Читать книгу Dirty Tobacco - Telita Snyckers - Страница 11

To understand the basics of how a smuggling empire operates, we need at least a rudimentary understanding of how the illicit trade in products like cigarettes works.

The term ‘smuggling’ encompasses a whole plethora of different behaviours, just as the trade in illicit cigarettes is not one homogenous concept.

Smuggling, of course, is an age-old phenomenon. As far back as the 1700s, pirates were dropping off illicit cigarettes in ports not controlled by colonial authorities, in what was a booming smuggling industry. Filling tubs of tobacco with sawdust and powdered brick in the 1800s saw the start of a counterfeiting industry, padding the tubs to falsely inflate the total amount of tobacco that could be sold, much like with modern drug dealers ‘cutting’ substances. (Addendum 5 has more details on the history of tobacco smuggling.)

Modern smuggling is very different and involves a variety of practices, as I have already explained. These days, excise duty is payable on every pack of cigarettes that is sold for use inside a country. It’s deceptively simple – but within that simplicity lies a multitude of ways to cheat.

At its heart, the scheme is to convince the taxman that you are selling fewer packs in the country than you really are. And it’s dead easy to cheat the system.

(For a far more detailed overview, have a look at addendum 1, the SARS letter to tobacco manufacturers, in which they explain the different schemes in some detail.)

Many countries – including South Africa – have virtually no insight into production volumes, and effectively have to take cigarette manufacturers at their word. It’s easy simply not to declare a batch; or to set up a covert factory the taxman knows nothing about; or to run entire unmapped contraband towns (as BAT has allegedly been doing in the Democratic Republic of Congo).

Many countries – including South Africa – do not in any notable way monitor the tobacco supply chain. They do not as a matter of course compare how many filters or cigarette papers a company buys against the number of cigarettes declared; there is no way to track where the packs go once they are sold, or to trace packs found on the market back to where they came from. Manufacturers are under no obligation to use ‘know-your-customer’ policies or to apply due diligence checks to the people they do business with, which means they can effectively sell willy-nilly to whoever comes to their gates.

And many countries – including South Africa – are plagued with archaic excise administration systems that cannot adequately compensate for the integrity risks that are inherent in any highly manual system that only checks a small percentage of consignments, for a commodity that poses a very high ­­risk.

And indeed, many countries – again like South Africa – do not really regulate the purchase or importation of tobacco manufacturing equipment. In many parts of the world you can buy state-of-the-art cigarette machines online from sites like Alibaba.com for $1,5 million to $3 million, which is easily recouped when you are making over $100 million in annual sales.

In addition, big tobacco companies shift significant volumes of their products across national borders. (Consider the fact that BAT South Africa alone ships its packs to at least 22 other countries.1) In light of the extremely porous nature of South Africa’s borders, the theoretical permutations and opportunities for under-declaration, ghost exports, round-tripping, diversion, over-supplying and otherwise playing with packs ostensibly destined for duty-free sales would be exponential, for whoever it is that ends up doing the actual smuggling.

Of course, for any company that wants to run a smuggling empire, hiding all of this entails an entirely different sub-set of criminal activities, including evading related income taxes; corruption and bribery; forgery; money laundering and sometimes fictitious transactions.

Some illicit packs are not attributable to big tobacco – so we see counterfeits emerging from places like China (addendum 3), and illicit whites (sometimes called cheap whites) rolling off manufacturing lines in free trade zones in places like the United Arab Emirates (addendum 4). And we see small consignments being dropped by drone or hang gliders; or sent by post; or carried across borders one box at a time.

If you wanted to supply the illicit market, where would you get your hands on contraband packs? Either you would have to make the packs locally and just not declare all of the packs to the taxman; or smuggle them in; or hijack a competitor’s trucks.

The first source – under-declaration – is simple enough: the undeclared surplus packs are sold, tax-free, on the black market. Factories may run double shifts or run their machines at night when they know nosy customs officers are unlikely to pay them a visit, or pay a customs officer to look the other way. They may re-use a single invoice for ‘100 cases of cigarettes’ for multiple deliveries of a hundred cases of cigarettes. Or they may claim that stock has been exported – which means that no tax is payable on it – when in fact it has been sold in the domestic market (called round-tripping or ghost exports). Commonly, they tend to have at least some kind of legitimate manufacturing and sales, with the illicit packs simply constituting a percentage of their overall sales, making it more difficult to distinguish between licit and illicit packs found on the market. This borrows from an art that big tobacco seems to have perfected decades ago: ‘umbrella operations’, where legitimate packs are deliberately sold to provide cover for their illegal cousins and explain their presence on the market.

The second source – smuggling the packs in from somewhere – is simple enough. In South Africa, much of this comes from neighbouring Zimbabwe, with large volumes of packs literally being smuggled in on a daily basis. At some point this heavily involved using fuel tankers and trucks which would deliver an unrelated consignment to Zimbabwe, and ostensibly return to South Africa empty, instead being stuffed with cigarettes (many trucking companies actively defray their costs by filling what would otherwise be empty vehicles with illicit loads on their way back, from cigarettes and cocaine to rhino horn and ivory.)2 When Zimbabwe introduced vehicle scanners at Beitbridge border post, using trucks became more dangerous, so they are now mostly used by those with political protection or enough money to grease a customs palm.

Why single out Zimbabwe? Because the illicit trade in South Africa is very closely tied to its neighbour, for two simple reasons: Zimbabwe is the biggest tobacco producer on the continent, producing what is widely regarded as some of the best tobacco in the world; and South Africa is the largest, most profitable consumer market and production hub.

Not all of Zimbabwe’s cigarettes that head down south were necessarily always destined for the South African market: in my conversations, a few sources have noted how South Africa was historically also used as a sanctions-busting transit space for its neighbour. When sanctions were imposed on what was then Rhodesia (today’s Zimbabwe), it became exponentially more difficult to sell what was considered to be some of the best quality tobacco leaves in the world. The solution was simple, as explained by an acquaintance whose father ran a tobacco factory in the country at the time: Zimbabwean cigarettes were produced as they always had been but were fraudulently marked as having being produced in South Africa – apparently this part of the factory was blocked off, with only a few people having access to the space where the packs were marked, and with the packs subsequently being smuggled into South Africa and exported from there.

Of course, not all of the illicit packs on the South African market come from Zimbabwe: packs are to a lesser or greater degree also smuggled into South Africa from places like China, often via Singapore, or from free trade zones in the United Arab Emirates. Almost all of it is ‘genuine’ contraband – since around the 2000s, counterfeit cigarettes have actually made up a very small percentage of the South African market, as is true for most of the world.

The third source – hijacking a competitor’s trucks – is perhaps a more uniquely South African phenomenon: BAT at one point reported that 1 412 of its transport vehicles are hijacked annually – at least four hijackings a day, and accounting for 20% of all vehicle hijackings in South Africa’s Gauteng province.3 That’s a lot of cigarettes going missing – and, depending on how the taxman dealt with this, potentially a lot of cigarettes not being taxed.

So, in its simplest form, when we talk about illicit cigarettes and smuggling, what we’re dealing with is the art of giving cigarettes an invisibility cloak, because the taxman can’t tax what he can’t see.

As you read through the next few chapters on smuggling, it may be useful to remember the anodyne synonyms the industry developed when talking about its smuggling activities (because even the most emboldened of businesses would probably not refer to its ‘smuggling’ business as ‘smuggling’ on paper.) And, so, the industry has developed a set of rather less offensive, somewhat more neutral terms to describe the illicit parts of its strategy.

Smuggling and illicit channels are implied any time you read the following words or acronyms: ‘duty not paid’ (DNP for short);4 ‘transit’; ‘general trade’ (GT for short); ‘border trade’, ‘free markets’ or ‘value for money’ (VFM).5 A few of BAT’s older documents quite neatly explain the terms:

•‘With regard to the definition of transit it is essentially the illegal import of brands upon which duty has not been paid.’6

•‘The DNP market is the volume of cigarettes produced in Venezuela, exported (mainly to Aruba), and re-entering Venezuela as transit.’7

•‘The imported sector in Taiwan has increased each year. This figure includes legal imports plus GT [general trade/smuggled] imports estimated at 7.6 bns.’8

Against that short introduction to smuggling, next we’ll explore how BAT may have made as much as 25% of its profit from smuggling into China and how big tobacco ended up paying more than $1 billion in penalties for the smuggling of its packs.