to media inquiries, he’ll be in for a horror ride. Not only is the UK’s Serious Fraud Office still probing BAT for similar claims it bribed officials in Kenya, but Bowles’s predecessor, Nicandro Durante, was thought to have been bulleted partly because of BAT’s abysmal communication.
A year ago, the Financial Times quoted analyst Owen Bennett as saying it seems Durante’s axing "was a board-driven decision in response to recent share price performance and investor frustration at a lack of communication". Let’s hope Bowles has learnt the lesson.
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