Ciggie smugglers bust

2012-11-20 00:00

THE Mbazwana police have confiscated illegally imported cigarettes valued at over R1 million in the past 10 days.

Importing cigarettes illegally is estimated to cost South Africa (SA) about R5 billion a year in lost revenue.

The rural-based police station, in two routine stop-and-search operations in the last 10 days, with the most recent being on Friday, seized nearly 15 000 boxes of Aspen cigarettes.

Four people, two of them Zimbabwean nationals, were arrested. All have appeared in the Ubombo Magistrate’s Court and are being prosecuted under the Customs and Excise Act.

The Tobacco Institute of southern Africa (Tisa) CEO, Francois van der Merwe said despite a massive effort from the SAPS and SA Revenue Services (SARS) to tighten up security at borders, the illicit cigarette smuggling cartels have become “very sophisticated”.

“Our borders as you know are porous, so the illegal syndicates are finding ways to cross and go as far as using trucks with fake components or stripping cars and hiding the cigarettes under panels.

“Our independent research tells us 60 % of all contraband cigarettes come from Zimbabwe albeit through various borders such as Botswana, Namibia, Mozambique or even via Angola,” said Van der Merwe.

Tisa, whose members include British American Tobacco, Phillip Morris and JT International, estimates at least 30% of the illegal market is generated from within SA, five percent from Botswana and the remaining five percent from both the Middle East and China.

“The illegal market will go where the excise is highest, and that is SA. Currently, duty on a box of 20 cigarettes is R10,32. We raise our red flag if we see cigarettes selling for less than R15 in the open market,” said Van der Merwe.

He said it is difficult to pinpoint just how the cigarettes are produced for the illicit trade.

He said the big problem was legitimate brands being sold illegally. Currently, a maximum fine of R1 million is levied against a brand transgressing any number of SA tobacco-related laws.

SAPS spokesperson Colonel Vincent Mdunge said syndicates smuggling in the cigarettes are in “cahoots” with foreign nationals.

“We are trying to work out how they are gaining access [into SA]. The cigarettes confiscated in Mbazwana have no markings or notices required within the local market,” said Mdunge.

According to the Tisa anti-illicit trade conference held earlier this month in Cape Town, the current marking system used to identify cigarettes as legal, is archaic and easily forged, but the industry, along with SARS is investigating moving towards a simpler, more efficient digital system.

At the same conference, the Hawks said in 2012 alone they have already seized approximately R823 million in illegal cigarettes and made nearly 1 000 arrests.

“The illegal trade in cigarettes is incredibly lucrative. The regulated industry is extremely competitive and highly regulated, so if a manufacturer can circumvent the taxes payable to the state, there is a massive amount of money to be made,” said Van der Merwe.

SARS spokesperson Marika Muller said the revenue service identified illicit cigarettes as one of seven key focus areas.

“Our most recent Annual Report tabled in Parliament in September notes that in the 2011 and 2012 financial year alone, SARS seized 75 456 master cases of illicit cigarettes, with a street value estimated at R278,4 million,” said Muller.

She said SARS loses about R4 billion in revenue annually to the illegal trade.

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