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Branded tobacco packaging rule riles BAT

The company warns a proposed ban on branded tobacco packaging poses a threat to British American Tobacco’s only cigarette plant in SA

British American Tobacco (BAT) says it may close SA’s only cigarette plant if plans to ban branded tobacco packaging are implemented.

BAT operates its eighth-largest factory in the world at Heidelberg, south of Johannesburg. The proposed new rules would threaten the financial viability of the operation, Joe Heshu, BAT’s head of external affairs in Southern Africa, said on Monday.

Plain packaging threatened the closure of the factory and “poses a threat to the viability of the legal tobacco industry in SA”, Heshu said. The move would make it harder to distinguish the cigarettes from black-market cigarettes and “the illegal market will benefit from having a cheaper product”, he said.

SA is cracking down on industries and products viewed as harmful to consumers, including through a planned tax on sugar-sweetened beverages, which Finance Minister Pravin Gordhan said in February would be implemented later in 2017.

SA had drafted a bill mandating plain cigarette packaging, which was expected to be made available for public comment soon, Elize Joubert, CEO of the Cancer Association of SA, said on Friday.


“You don’t want to build jobs based on people who are sick,” said Joe Maila, a spokesman for the Department of Health. He declined to provide a time frame for the new rules.

Plain packaging of tobacco products, which has been championed globally by the World Health Organisation, requires standardised designs on cigarette packs.

BAT had cut 750 jobs in SA in two years as it grappled with an increase in illegal cigarettes, it said. The Heidelberg plant employs 1,100 people.

According to the Tobacco Institute of Southern Africa, the supply, distribution and sale of smuggled or counterfeit tobacco products have cost the government more than R21bn since 2010 in lost tax revenue.




In November 2013, the South African Revenue Services (SARS) announced that it wanted 15 local tobacco manufacturers and importers to be prosecuted for tax evasion and illicit trade. At stake was R12 billion (US$858.9 million) in unpaid taxes.

About 18 months later, the acting commissioner of SARS, Ivan Pillay, and 55 other top SARS officials, found themselves unemployed— the result of an aggressive campaign against SARS.

The plot involved the Sunday Times newspaper, which published false stories about an apparent “rogue” unit in SARS that supposedly spied on President Jacob Zuma and that set up a brothel aimed at infiltrating the ruling African National Congress Party. The paper subsequently apologised for printing the stories.

But in the wake of the articles, Pillay and the SARS head of enforcement, Johan Van Loggerenberg, were suspended and, after reaching a settlement with SARS, resigned..

A key player in the downfall of Van Loggerenberg is Pretoria attorney Belinda Walter. Walters and Van Loggerenberg first met during investigations of the illicit trade in tobacco and subsequently had a brief romantic liaison. It was after the break-up of their relationship that claims emerged that SARS was running a ‘rogue’ unit first emerged.

Ms Walter was allegedly a doubleagent.

She was an informant to the government’s State Security Agency (SSA) and also to British American Tobacco (BAT), to whom she gave confidential information on smaller rival manufacturers.

In order to infiltrate the rival companies, Ms Walters proposed creating an association, the Fair Trade Independent Tobacco Association (Fita), to represent these companies. The first Fita meeting was held late in 2012, at Walter’s offices, and she was elected chair.

In a court application, a rival has accused BAT of “corporate espionage” and working with government agencies to try to put it out of business.

BAT allegedly spent about $3.6 million a year to bribe politicians, gangsters and government officials in South Africa. The company is accused of money laundering, corruption, spying and the use of state resources to target competitors— all in the name of ‘fighting’ the illicit trade in tobacco.

BAT’s money gave it a seat on the official Illicit Tobacco Task Team, which includes representatives from the Hawks (a state agency tasked with fighting priority crimes), the SSA, South African Police, National Prosecuting Authority and the Tobacco Institute of South Africa.

This structure gives BAT access to state intelligence and the ability to influence who the state targets among BAT’s direct competitors.

A warning from the South Africa experience is that co-operating with the tobacco industry is harmful to democracy. It will use its influence to direct the powers, actions and resources of the state for the benefit of the industry.

Yussuf Saloojee
National Council Against Smoking
South Africa

Tobacco firms at each other’s throats

Tobacco firm Carnilinx has laid corruption charges against rival British American Tobacco for allegedly spying on the competition with the help of Sars.

Low-cost tobacco producer Carnilinx has declared war on its competitor British American Tobacco (BAT), laying corruption charges against the latter’s directors and various government agencies officials related to the SA Revenue Service’s (Sars’) Illicit Tobacco Task Team, which has been accused of using illicit practices to spy on key players in South Africa’s tobacco industry.

“Evidence has been collated of instances which point to various practices by certain role players in the tobacco industry that speak to unfair treatment of some by the state, preferential treatment in other cases, and various anti-competitive practices,” the tobacco giant said in a statement.

This is the latest in a string of spats with BAT and the Fair-Trade Independent Tobacco Association (Fita). Last year, Carnilinx launched a court application against Walter citing BAT South Africa (Batsa) as a respondent, which appears to have died in the water.

The 16 respondents named in the complaint include Sars officials Piet Swart and Danie le Roux, as well as the woman at the centre of the spying allegations in the local tobacco industry, Belinda Walter. The Hawks are also named.

Walter is the former head of Fita, which represented smaller tobacco firms in disputes with tax authorities.

She has also represented Carnilinx, whose head Adriano Mazzotti was being investigated for tax evasion by Sars investigator Johann van Loggerenberg.

Batsa corporate affairs manager Mandlakazi Sigcawu told The Citizen that the company had hired law firm Norton Rose Fulbright to conduct an independent investigation into the allegations.

“The allegations in question are not new and have been propagated through various social media channels.

We wish to assure our suppliers‚ customers, shareholders and government that we take this matter extremely seriously and will not in any way‚ shape or form tolerate unlawful behaviour,” she said.

In 2014, it emerged BAT had paid Walter to feed them information, supposedly concerning the illicit tobacco trade in South Africa. Carlininx was also a client of Walter’s at the time.

At the time, Carlilinx director Kyle Phillips detailed in an affidavit that Walters had unlawfully fed information about the manufacturer to BAT. The company accused BAT of using this information for commercial advantage rather than fighting crime in the tobacco industry, as they had claimed.

Walter, in her replying affidavit, alleged her former client was not the “victim” it made itself out to be and that it had used a separate entity to spy on fellow Fita members to “rat out” its competitors to Sars.

In its latest action, Carnilinx called on state officials implicated in the charges to be removed from matters where they were required to deal directly with the manufacturer and other local tobacco manufacturers, pending the outcome of these criminal investigations.

“We expect of the state to investigate these complaints with the same vigour and allocation of resources as they appear to have directed against us in their multiple inspections, raids and criminal investigations over the past few years,” Carnilinx said in the statement.

In his response to the allegations, Van Loggerenberg emphatically denied “any allegations of impropriety attributed to me and a specific Sars unit as reflected in the complaint”.

While Sars sues Lackay for R12m, he wants R1.5m for being fired

Meanwhile, while President Jacob Zuma was fighting for the “state capture” report to disappear, judgment was reserved yesterday in the R12 million defamation suit at the Pretoria High Court by the South African Revenue Service (Sars) and its commissioner Tom Moyane against former spokesperson Adrian Lackay.

The dispute is over a letter he wrote to the chairperson of the Standing Committee on Finance, Yunus Carim, last year, regarding issues Lackay said he witnessed at his former employer under Sars commissioner Tom Moyane.

There was apparently a bid to have the letter tabled in Parliament, but Democratic Alliance MP Dion George publicised the letter after he accused Carim of not bringing it to the attention of the committee after receiving the letter from Lackay.

This comes as Lackay seeks R1.5 million in compensation for constructive dismissal in a case before the Commission for Conciliation, Mediation and Arbitration (CCMA) in which he accuses Sars and Moyane of leaving him no choice but to quit last year.

In his defence, Lackay said Sars, as an organ of state, “cannot be defamed at all” and that Moyane’s claim that he was defamed was “vague and meaningless”, and the level of damages he claims could not be quantified.

Sars and Moyane claim Lackay not only defamed them, but breached his oath of secrecy and the Tax Administration Act.

In his letter, Lackay, who was Sars spokesperson for 11 years, said that under Moyane’s leadership, he was forced to issue statements on behalf of his employer that contained “false and incorrect” information.

“My role as spokesperson, in particular with aspects contained herein, was diluted and eventually withdrawn in part by Sars and my duties were referred to the Sars Executive: Mr Luther Lebelo and other colleagues,” it said.

The BAT whistle-blower: Francois van der Westhuizen

BAT will soon have to stand up in court and explain itself

The man who blew the whistle on the alleged racket of bribes relating to British American Tobacco (BAT) says he and his wife still get death threats.

“Often, my wife will be in a shopping centre and guys who’ve clearly followed her will tell her they’re going to come get us,” says Francois van der Westhuizen in an interview with the Financial Mail.

“It doesn’t bother me; I’ve had plenty of threats in my life.”

Van der Westhuizen worked in the murder and robbery section of the SA Police in 1987 during the apartheid era, before being hired as an investigator at the Road Accident Fund in 1999, where he bust a R92m scam involving crooked doctors, lawyers and police.

Tall, with a moustache and a brusque, no-nonsense demeanour, he still has the hardened air of a cop.

In 2012 he was hired by Forensic Security Services (FSS), a company that works as the contracted security arm of BAT for an estimated R150m/year.

“We talk about state capture, but BAT has done state capture high-up — when it comes to Sars (SA Revenue Service), the police, and state intelligence,” he alleges.

He says that once he joined FSS, he was asked to work full-time on its programme to root out illicit tobacco.

“Our work mostly revolved around conducting surveillance on its [BAT’s] rivals, like Carnilinx and Gold Leaf, and then reporting back. But soon it escalated into far more serious stuff, like paying off people.”

This “serious stuff” is detailed in a 70-page affidavit he signed, which was then used by Carnilinx, a “value-branded” cigarette manufacturer owned by Adriano Mazzotti, the charismatic benefactor of Julius Malema. Carnilinx took BAT and a lawyer, Belinda Walter, to court to ask the court to stop it “interfering with its trade”, using this testimony. The judge dismissed the original application on procedural grounds, and a new case is likely to be lodged soon for a full hearing.

It’s a reputational nightmare for BAT, the second-largest company listed on the JSE, with a market value of R1.81 trillion. Locally, it’s a Goliath, controlling 85% of the tobacco market through brands including Rothmans, Dunhill, Lucky Strike and Peter Stuyvesant.

A stash of explosive documents was released in recent days by someone using the pseudonym SA Tobacco Espionage, which casts new light on alleged efforts by tobacco firms to compromise the SA Revenue Service (Sars). This is important, considering that the claims of a “rogue unit” at Sars, which are being used to target finance minister Pravin Gordhan, were first made by tobacco interests.

Thanks to Van der Westhuizen, however, the agendas are becoming clearer. “I worked for FSS, but BAT was aware of what was happening every step of the way,” he says.

“They even sent me for training with their staff from the UK, so they can’t claim they didn’t know.”

In his affidavit, Van der Westhuizen says he soon discovered he’d really been hired “to disrupt the business of BAT’s competitors” using a network of corrupted police and Sars officials.

He claims BAT had an “unholy alliance” with law enforcement agents, and also political strings it could pull with “senior members of the SA law enforcement circles”.

“Each law enforcement agent, whether from Sars, the Johannesburg Metro Police Department (JMPD) or SAPS, would be on BAT’s informal payroll, receiving a minimum of R2,000 each per month, up to R5,000 each per month. Effectively this was a bribe,” he claims.

These officials would allegedly help break into various properties, illegally intercept phone calls, plant cameras in offices and homes, and pay police to conduct raids to gather documents.

Van der Westhuizen says he was the “project manager”, under whom a network of “handlers” would liaise with 171 “agents” who were paid “directly by BAT through FSS as a conduit”. “The payments were made in cash so that there was no direct link to BAT.” In all, he says, these spies were paid more than R150m by BAT.

He says FSS was given access to the JMPD’s network of 240 cameras throughout Jo’burg, which they used to spy on Carnilinx’s offices.

“The law enforcement agents who, as I have shown earlier, get paid by BAT will do whatever they are asked to do, no matter how illegal or unjust,” he claims.

FSS’s Stephen Botha has rejected Van der Westhuizen’s claims as “factually inaccurate”, saying they contain “loose allegations, matters of hearsay and extracts of alleged FSS documentation that has been presented in a distorted manner”. And when it comes to the security cameras, Botha says: “I am not aware of any camera being commandeered as you have stated.” Botha says it seems that Van der Westhuizen’s only goal is to “discredit FSS and BAT”.

This week, BAT ignored a list of questions from the Financial Mail but sent through a statement. In it, Joe Heshu, BAT’s head of regulatory engagement, says: “Under no circumstances will we condone illegal behaviour … we are conducting an investigation with the assistance of an external law firm, and if we were to find that illegal activity has occurred, we would, of course, take appropriate action.”

Richard Burrows, BAT’s chairman, spoke of such a probe in BAT’s annual report relating to “historic misconduct in Africa”, which it was made aware of in late 2015.

BAT SA’s head of anti-illicit activities, Martin Potgieter, has already submitted an answering affidavit to Carnilinx’s accusations in which he says it hired FSS simply to “gather information and pass it on to the law enforcement agencies”.

Potgieter said BAT only co-operates with the law enforcement agencies in order to defeat the illicit cigarette trade in SA, which now accounts for 31% of the total SA market, leading to a R3bn-R5bn annual tax loss.

People close to BAT say that rivals are good at making allegations which cannot be proven, simply to distract attention from the illicit tobacco business. “There’s a bigger hand at play and the bad guys are playing it well,” said one. Still, this isn’t the first time BAT has been accused of spying on rivals. In 2014, Walter said she had been paid by BAT while employed as a lawyer for its rivals, including Carnilinx, and chairing the Fair-trade Independent Tobacco Association, Fita.

Walter wasn’t the most credible witness. Not only was she a triple agent, working for BAT, the State Security Agency (SSA) and Fita at one stage, but she also flip-flopped on her story numerous times.

However, it was ultimately Walter’s ill-fated romantic relationship with Sars’s Johann van Loggerenberg that triggered the various inquiries into Sars and the claims of a “rogue unit”.

Walter initially claimed Van Loggerenberg had confided confidential taxpayer details, before recanting this testimony, only to repeat the accusation later.

But when it comes to BAT, at least, there are tape recordings of her speaking to BAT executives, who appear to be panicked at the prospect of Sars finding out about the payments made to its “agents”.

In the recording, a BAT executive implores Walter not to “sell us out” and says “we will never reveal who we pay because of the nature of the business and the danger to the individuals … I am not going to reveal that because it is a life-threatening issue”.

Documents confirm Walter was paid £30,500 (about R570,000) by BAT.

In a letter to Walter on March 6 2014, BAT’s Ewan Duncan says the company’s relationship with Walter was “legal and proper throughout”. “We established a mutually agreeable relationship in order to provide information on criminal activity to SA law enforcement and national intelligence agencies,” he said.

While details of Walter’s relationship with BAT are believed to have been scrutinised by Britain’s Serious Fraud Office (SFO), it is Van der Westhuizen’s claims which could prove more damaging, if he can produce all the evidence he says he has.

It comes three months after another whistleblower, Paul Hopkins, gave a dossier to the SFO in which he says he bribed officials and spied in numerous East African countries for 13 years for BAT.

Hopkins says BAT paid security firms in these countries who acted as “cut outs” to allegedly distance the tobacco giant from the dirty business of paying bribes, conducting black-ops and moving cash across borders.

It is eerily similar to the arrangement BAT is alleged to have with FSS. Van der Westhuizen told this magazine: “You can’t tell me it’s right that one company, no matter how much money they have, can do things like hijack the police’s security cameras so they can keep an eye on competitors.”

Van der Westhuizen’s detractors say his affidavit is simply the work of a disgruntled ex-employee seeking to assist another role-player, Carnilinx.

But he says he has never worked for Mazzotti’s company, which benefits most from his revelations. “There is a mountain of evidence for everything I said in there, and that’s stored with numerous people. Plus others are coming forward with the same story,” he says.

So why did he blow the whistle? “Well, I began to realise that what was happening was highly illegal.

“They told us it was all legitimate, and that it was sanctioned by the authorities. But I then realised this wasn’t so, and if it came out what we were doing, none of us would be protected,” he says.

Either way, BAT will soon have to stand up in court and explain itself. Mazzotti’s court application was initially struck off the roll, and has now been re-enrolled by summons in which people will have to testify. And Van der Westhuizen will have to be grilled on his claims.

“I’m fully prepared to do that. I want that,” he says.

The day Pravin Gordhan took on big (illegal) tobacco

Gordhan and his colleagues’ investigations of the illicit tobacco trade – which appears to involve top politicians and businessmen – is possibly the reason they’re being targeted now.

Finance Minister Pravin Gordhan must be wondering whether one of his old plans while he was in charge of the SA Revenue Service (Sars) – combating the illegal tobacco trade in South Africa – was worth it.

Because that is apparently where the nightmare he finds himself in now began.

While Gordhan will not be reporting to the Hawks this afternoon, it appears as if former Sars deputy commissioner Ivan Pillay, together with former group executives Pete Richter and Johan van Loggerenberg, will be knocking on Brigadier Nyameka Xaba’s door, where they will be informed of their rights under the constitution and the charges against them.

Pillay, Richter and Van Loggerenberg will be kept in separate rooms as, one by one, they are informed of their rights under the constitution and the charges against them.
Van Loggerenberg has urged the public not to overreact to speculation.

“As early as 31 July 2014, Sars was on record that the initial attacks on Sars, me and investigative units that I managed, were driven by persons associated with the tobacco industry,” Van Loggerenberg told The Citizen.

“I have continuously offered my cooperation to the authorities since as early as 2014. I have nothing to hide and deny any wrongdoing. As stated before, I have no doubt that if the Hawks conduct their investigations without fear or favour, the truth shall ultimately triumph.”

Gordhan and the others have to decide if they are willing to answer questions or make a statement, or simply inform Xaba they wish to testify in court.

The “rogue unit” narrative at Sars has been well documented and discredited. However Van Loggerenberg’s claim the tobacco industry was behind the destabilisation of Sars is startling.

Sars wars: where there’s smoke

If the Hawks need more information, it needs to look at pending court action between independent cigarette manufacturer Carnilinx and British American Tobacco (BAT), Forensic Security Services (FSS) and eight other respondents.

Former police officer and FSS investigator Daniel van der Westhuizen states on behalf of Carnilinx in its founding affidavit he was the project manager of operation “Knysna”, which was dedicated to disrupting Carnilinx’s operations.

In the affidavit, he claims stakeholders in the project were the “South African Police, Department of Priority Crimes Investigation, Crime Intelligence Gathering, Asset Forfeiture Unit, Sars, Customs, and the Traffic Control Policing Unit.”

He further claims BAT agents were paid up to R5 000 for disturbing Carnilinx operations.

“BAT SA paid an amount in excess of R150 million to the spies, through FSS,” said Van der Westhuizen, referring to “spies” recruited by FSS.

Van der Westhuizen stated further that if BAT SA were investigated properly, authorities “may well recover tens of billions of rands which are due to the fiscus.”

Spy games

According to a letter from former Fair Trade Independent Tobacco Association (Fita) chairperson Belinda Walter’s attorney in May 2014, it was between December 2012 and January 2013 that Walter was introduced to BAT, and the Tobacco Institute of SA (Tisa) and their private security firm FSS, and then subsequently to BAT United Kingdom.

“As a direct result of Ms Walter’s relationship with representatives of the State Security Agency (SSA),” Walter then entered into an agreement with BAT.

“Walter would provide BAT with information of and concerning the business operations, illicit and/or criminal activity of independent cigarette manufacturers who were clients of Ms Walter and/or members of the Fita (of which Ms Walter was the chairperson from its formation until November 2013),” the letter to Ewan Duncan of BAT declares.

For her work, Walter was to be paid £3 000 per month by BAT “to provide and share such information” with BAT, which would “be used by BAT in conjunction with SSA and other South African law enforcement agencies in order to combat criminality in the tobacco and cigarette industries”.

In the subsequent letter to BAT, Walter threatens to sue BAT for nonpayment of £5 000, and was also going to sue the SSA for misrepresentation, “as BAT, SSA, and the other South African law enforcement agencies were not sharing the information for the purposes alleged …” and “BAT required the information for purposes of industrial espionage” the letter continued.

Shortly afterwards, Walter was allegedly approached by members of Sars’ Tobacco Task Team and offered immunity from prosecution in exchange for dropping the civil action against BAT and the SSA.

However, in June 2014, rumours of a “rogue unit” within Sars began hitting the media.

Walter, a lawyer by profession, was allegedly paid in “Travelex” cards, which meant no cash trail for Sars and therefore no tax.

Then in July 2014, Walter’s SSA alleged handler told Walter “he represented interests of people who sought to replace the leadership of Sars and minister of finance”. The claim was circulated to various people within Sars on email by Walter on July 20, 2014.

At the time, Nhlanhla Nene was finance minister and Ivan Pillay the acting Sars commissioner.

In September, Tom Moyane was parachuted in as Sars boss after the crescendo of “rogue unit” articles grew.

The denials

“The illicit tobacco trade in South Africa, which accounts for nearly a quarter of the overall market, is a growing problem for our consumers and our business. For several years, we have endeavoured to assist the law enforcement agencies in their efforts to combat this illicit trade,” BAT said in a statement to The Citizen.

“We are currently involved in litigation with certain manufacturers, who have made claims that some of our activities went beyond our legitimate interest in combating the illicit trade.

“We are conducting an investigation with the assistance of an external law firm and if we were to find that illegal activity had occurred, we would, of course, take appropriate action. However, given that our investigation is ongoing and that some of the allegations are the subject of legal proceedings, it would not be appropriate for us to comment any further on them,” BAT stated.

Numerous attempts to engage Walter on the allegations proved fruitless.

Rot starts at the top

In a report entitled “Project Broken Arrow”, by an unnamed SA Revenue Services (Sars) official, it is brought to the attention of its former group executive Johann van Loggerenberg (JVL) and former deputy commissioner Ivan Pillay (IP) that there were efforts by “certain individuals”, who wished to destabilise and disorganise the organisation.

These “individuals” wanted to damage the reputation and stability of the targeted functionaries and that of Sars as a state institution, according to the document as seen by The Citizen.

The official claims to have met on several occasions in 2009 with former Sars employee Mike Peega (MP).

“…He duly informed me of his intentions to merge with other individuals in order to ‘expose’ and possibly ‘take care’ of JVL and a host of other significant individuals in the NRG [National Research Group],” it states.

“This would ultimately include the then commissioner of Sars and now Finance Minister Pravin Gordhan.

“MP spoke of a number of interested individuals inside Sars who are more than willing to combine efforts to target IP and JVL.

“It must be borne in mind that, although the aforementioned names of people were identified, NO other way of corroboration was actually done.

“The aforementioned individuals have allegedly met on a number of times at different locations before I could be approached.”

President Jacob Zuma in the report is often referred to as ‘old man’.

In an alleged timeline of events it is states:
• August 2009, a call was received from MP to meet.
• “MP came to my house and he told me that there were highly influential people that would like to meet with me.”
• The official then alleges that MP was referring to the late Leonard Radebe (LR), Mabheleni Ntuli (MN) and Bizoski Manyike (BM).

He continues:
• The following day… he came back to my house… at around 8am and he was driving a greenish Volvo SUV.
• He told me we were to meet with LR and BM for a discussion.
• We met LR alone at the House of Coffees in Silver Lakes at exactly 10 in the morning…
• BM did not show up.

Espionage claims as tobacco war hots up

Cape Town – Serious allegations of espionage have been levelled against established cigarette manufacturers, including tobacco giant British American Tobacco of Southern Africa (Batsa), in a Western Cape High Court application lodged by Carnilinx, the manufacturer of low-cost brands.

Carnilinx claims that the Tobacco Institute of Southern Africa (Tisa), of whichBatsa is a principal member, has been carrying out covert, unlawful surveillance of its operations and tracking its vehicles in an effort to force it out of the industry.

Carnilinx is a member of the Fairtrade Independent Tobacco Association (Fita) with other low-cost brand manufacturers.

The two associations have been at loggerheads for some time and, in the court application, Carnilinx alleged that Tisa contracted private security firm Forensic Security Services (FSS) to conduct unlawful surveillance of its operations and track its vehicles.

Carnilinx also claims Tisa procured covert electric surveillance of its business premises, delivery vehicles and distributors, intercepted and detained its products, and reported its products to Sars and the police as illicit.

It sought an interdict against Tisa, which it claimed wanted to protect its members against those affiliated to Fita.

Tisa denied most of the incidents as well as the allegations of unlawful conduct.

The difficulty for Carnilinx, however, was the manner in which it lodged the proceedings.

By the time the case went to court, the parties agreed that the matter could not be decided on the papers only and Carnilinx applied to have it referred for trial instead.

In his judgment, Judge Lee Bozalek said the legal underpinnings of the case were certainly not made explicit in Carnilinx’s papers. It was only when it presented its argument that it revealed that it relied on breaches of certain rights.

However, he said there was “little value, if any” to be gained from referring the matter to trial. Judge Bozalek found, instead, that it was best that Carnilinx institute fresh proceedings.

He warned, however, that this did not mean he was suggesting that there was no merit in Carnilinx’s case.

Tobacco industry insiders behind ‘initial attacks on Sars’ – former unit head

Johannesburg – Former head of the Sars investigation unit Johann van Loggerenberg released a statement on Tuesday night indicating that the initial attacks on Sars, himself and the unit had been driven by people inside the tobacco industry.

“As early as 31 July 2014 Sars was on record that at least the initial attacks on Sars, me and investigative units that I managed were driven by persons associated with the tobacco industry.”

Van Loggerenberg made his statement after it emerged that Finance Minister Pravin Gordhan could face arrest by the Hawks.

News24 revealed that Gordhan not only faced possible arrest, but that Sars had also launched a massive new forensic probe into deals concluded during his tenure at the organisation.

Sars appointed accounting firm Grant Thornton to conduct a forensic investigation into its modernisation and technology programme, which was implemented between 2007 and 2014.

Gordhan was Sars commissioner from 1999 until 2009.

The Daily Maverick on Tuesday night reported that the Hawks had asked Gordhan, his former deputy at Sars Ivan Pillay and three other former senior Sars officials to provide warning statements.

Appearing before Hawks

A warning statement is a precursor to a suspect being charged criminally.

Gordhan, Pillay, former head of risk Pete Richer, and Van Loggerenberg were summoned to appear before the Hawks on Thursday morning.

The Western Cape Hawks had already obtained a warning statement from Van Loggerenberg’s predecessor, Andries “Skollie” Janse van Rensburg.

News24 understands Gordhan and his four former colleagues were expected to be charged under the Regulation of Interception of Communications and Provision of Communication-Related Information Act of 2002 and the National Strategic Intelligence Act of 1994.

The charges related to the alleged establishment of intelligence capacity in Sars, the recruitment of investigators to work for this unit and “Project Sunday Evenings”. The latter was an allegedly illegal Sars operation to record conversations of members of the now-defunct Scorpions unit.

Grant Thornton said its forensic investigation at Sars was in progress.

Two transactions in focus

The firm was “specifically appointed to conduct an independent preliminary forensic investigation of the modernisation and technology programme from 2007 to 2014″.

This was according to a statement in answer to News24’s queries, issued by communications firm StratComms.

The programme was started in 2007 and saw Sars adopt new software and IT systems, such as its e-filing platform and its electronic system for customs payments.

It is understood that two transactions in particular had been in the Grant Thornton investigators’ sights: one involving software development firm BBD, and another involving state-owned software firm Interfront.

The Grant Thornton probe was known within Sars as “Project Lion”, say sources familiar with the development.

Van Loggerenberg said he believed it was in the public interest to provide a response to the allegations that he had been asked to provide a warning statement to the Hawks.

“I urge the public to not overreact on mere speculation,” he said. “I have continuously offered my co-operation to the authorities since as early as 2014. I have nothing to hide and deny any wrongdoing.

“As stated before, I have no doubt that if the Hawks conduct their investigations without fear or favour, the truth shall ultimately triumph.”

‘Creating confusion’

Substantiating his allegations regarding the attacks on the tax organisation being driven by people associated with the tobacco industry, Van Loggerenberg referred to an article run in The Star at the time.

The article said that a clampdown by the taxman on the tobacco industry had resulted in a backlash which saw Sars investigators becoming the target of “spies, double agents, dirty tricks and the leaking of false allegations to discredit them”.

“There are people who have a vested interest in creating confusion among State institutions. Sars is in no doubt that they are behind these allegations, as they have been in the past,” then spokesperson Adrian Lackay said at the time.

Sars had sent letters, under the project name “Honey Badger”, to the Tobacco Institute of Southern Africa (Tisa) and the Fair Trade Independent Tobacco Association, which represent the majority of stakeholders in the tobacco industry in South Africa indicating there would be investigations.

Van Loggerenberg said that recent revelations on social media platform Twitter by a whistleblower in the tobacco industry, @EspionageSA “have a direct bearing on the matters at hand”.

The leaks contain hundreds of pages of documents revealing alleged spying by British American Tobacco through their hired security company FSS on their competitors, particularly Carnilinx. The documents contain private information on employees of competitors, which was allegedly obtained through spying and bribing of police officers.

Heads in the sand

Van Loggerenberg has been openly commenting on the leaks on Twitter over the last few days, indicating frustration that the revelations are not being investigated by the authorities.

“I can confirm that all indications are that the real rogue unit exposed by @EspionageSA is not being investigated,” he tweeted.

He retweeted The Star’s 2014 story and commented: “Well before the rogue unit sham. Eventually the truth will out. Waiting 4 my day 2 be heard [sic].”

He also posted a picture of people sticking their heads in the sand, and commented: “Certain journos who drove Sars ‘rogue unit’ narrative 30+ articles over 2 years after @EspionageSA leaks be like…”

Another tweet had a picture of an ostrich with its head in the sand and went: “Hawks after @EspionageSA massive leaks of corruption, money-laundering, illegal covert rogue intelligence units.”

British American Tobacco ‘bribed’ police – affidavit

Johannesburg – JSE-listed conglomerate British American Tobacco (BAT) and the private security firm it has contracted have been accused of running a scheme of bribing South African police officers, spying on competitors using police cameras, and even sourcing confidential business information on one of its rivals from officials in the SA Revenue Service (Sars).

The latest explosive allegations against BAT are contained in a sworn affidavit made by a former employee of Forensic Security Services (FSS), a private security outfit run by former apartheid era intelligence agent Stephen Botha.

According to the affidavit, a copy of which has been leaked online along with scores of other documents that purport to prove BAT’s unlawful spying on local competitors, BAT pays FSS about R150m a year, ostensibly to help fight the illegal cigarette trade in South Africa.

However, if the former FSS employee is to be believed, FSS, with the full blessing of senior BAT executives, had instead been running a massive unlawful spying and disruption programme aimed at ensuring it kept hold of the lion’s share of South Africa’s multi billion rand tobacco market.

Court application

The former FSS employee’s affidavit forms part of a high court application against BAT by Carnilinx, a producer and distributor of cheaper cigarette brands.

“In hindsight, the purpose of my employment was for BATSA (BAT’s South African filial) to deploy my investigative skills together with backup from corrupt SAPS and SARS officials in order to disrupt the business of BATSA’s competitors, Carnilinx being one of them,” reads an excerpt from the affidavit.

The ex FSS employee then goes on to claim, in startling detail, how BAT and FSS allegedly broke the law.

Some of the most shocking allegations contained in the affidavit include the following claims:

* BAT and FSS ran a secret bribery programme, in accordance with the strategies contained in a BAT document entitled the Project Management Plan (PMP), whereby law enforcement officials were “paid up to R5 000 a month for co-operating with FSS and BATSA in disturbing Carnilinx’s trading operations”.

The affidavit goes on to explain that police officials were often fed false information by members of FSS’s network of agents across the country, which then prompted police to harass and even arrest Carnilinx employees on suspicion of being in possession of illegal tobacco products.

“Thus, each law enforcement agent, whether it is from SARS, JMPD (Johannesburg Metropolitan Police Department) or SAPS, would be on BATSA’s informal payroll, receiving a minimum of R2 000 each per month up to R5 000 per month. Effectively, this was a bribe by BATSA to corrupt police officials who it regarded as trusted,” reads the affidavit.

* FSS ran an extensive unlawful spying programme in order to monitor Carnilinx distribution vehicles, facilities and employees. This included securing the use of an entire CCTV room at the JMPD’s CCTV monitoring facility in Johannesburg by means of an agreement with the company that manages the control rooms on behalf of the City of Johannesburg (CoJ).

“(The company running the control rooms) has made available to FSS, since approximately 2012, an entire room for FSS(‘s) sole usage which would allow FSS access to all of the City’s cameras. This then gave FSS an opportunity to obtain footage of all vehicles that were used by Carnilinx, together with their registration numbers. A special camera, camera number 5, was strategically positioned so as to allow FSS to view Carnilinx’s premises,” the ex FSS employee alleges.

* A senior SARS official, whose name is mentioned in the affidavit, was in “constant communication” with FSS staff.

“BATSA had arranged for SARS . . . to arrange regular monthly inspections at Carnilinx. During the course of the inspection, Carnilinx would deliver to SARS . . . all the production sheets, reports of production, confidential information . . . as well as sales figures,” reads the affidavit, which then goes on to claim that the SARS employee had regularly met with a FSS agent at “the Wimpy in Edenvale”, where all of Carnilinx’s business information was given to the FSS agent by the SARS official.

According to the affidavit, senior BATSA employees, all named in the document, would ultimately take possession of the Carnilinx documents.

* FSS unlawfully placed tracking devices on Carnilinx’s delivery trucks in order to track their movements. The purpose of this according to the affidavit, included “to keep a monitor on the vehicle whilst it is moving so as to communicate with the relevant law enforcement officers such as SAPS, JMPD and SARS officials to stop the truck on the highway, seize the goods and arrest the drivers”.

The ex FSS employee also explains in details how the tracking devices were put on the vehicles by a FSS operative, who is named in the affidavit, mostly at night.

“(Name of FSS employee) would wear an all-black cat suit on such occasions and all persons present with him would be required to wear gloves.”


A BATSA spokesperson says the company will “under no circumstances… condone illegal behaviour”.

The company says it is “currently involved in litigation with certain manufacturers, who have made claims that some of our activities went beyond our legitimate interest in combating the illicit (tobacco) trade”.

“We are conducting an investigation with the assistance of an external law firm and if we were to find that illegal activity had occurred, we would, of course, take appropriate action,” says the spokesperson.

The company did not want to provide detailed comment on the allegations raised in the affidavit.

“. . . given that our investigation is ongoing and that some of the allegations are the subject of legal proceedings, it would not be appropriate for us to comment any further on them.

In a statement issued by its media office, Sars maintained that it “considers any alleged act of corruption, whether perceived or actual, in a serious light”. It did not respond in detail to queries around the Sars officials’ alleged involvement in providing Carnilinx’s business information to BATSA.

“The department will not dignify any enquiry based on information which you are unlawfully in possession of with a response,” said SAPS spokesperson Brigadier Mashadi Selepe.

“Any such allegations will be investigated by the authority competent to do so in accordance with the laws of our country,” added Selepe.

JMPD spokesperson Wayne Minnaar said only staff of the company that operated the CCTV facility and JMPD officers were allowed access to its CCTV rooms.

“The JMPD does not tolerate any form of bribery or corruption, as officers are expected to conduct themselves in a professional and proper manner at all times,” said Minnaar.

The FSS was approached for comment, but had not responded by time of publication.

* This article was updated at 14:30 on Tuesday to add the JMPD’s response.


Health Minister Dr. Aaron Motsoaledi, is no stranger to tobacco legislation.

His stance on curbing the sale, advertising and use of cigarettes is well known, but now he wants to increase the Health Department’s scope to more than just the tobacco industry by going after ecigarettes.

In a recent interview with SABC on World No Tobacco Day, Motsoaledi said that electronic cigs should be treated the same way as normal tobacco cigarettes.

“We are looking at it very carefully. In the last framework (at the) Convention on Tobacco Control of the World Health Organisation held in South Korean recently, the decision was that we need to package ecigarettes as just any other type of cigarette,” he said.

Ecigarettes, instead of burning tobacco leaves, make use of liquids, which are heated by coils – much like a kettle. The resulting vapour that is produced by the evaporating liquid is inhaled by users. Think of it as inhaling the steam that is produced by a kettle – the mechanics are identical.

The Minister added that the ecig industry is trying to trick Health Departments across the world by making zero-nicotine ecigarette liquid (the liquid that gets vaporised).

“There is a trick here. Some ecigarettes have nicotine, which means they are just as bad as cigarettes – other don’t have nicotine,” he said. “Now that is a trick by the industry, saying that governments must only deal with those that have nicotine, which means I as a minister must now spend money to find out which ones do not have nicotine.”

“So the decision around the world from Ministers of Health is, ‘hey, do away with everything. It is not our job, it is the industry’s job’,” he added. “There is also a belief that those that don’t have nicotine, is introducing youngsters to smoking. When they start catching it, the next level is to go to real cigarettes.”

Motsoaledi’s comments about ecigarettes being a gateway to the smoking tobacco don’t seem to line up with current research co, which says that in 99% of cases, it is actually the other way around.

In the US, the Food and Drug Administration (FDA) recently set out Deeming Rights (guidelines) that ecigarettes should be classified as ‘tobacco products’.

The FDA also added that ecigarettes stores that produce their own liquid for use in ecigarettes are considered tobacco manufacturers, so anybody making their own juice is now a tobacco product manufacturer.

Among the other regulations set out by the FDA, this will have an impact on where people can use their ecigarettes if they fall into the same strict tobacco laws.

South Africa has historically been a leader in introducing tobacco laws, and if Motsoaledi turns to the FDA regulations, South Africa could follow suit in classifying ecigarettes as tobacco products.