Last week, you might have spotted a breathless full-page advert in the Sunday Times, entitled, dramatically: "What are you going to do now, Commissioner Kieswetter?" The advert, placed by an organisation called the SA Tobacco Transformation Alliance (Satta), spoke of findings from "a shocking new independent report".
These "shocking findings": 41% of retailers sell cigarettes below the legal tax rate, and Gold Leaf and Carnilinx brands "make up half of all products sold below the legal tax rate". With the kind of laissez-faire disregard for the conventions of capitalisation you’d expect in a Facebook post from a septuagenarian ivermectin evangelist, it demands: "We need a full-scale investigation into SA’s biggest crime NOW."
SA Revenue Service (Sars) commissioner Edward Kieswetter would have been justifiably confused. SA’s biggest crime? Was he being asked to investigate, say, the pilfering of Covid funds? Institutionalised corruption in government? Gender-based violence? Eskom looting?
No. Apparently the tobacco group considers these to be piffling secondary crimes, behind the destruction wrought on our society by the extinction-level event that is illicit tobacco.
So, who is Satta then?
On its website, it lists its members as the Black Tobacco Farmers Association, the Limpopo Tobacco Processors, Tobacco Producers Development and (almost apologetically, tucked away at the end) a little company named British American Tobacco SA (BAT). Ah, BAT: that ethically unimpeachable shrinking violet — implicated in such minor infractions as corporate espionage and money laundering.
Satta, it seems, is the heir to the Tobacco Institute of Southern Africa, which shut down last year after revelations in 2018 that it was covertly paying "social media influencers" to push its #TakeBackTheTax campaign. Corné van Walbeek, University of Cape Town (UCT) economics professor, told Bhekisisa journalists: "By rewriting history about the magnitude of the illicit market, [the tobacco industry] has yet again shown itself as an untrustworthy source of information."
It’s unclear if Satta (whose directors include BAT’s local GM, Johnny Moloto) is similarly inclined.
Of course, this doesn’t detract from the fact that SA really does have an illicit tobacco problem. Even if you take the findings of the Ipsos research with a pinch of salt (since it is funded by the industry), independent researchers have attested to this. Last year, a survey by the UCT excise research group found that 90% of smokers still bought cigarettes during the tobacco ban — often at a 500% mark-up.
In September, Kieswetter said the ban had led to illicit suppliers becoming "embedded in the supply chain, and it will take us years to reverse the impact".
All of that is true. And yet, it’s rich of BAT to throw a fit of moral pique, given the behaviour it discloses in its annual report, released last week.
BAT ignored demands that it should be held to account and ignored requests for access to information
For a start, it reveals it is being investigated by the US department of justice and faces "tax disputes" in Brazil, the Netherlands, Bangladesh, Egypt, South Korea and Turkey.
There are also legal claims for copyright infringement, the allegedly unlawful exploitation of 7,500 Malawian tobacco farmers, and 2,989 tobacco-related lawsuits. No surprise that BAT has set aside £985m as a "provision for liabilities".
For the tobacco giant to pretend it is any kind of ethical lodestar requires a serious suspension of disbelief.
There are 18 pages of "risk factors" in the report. Coyly, one is the risk of its "failure to uphold high standards of corporate behaviour, including under anti-bribery and corruption laws". It is revealing that BAT considers anti-corruption laws to be a "high", rather than a basic standard.
But it also reveals that while a probe by the UK’s Serious Fraud Office into corruption "had been closed", that office is still helping "other law enforcement partners" investigate. As a result, says BAT, "the potential for fines, penalties or other consequences cannot currently be assessed" — but this could include "criminal sanction" and reputational harm.
You might think these are standard legal disclaimers. But BAT has a habit of running into trouble. Last month, investigative journalism outfit OCCRP reported how BAT oversupplied billions of cigarettes to Mali, allegedly aware they’d be illicitly trafficked north, and the profit would end up "lining the pockets of offshoots of al-Qaeda and the so-called Islamic State group, as well as local militias and corrupt [officials]".
Here in SA, BAT had a R2.1bn dispute with Sars over its "debt financing" between 2006 and 2010 — the implication being that it used crafty structures to avoid tax. Last year, BAT said this "challenge from Sars … was resolved in 2019" — but conveniently, it didn’t say what, if any, sort of hush money it paid to make the case go away.
In his book Tobacco Wars, former Sars executive Johann van Loggerenberg described a meeting with BAT’s lawyers 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."
It’s a point reiterated by Telita Snyckers, author of the book Dirty Tobacco, who wrote that BAT "should still be held to account for its dirty tactics" in SA.
For years, BAT simply ignored these claims, ignored access to information requests, and filed "notices of appeal" against Sars’s demand for payment. Shareholders have ignored this too. At the upcoming AGM they are likely to green-light a £5.06m (R103m) package for CEO Jack Bowles this year, including "incentives" of £3m.
Given all this, it’s pretty ironic that the company has climbed onto the moral indignation soapbox, and feels it’s in any position to demand that Kieswetter "act now".
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