Black market for cigarettes still thriving – led by Zim’s Gold Leaf

During South Africa’s strictest national lockdown, a ban on alcohol and tobacco fanned the fires of a large and lucrative black market for cigarettes. The South African National Treasury data show the government lost R9.5bn in alcohol and tobacco taxes in the first four months of the 2020 fiscal year. A report funded by the country’s Tobacco Institute showed that two years before the ban, the country already had one of the world’s largest illicit markets for tobacco products. In December last year, a SARS official and two accomplices were charged with corruption and defeating the course of justice over a seized truck and contraband, which was allegedly cleared to pass over the Beitbridge border crossing from Zimbabwe. The contents of that truck were estimated to be worth R10m. On Sunday, more Remington Gold cigarettes were seized, this time the load was worth R13m. Tax Justice SA founder Yusuf Abramjee says the bust is proof of the findings released in a report by Ipsos, which demonstrates a thriving black market. – Melani Nathan

Massive bust proves brazen price war between criminal cigarette companies

Cops have seized a massive truckload of illegal cigarettes from Zimbabwe, giving yet more proof of the full-scale price war raging between criminal operators in South Africa’s illicit tobacco trade.

The huge bust of R13m worth of Remington Gold cigarettes was announced on social media at the weekend by officials who hailed it as a breakthrough against the “sickness” of illicit cigarettes that is infecting our economy.

It comes in the same week as a major independent survey reported that illegal cigarettes are now on sale in three out of every four retail outlets in SA’s hotspot provinces.

“This truck is physical proof, on a massive scale, of the report’s conclusion that Gold Leaf, the makers of Remington Gold, are in a price war with criminal members of the Fair-Trade Independent Tobacco Association (FITA) for control of the illicit market,” said Yusuf Abramjee, founder of Tax Justice SA (TJSA).

“These criminals are so brazen and so big that they’re sending huge trucks around the country to distribute cigarettes in the largest black market in the world. They’re looting our citizens of billions in unpaid taxes at a time when they’re desperately needed to fight the pandemic and rebuild the economy. This is criminality on an industrial scale that should be treated as a public danger and a national priority for law enforcement agencies.”

Independent market researchers Ipsos published a report on Monday after studying 4,000 outlets in the Free State, Gauteng, and Western Cape. It found:

  •  Cigarettes are retailing for as little as R6 for a pack of 20 – a fraction of the legal Minimum Collectible Tax (MCT) of R21.61.
  •  The number of brands owned by the Zimbabwean-owned Gold Leaf Tobacco Corporation (GLTC) found being sold under MCT soared by 13 percentage points in a month; 85% of their brands purchased were illegal.
  •  The Remington Gold brand owned by GLTC is dominant and selling for as little as R10.
  •  Members of the Fair-Trade Independent Tobacco Association (FITA) are engaged in the price war with GLTC: 100% of Afroberg products purchased were below MCT, with 91% of Carnilinx brands also evading tax.

“The bust of this massive truck from Zimbabwe is a graphic depiction of the report’s findings,” said Abramjee.

“Loaded with millions of rands worth of illegal goods, it has travelled more than 550km on major roads within South Africa’s borders before being intercepted. Who knows how many trucks are out there evading the cops – the Ipsos report suggests there are plenty. We must have a national inquiry into the whole of SA’s cigarette industry to establish how this has been allowed to happen and who is responsible.”

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