πŸ”’ Illegal cigarette industry explodes under Covid-19 lockdown with help from police: Yusuf Abramjee

Mr Yusuf Abramjee, head of Tax Justice SA, has campaigned tirelessly for the South African government to bring to book the hardened criminals and dirty tobacco industry companies that have made huge sums on the backs of taxpayers. Although law enforcers were making some headway in pursuing charges in the criminal justice system against some of the villains, under the Covid-19 lockdown illegal trade has exploded. In this podcast, Mr Abramjee describes how industrial-scale illicit cigarette dealing and cross-border smuggling has flourished under the government’s ban on the sale of tobacco products. He appeals for a rethink, telling BizNews that the government is losing R35m a day in taxes – at a time when it could be shoring them up by allowing smokers to buy their poison through the formal retail sector. – Jackie Cameron

Mr. Yusuf Abramjee is the founder of Tax Justice South Africa. Mr. Abramjee, you’ve caused quite a stir with a tweet you’ve posted showing that the illegal tobacco industry is booming even though South Africa is in lockdown. Can you please take us through this – where do you get that evidence from?
___STEADY_PAYWALL___

Those are official photographs from the confiscations made by various law enforcement agencies including the South African Police Service and various metro police departments. Our suspicion has been right from day one of the lockdown that illicit trade will boom as a result of ban of items as cigarettes. The illicit trade is very big in South Africa. The South African government fiscus is losing about R35m per day as a result of the ban on cigarettes during the lockdown. I’m talking of excise duties. Over the period of 25 days of the lockdown, our country stands to lose over R1.2bn in taxes. That could be the money that could be going towards ventilators, masks, essentials and PPEs.

It could have saved many lives – but in their own wisdom – the government has decided to maintain the ban on cigarettes and the criminals are smiling all the way to the bank. The illicit traders are trading openly on Facebook and other social media platforms. It’s leading to unnecessary movement of people into parking lots where they are trying to trade in cigarettes. We have seen some seized tobacco, some of the seized cigarettes lining up back in the black market because some of the law enforcement officials who confiscated them are stealing it and selling it back to members of the public.

You had a long-running battle against the illegal tobacco industry from before the Covid-19 pandemic. Just explain briefly why you’ve been championing this cause.

Yusuf Abramjee

We’ve been very vocal. It’s not only the tobacco industry that has the problem of illicit trade. We are talking of the fuel industry losing millions of rands every month. We are talking of textiles and clothing. We are talking of the pharmaceutical and the medicines industry. We are talking of counterfeit goods. We have been very vocal since we launched this campaign. For how long can we sit back and watch these criminals looting our country. South Africa Revenue Service (SARS) and other law enforcement agencies have taken some action but we believe not enough progress has been made. As a lobby group, we want the government to act with urgency and bring these people to book. We have evidence that many of these people involved in illicit trade are involved in money laundering. They need to be arrested and that is why we’ve been pushing the line – lock them up. We want the government to lock them up because our country is losing it. Our education system is suffering. Service delivery system is poor. The government often complains they have no money, thanks to the illicit trade and that is a major problem the government needs to address. We’ve done some calculations ahead of the lockdown and it showed that R100m on average was being lost every day in South Africa because of the illicit trade.

Organisations such as Business Against Crime, Business Leadership South Africa, individuals and groups of people have now come out in support – especially during the ban on the cigarette trade during the lockdown. Why deprive the 11m smokers of their habit – where they can just go to a store or a supermarket and buy a pack of cigarettes when they buy essential goods.

Unfortunately, because of the ban we are now seeing unnecessary movement which is defeating the purpose of the lockdown. The Western Cape premier said about two weeks ago, the government is unclear in their legislation and there’s been absolutely no clarity from the government other than the cigarette ban.

Haven’t we seen any arrests? Have you presented evidence to the police? Have you helped them compile a dossier?

We’ve given a lot of evidence to the police. They’ve made some arrests and we need to see convictions. The police are wasting a lot of time just targeting people selling cigarettes. The illicit trade is massive. Let’s not forget that the minimum excise duty on a pack of cigarettes for example is just over R20. One has to ask, how on earth is it possible for people to sell cigarettes at under R20, which means they are pocketing the money. The illicit dealers are smiling all the way to the bank. If you look at the photographs that we posted, it’s the same brands that are even outside the lockdown very often are selling these brands for under R20 when they are robbing our government. These are criminals involved in illicit trade and they need to be brought to book. I hope that the manufacturers and distributors and those involved in smuggling these brands are arrested and convicted.

You’re talking about manufacturers. This is industrial-scale illicit dealing – are these big bona fide companies; are these companies that look above-board? Who are the villains in this illegal tobacco trade industry?

When you buy a packet of cigarettes for just under R20, they are breaking the law. Clearly they are not paying the cigarettes. You can go to a spaza shop. You can go to some of these wholesalers and they’re openly selling these brands. Yesterday I tweeted a post to say that the same people that have been openly supporting the illicit trade in disguise over the years are now crying foul. The same products which they have been protecting and are being sold under the minimum excise duties payable. It’s no secret who’s involved in these products. I have a court case pending before the Pretoria High Court where I’ve been sued for 50m rand by Gold Leaf Tobacco. I made a statement that their brand at the time was the number one illegal brand in trafficker.Β  The RG brand has been mentioned. If you look at some of the photographs posted, this particular brand and other brands which are being sold for under the minimum customs and excise duties payable are the big culprits. They is need to have a full investigation, charged and convicted.

Who would you say are the actual kingpins behind all of this, who are the people making the big money?

Criminals who are part of organised crime syndicates dealers. They have runners, people on the streets, buying and selling the cigarettes. We’ve suspicion that they might have underground factories manufacturing some of these cigarettes.

Some of them could be counterfeit products. The crime intelligence needs to get their act together and SARS need to arrest them and make sure that they are charged under the South African laws for the crimes they are committing.Β 

Is it police incompetence behind this inertia when it comes to arresting people for the illicit tobacco trade or is it corruption?Β  If you’re to put your finger on the problem, what is it?

It’s a combination of factors – police inefficiency is one problem. Another problem is corruption. Very often we see these people taking bribes. Police are overloaded. They have a lot of other work to do especially with a lockdown. The police are understaffed and that is why we need a multifaceted approach. We need South Africa Revenue Service, Treasury, Police, NPA and Metro police to come on board to fight the illicit scourge. This problem is growing, the smuggling is rife. With the lockdown, we’ve seen one or two reports of cigarettes being smuggled in from neighbouring countries despite the borders being close. How on earth is this possible? These criminals are trying to infiltrate the market and with the lockdown it seems to be escalating.

You mentioned that police officers seem to be involved. Do you think that is a major factor in all of this?

It is a contributing factor. It’s a growing problem and we have evidence that some policemen are involved and we also notice some policemen are working in cahoots with criminals. This weekend alone – unrelated incidents – twelve policemen were arrested for various crimes. It showed that the police are also not immune from these criminal elements within their own ranks.

Under President Jacob Zuma, there were a lot of rumours that politicians were involved in the illicit tobacco industry. Does this still hold?Β 

This industry can be very toxic. We know a lot of politicians’ names have come forward. We know some of them have been fingered in even taking money from some of the people involved in the tobacco trade. We’ve seen no investigation. We’ve seen no arrests. That is a big worry. There is a need for a full scale inquiry into the illicit trade. The Nugent Commission made findings on the tobacco industry and how people are getting away with the illicit trade. While some progress has been made by SARS, a lot of work still needs to be done – post-lockdown and bring an end to the illicit trade –Β  hashtag lock them up.

Visited 4,569 times, 1 visit(s) today