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

Aug 24th, 2016
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http://www.news24.com/SouthAfrica/News/tobacco-industry-insiders-behind-initial-attacks-on-sars-former-unit-head-20160824

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.”

Daily Maverick’s 28 questions for the Hawks

Aug 24th, 2016
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http://www.dailymaverick.co.za/article/2016-08-24-daily-mavericks-28-questions-for-the-hawks/

One of the most sensational leaks alleging serious criminality in the tobacco industry occurred on Twitter earlier this month. Thousands of documents, photographs, sound clips and affidavits were dumped online implicating the multinational British American Tobacco company in various acts of criminality including bribing SAPS, SARS and other government officials and conducting industrial espionage on its rivals. The leak, if documents prove to be true, provide evidence of a serious threat to democracy. By MARIANNE THAMM.

The leak by an account, @EspionageSA, began early in August and confirmed, to some extent, what journalists at amaBhungane Centre for Investigative Journalism had been writing about for years. That it reveals, according to former Mail & Guardian editor Nic Dawes, how “a messy nexus of intelligence networks employed by competing tobacco firms works and how their activities compromise state bodies, notably in the the battle for control of the SA Revenue Service”.

“What fewer people have noticed is that amaB, and Sam Sole in particular, have been tracking connections between the tobacco industry, big and small, licit and otherwise and grand corruption for over a decade. Many of the names in the mix in the SARS debacle, including Martin Wingate-Pearse, also featured in the M&G’s investigation into Jackie Selebi.”

Dawes added that prior to these investigations were those into “dodgy aviation and cigarette firms operating in Johannesburg that were linked to former apartheid spies, Russian aviation firms, and arms smugglers. I spent a lot of time snooping around hangars at Rand Airport and Rustenberg and talking to Russian pilots. Sam got deeper into the guts of the system.”

This was, he added, “an industry in which criminality and state capture aren’t accidents, they are baked into the mix, and in South Africa with its new and fragile institutions it poses a clear and present danger not just to health, but to the functioning of democracy”.

In light of the seriousness of these allegations Daily Maverick sent the following 28 questions to the Hawks.

Do you have any knowledge of the content of what has been publicly released on Twitter by @EspionageSA?

Do you have any knowledge of the disbandment of the Tobacco Task Team and its private partners, including FSS, TISA and BAT?

Who were the stakeholders who formed part of the Tobacco Task Team?

Do you have any knowledge of the existence of the Tobacco Task Team headed by Hawks Brigadier Casper Jonker?

Can you confirm that the Tobacco Task Team was managed by a team consisting of Brigadier Jonker as the head, Lieutenant Colonel Hennie Niemann of SAPS Crime Intelligence and SSA officials, Ferdi Fryer and later Chris Burger and NPA advocate Johan van Heerden and others of the NPA, SAPS, and FIC?

Can you confirm that attorney Belinda Walter was a paid informant for the Tobacco Task Team? Can you confirm that she was by way of introduction by the Tobacco Task Team also an informant to FSS and BAT for which she was also paid? Is it lawful to recruit and pay a lawyer for information on clients?

Can you confirm that FITA was formed “in conjunction with the Tobacco Task Team and the SSA”?

Can you confirm that SARS was not a permanent member of the Tobacco Task Team? If not, why not?

What were the aims and objectives [mandate] of the Tobacco Task Team and subsequent operating environments?

How were the members of the Task Team recruited/selected? Were recruitment processes followed? How were the private partners/stakeholders selected?

Who was heading the Tobacco Task Team and who was it responsible and accountable to?

Do you know anything about the illegal entry of tobacco manufacturer Carnilinx’s property by a joint team comprising members of the Tobacco Task Team and private security firm FSS where a person named “Rassie” wore a black “catsuit” and required everybody with him to wear gloves?

Who were Jonker, Niemann, Fryer, Burger, Van Heerden and what were their positions, roles and responsibilities within the Tobacco Task Team?

Can you confirm that the Tobacco Task Team, FSS, TISA and BAT co-operated in conducting surveillance of citizens of this country with the necessary legal authority?

Kindly share with us or provide a copy of any agreements between the Hawks, SSA, NPA, FIC, SARS, SAPS crime intelligence that guided the activities of the Tobacco Task Team?

Was the Head of the Hawks [accounting officer] briefed about all key strategic operations of the Tobacco Task Team?

Is it standard practice, for instance, for someone like Lt-Colonel Niemann to meet with informants together with FSS investigators and then sign confirmation of payment to the informer using funds obtained from FSS?

In light of the views expressed by the Ministers of Police and State Security on 3 March 2016 with respect to the so-called SARS “rogue unit”, can you confirm that the acquisition and use of sophisticated spy equipment with interception and surveillance capabilities by FSS is also being investigated by the Hawks?

The payment by FSS to individuals in a concealed manner in exchange for information on the commercial competitors of BAT and TISA members suggest the offences of money laundering, corruption and FICA contraventions. Were you aware of these practices? If not, are you intending to investigate those implicated?

Is there anything that the Tobacco Task Team, Hawks officials and police officials and those associated with the Tobacco Task Team may have been involved in that you would not have been aware of?

Do you know anything about operations code named “Charlie/Oudtshoorn/Black Widow/Bravo/Vlakplaas/Piper/Siera/Alpha/Ching” or the installation of sophisticated surveillance equipment at 19 De Beer street Lydenburg and Carnilinx, Salisbury Street, Johannesburg?

Who authorised these? Is this in line with the Tobacco Task Team mandate and was it done lawfully?

What were the objectives and targets of these projects?

Did the relevant Ministers approve the establishment of and identify members of the respective departments to work within the Tobacco Task Team? Provide evidence.
Were there things at the Tobacco Task Team that would have happened without your knowledge?

Did members of the Tobacco Task Team appear on the Hawks, SAPS, SSA, NPA, FIC, SARS normal employees’ payroll?

If this Tobacco Task Team was operating legitimately, why were they operating from guesthouses, hotels, restaurants and private dwellings? Further, why were they not provided with Hawks, SARS, SAPS, NPA or FIC equipment? Why did they use privately purchased equipment that belongs to private investigations firms?

How was the funding of the various operations managed? Which costs were paid for by the Hawks, the SSA, NPA, SAPS, FIC, SARS, BAT, TISA, FSS and others?

Who authorised the procurement of the surveillance equipment to be utilised during the Tobacco Task Team operations?

Directorate for Priority Crime Investigation (as espionage and bribery are surely priority crimes?) spokesman Brigadier Hangwani Mulaudzi responded; “We only comment on official complaints and the BAT is one of those that was leaked to the public and no formal docket has been opened. Unless otherwise you have a case number we can assist and if not we cannot help, this goes to the SAPS as well.”

British American Tobacco ‘bribed’ police – affidavit

Aug 16th, 2016
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http://www.news24.com/SouthAfrica/News/british-american-tobacco-bribed-police-affidavit-20160816

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.”

Response

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.

Tobacco giant shrinking size of some cigarette packs as smokers to be hit with another tax rise

Aug 14th, 2016
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http://www.heraldsun.com.au/news/tobacco-giant-shrinking-size-of-some-cigarette-packs-as-smokers-to-be-hit-with-another-tax-rise/news-story/535e6f0188faad2317a570620e6b7b26

A TOBACCO giant is shrinking the size of some cigarette packs as smokers are set to be hit with another tax rise.

Retailers will start phasing in Dunhill brand packs of 23, culled from 25, from next month. The wholesale price of the new packs will be the same as the bigger size now.

British American Tobacco Australia spokesman Nicholas Booth said: “Dunhill smokers told us that instead of paying a higher price after the next tax hike in September, they’d prefer to have slightly fewer sticks and have the price stay the same.

“The wholesale price will be the same as the pre-tax Dunhill 25.”

A double whammy 12.5 per cent federal tobacco excise increase, plus indexation, takes effect from September 1.

The current tobacco tax take on a single cigarette is AUD 53.7 cents — a grab ranging from AUD $10.75 for a pack of 20, to AUD $26.85 for a pack of 50.

Next month’s increase is expected to see smokers cough up at least AUD $1.30 to AUD $3.35 more tax per pack, depending on size.

Retail price changes vary depending on competition and margins.

Public health campaigners say a series of 12.5 per cent annual tax hikes pencilled in for the next four years will further reduce smoking rates because of soaring prices.

The Dunhill downsize adds to a string of shrinking packs including Freddo Frogs, laundry liquid, deodorants and potato chips such as Pringles.

“British American Tobacco Australia is working with retailers to roll out Dunhill 23s from September,” Mr Booth said.

“The product remains the same with all Dunhill 25s variants transitioning to this pack size by the end of the year.

“Like most fast moving consumer goods companies we have a portfolio of products we offer our consumers and this is constantly reviewed.

“The introduction of Dunhill 23s is in response to feedback from consumers.”

September’s 12.5 per cent tobacco excise increase is in addition to twice-yearly indexation linked to average weekly ordinary-time earnings. The indexation amount for September will be determined soon.

Cigarette makers have warned that steep excise rises are fueling the illegal tobacco black market.

Australian tobacco executive bashed and stabbed in attempted kidnap

Aug 11th, 2016
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http://www.smh.com.au/national/australian-tobacco-executive-bashed-and-stabbed-in-failed-kidnap-attempt-20160811-gqqds1.html

The attempted kidnapping, bashing and stabbing of an international tobacco company manager outside his family home in Sydney suggests crime syndicates are hitting back at efforts to combat the booming illicit tobacco trade.

A criminal syndicate is suspected of ordering the botched kidnapping in June of a former decorated NSW policeman turned manager of British American Tobacco.

The BAT manager was stabbed and bashed by at least three men, after he refused their order that he get into a car. The kidnappers arrived at the man’s Sydney home at around 10pm on Saturday June 4.

A source said the manager was forced to “fight for his life” to ward off the kidnappers, who have not been identified. He was rushed to hospital after the attack.

The attack appears to be an unprecedented escalation in the struggle between policing agencies and the syndicates driving the illicit tobacco trade. Evidence suggests the attack was linked to BAT’s support of police inquiries.

Police and big tobacco companies believe the illegal trade is driven by the escalating cost of legal cigarettes, and is now worth more than $1 billion. Budget measures mean a legal pack of cigarettes will cost $40 by 2020, compared with as little as $10 for a smuggled packet.

The bashed BAT manager had been working closely with state and federal agencies investigating the illicit trade, which is a huge source of income for organised crime syndicates in Melbourne and Sydney.

The attack has shocked law enforcement and security officials, who have compared it to the Italian mafia’s violent confrontations with managers from supermarket giant Woolworths over control of the fruit trade several decades ago.

The attack comes less than a year after a separate incident in which an undercover agent was threatened while working confidentially with organised crime detectives investigating tobacco smugglers.

A key concern to emerge from the attempted kidnapping is how the underworld may have learned of the BAT manager’s support of transnational police investigations into tobacco trafficking.

It may have also been designed as a warning to any person supporting authorities.

The attack has led some organised crime investigators to question why NSW Chief Commissioner Andrew Scipione, who has been briefed on the attack, agreed in May to shut down the Polaris waterfront crime taskforce, which was investigating several leading illicit tobacco importers in NSW.

The federal government’s response to the spike in the illicit tobacco trade has been a modest $7.7 million funding boost for the small but successful Australian Border Force Tobacco Strike Teams, which have been operating for a year.

The teams, devised by Australian Border Force chief Roman Quaedvlieg, have already intercepted tens of millions of dollars worth of tobacco smuggled in shipping containers into Sydney and Melbourne from the Middle East and Asia.

The teams have also mapped strong links between the illicit tobacco trade and notorious organised crime families in Melbourne and Sydney – families that are also allegedly involved in drug trafficking and violence.

It is possible the success of the strike teams, or the work of Taskforce Polaris, encouraged the attack on the BAT manager.

Organised crime investigators in NSW and Victoria have been warning for months that the illicit tobacco trade is booming.

One NSW based tobacco smuggling syndicate has used its profits to fund cocaine importations and is also linked to fundraising for a Lebanese community organisation loosely aligned with the militant Lebanese group Hezbollah.

Organised crime groups traditionally involved in drug importations have embraced the illicit tobacco market due to the less serious penalties for those caught importing and the huge profits available.

Increases in tobacco excise, which is set to rise again this year and are backed by both major parties due to public health and revenue raising benefits, has been a boon for the illicit trade.

Criminal intelligence suggests that this has in turn led to an increase in efforts to corrupt law enforcement officials and waterfront workers who can aid smugglers.

Despite successful law enforcement efforts, illicit tobacco is sold freely and openly across Australia, suggesting huge quantities of the untaxed product is being continuously and successfully smuggled into Australia.

Health advocates have accused the tobacco industry of overstating the size of Australia’s illicit tobacco market and the involvement of organised crime as part of a strategy by ‘big tobacco’ to combat anti-tobacco initiatives that erode the profits of cigarette companies

Agrokor Sells Part of Tisak to British American Tobacco

Aug 11th, 2016
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What will happen with the Croatia’s largest newsstand chain?

https://www.total-croatia-news.com/item/13537-agrokor-sells-part-of-tisak-to-british-american-tobacco

With the recent purchase of Adris’ tobacco business, British American Tobacco (BAT) also acquired 25.8 percent of Tisak, shares which are owned by the Rovinj Tobacco Factory (TDR). BAT has now increased its stake in the largest domestic chain of newsstands by additional 16 percent. Agrokor announced on Wednesday that it had signed a contract about the transaction with TDR, reports Poslovni.hr on August 11, 2016.

With this transaction, TDR has gained 381,854 shares and now it owns 42 percent of Tisak, while Agrokor retains 51.3 percent of shares. Agrokor’s statement regarding the transaction was rather vague and short. The price, as expected, remains unknown, but the same is true about the motives and the nature of this sale. They only said that “Tisak is the market leader in introducing new and innovative services and products, and this transaction will enable additional investments in the modernization, efficiency and increased operational security”.

Although Tisak’s semi-annual report suggests an increased investment activity this year (200.5 million kuna), business community is looking for other explanations. A part of it believes that this purchase of shares could be a kind of prelude to BAT’s takeover of Tisak or at least one step toward such a scenario, while others see the move as motivated by Agrokor’s liquidity issues and needs related to debt servicing.

In business circles there have been speculations for some time now (after last year’s half-billion-euro BAT’s takeover of TDR) about the fate of Tisak. The distribution network has been mentioned as an important part of that deal, including the price paid. In other countries where it operates, BAT does not usually tend to acquire retail chains, but the situation is somewhat different in Croatia. Of course, the takeover scenario would require the approval of the Croatian Competition Agency and it would involve measures related to regulations on concentration and market competition.

Tobacco industry to benefit from new vaping proposals

Aug 5th, 2016
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http://www.stuff.co.nz/national/politics/82805830/Tobacco-industry-to-benefit-from-new-vaping-proposals

Tobacco companies are taking over the e-cigarette industry. Does this mean they’re changing their spots?

Why are tobacco giants welcoming the Government proposal on electronic cigarettes? Because they stand to benefit.

For the past decade the tobacco industry have been buying up e-cigarette manufacturers and suppliers and investing heavily in developing these product lines.

The three dominant tobacco players in New Zealand – Imperial, British American Tobacco, and Philip Morris – all have e-cigarette subsidiaries under their parent companies.

The Government are proposing nicotine e-ciggy sales should be R18, have constraints on advertising and be banned in smokefree areas.

All going to plan, nicotine-vapours will be part of New Zealand’s health policy to help Kiwis quit smoking. The Government are just trying to figure out how it would work.

Perhaps this is the dawn of Big Tobacco being the ‘good guys’ for once – but experts are not so sure.

The Government wants to clarify the law surrounding electronic cigarettes, Peseta Sam Lotu-liga says.

Imperial Tobacco are “certainly wanting to assist” in “shaping good, solid and sound regulations”, says its corporate affairs manager Louise Evans McDonald.

“We are very supportive of adults having the right to choose a product,” she said.

Imperial bought e-cigarette brand Blu in 2014, after member company Fontem Ventures bought Dragonite in 2013 for $75m.

Associate Health Minister Peseta Sam Lotu-liga says the proposals on e-cigarettes are not about regulating who can supply them.

However, the corporation has never applied to Medsafe to have its products available to those that want to quit smoking. It’s been waiting on the Government to take a “lead steer” on regulations, Evans McDonald said.

At this stage, Imperial was just focused on selling tobacco in New Zealand. It made a 50 percent jump in profit from sales of $553m for the year ending September 2015.

IS THE TOBACCO INDUSTRY ‘CHANGING ITS SPOTS’?

It’s “unlikely” the tobacco industry are just wanting to be ethically responsible with their investments, says Otago University pubic health co-head Richard Edwards.

They’re really getting “a big slice” of the consumer pie by investing in a market that’s grown exponentially in the past few years, he said.

“It may mean it’s a way for them to get more influence over governments, and policy and so on, by appearing to be not so bad after all.”

Take a look at the track record of the industry’s court actions, he said, such as trying to prevent graphic health warnings in Uruguay, and losing the argument to prevent plain packaging in the UK.

“They’re still trying to prevent effective policies to reduce the harm caused by smoking. So that’s why I don’t think there’s any evidence that the tobacco industry has changed its spots.”

NO PROPOSAL TO REGULATE SUPPLIERS

When asked if tobacco companies stand to benefit from the Government proposal, Associate Minister of Health Peseta Sam Lotu-Iiga responded: “It is not a proposal to regulate who is involved in the provision of e-cigarettes.”

The proposal would treat e-cigarettes in a “similar fashion” to tobacco regulations, “which tobacco companies already operate within”, he said.

He had not had discussions yet with the tobacco industry on the issue.

Philip Morris, known for the Marlboro and Chesterfield cigarette brands, welcomed the consultation announced by the Government, said New Zealand general manager Jason Erickson.

He pointed out that advances in vaping technology was “transforming the tobacco industry”.

Philip Morris International teamed up with Altria to market e-cigarettes in 2013, selling these exclusively outside the US. In 2014, it bought Nicocigs to enter the UK market.

GOOD FOR PUBLIC HEALTH & COMMERCIALLY SENSIBLE

In 2013, British American Tobacco was the first international company to launch an e-cigarette (called ‘Vype’) in the UK.

Its website says it will continue to invest “substantially” in the research, development and commercialisation of a pipeline of products. They also plan to launch Vype in other markets.

It also says it was the first company to have a nicotine product licensed as a “medicine” – their nicotine inhaler.

“If we are successful in developing and bringing to market a range of products that meet the needs of adult smokers seeking less risky alternatives to cigarettes, this will help to meet the objectives of a number of leading public health professionals.

“And of course it will also make commercial business sense to us and our shareholders.”

Statistics about vapers in New Zealand are hard to come by because the nicotine products are illegal to sell.

However, in the UK and US there are already a high rate of users. It’s estimated that 2.8million adults in the UK are vapers, according to Action on Smoking and Health, correlating with a decrease in smokers. However two thirds of vapers were still smokers.

American vapers are counted as high as 10 per cent of the US adults, according to a Reuters poll last year.

British American Tobacco was contacted for comment on the Government’s proposal, but have not responded in time for this article.

Auckland Council to review investments

Aug 1st, 2016
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Auckland Council will conduct a full review of its investments after revelations that one of its funds holds shares in sugary drink and tobacco companies.

http://www.radionz.co.nz/news/national/309854/auckland-council-to-review-investments

It will also investigate why it invested in the fund in the first place.

The council had about $320 million invested with 11 different fund managers in New Zealand and overseas.

An investigation by RNZ News found one of those funds holds shares in the world’s biggest soft-drink manufacturer Coca-Cola, the chocolate and confectionary giant Hershey’s, theinternational coffee chain Starbucks and British American Tobacco.

The Janus Global Research Growth fund also invested in two of the world’s biggest alcohol companies SABMiller and Pernod Ricard.

Those investments contradicted the work the council was doing to fight obesity and smoking, as well as its responsible investment policy, Councillor Chris Darby said.

He told Checkpoint with John Campbell the stake in British American Tobacco was of particular concern and the council’s investment agency should have known better than to invest in it.

“I would expect that those in governance and management at that entity to have identified that particular investment well in advance. I mean, it should have been revealed by them much, much earlier and sold down,” he said.

Mr Darby feared there may be similar investments among some of the other 10 funds the council invested in.

Last week the council announced it would ban all sugar-sweetened drinks from vending machines at its 21 leisure centres in a bid to “show leadership in the battle against obesity and type 2 diabetes.”

In 2013, smoking was banned at all parks, playgrounds, stadiums, sportfields, swimming pools, council buildings and bus and train stations.

The council will this week consider strengthening its smoke-free policy as part of its commitment to making New Zealand smoke-free by 2025.

Councillors shocked at investments

Auckland councillors contacted by RNZ were shocked to learn of the investments.

“This is more than a little embarrassing for council,” councillor Chris Darby said.

“It’s inconsistent with where the council wants to go and without question it’s not a good look. I believe that my colleagues around the council table will see this rectified,” he said.

“For two years I have been working with the Smoke-free Coalition and Cancer Society on getting council to move faster towards being smoke-free.

“After almost a year’s delay the Smoke-free Policy Review paper comes before the Regional Strategy & Policy Committee this Thursday. So the British American Tobacco stake poses an even bigger embarrassment, one that requires full sell down as soon as possible,” Mr Darby said.

He told Checkpoint with John Campbell the stake in British American Tobacco was of particular concern and the council’s investment agency should have known better than to invest in it.

“I would expect that those in in governance and management at that entity to have identified that particular investment well in advance. I mean, it should have been revealed by them much, much earlier and sold down,” he said.

He feared there may be similar investments among some of the other 10 funds the council invested in.

Auckland Council finance committee chair Penny Webster was also surprised to learn of the investments in soft drink, alcohol and tobacco companies.

“I wasn’t aware of it, but I will certainly go back and ask some questions now,” she said.

The council had a responsible investment policy but councillors would not necessarily be given that level of detail unless they asked for it, she said.

Auckland University epidemiologist and FIZZ founder Gerhard Sundborn said the council needed to better align its policies with its financial decisions.

“It’s important that councils do check where they are investing their funds and ensure they’re investing them responsibly in companies that meet the ethical considerations that they have,” he said.

“The decision to remove sugary drinks from vending machines was a great start. I’m confident that the council and government will take into consideration more now where they invest their funds,” he said.

Council has ‘responsible investment policy’

Auckland Council treasurer John Bishop said the council did not know exactly which companies its 11 funds were invested in because that information was often confidential.

The decision to drop sugar-sweetened drinks from vending machines at council-run leisure centres was an operational, not policy, decision, he said.

“The portfolio originates from funds held by legacy councils. Investments are made through a range of fund managers, based in New Zealand and overseas, and advice is taken from a professional investment advisor,” he said in a statement.

“As part of this process we continually look to align our investment policies with best practice, including those associated with responsible investment.

“Auckland Council has a responsible investment policy which is regularly reviewed in association with our overall investment policies. We have certain confidentiality restrictions with some of our fund managers which inhibit our ability to disclose specific asset holdings,” he said.

The fund managers were required to act consistently with the council’s responsible investing policy, he said.

The council’s policy did not ban particular investments but stated it should choose fund managers that could demonstrate a high degree of alignment with the principles of responsible investing.

“Council considers that a policy of active engagement with companies rather than screening or avoiding companies based on environmental, social and governance criteria will deliver the least cost, best outcome,” it stated.

The government-owned New Zealand Superannuation Fund and ACC banned investment in tobacco companies in 2007, but still invested alcohol, soft drink and fast-food companies.

The council was looking at divesting its investment portfolio over the next two years to help pay for infrastructure costs.

Price increase hurts British American Tobacco’s results

Jul 27th, 2016
by Editor.
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British American Tobacco (M) Bhd’s (BAT) second-quarter financial performance was hurt by the continued impact of the November 2015 excise-led price increase, as well as the reduced consumption during the fasting month.

The company remains concerned with legal volumes continuing to be impacted by the current rampant illegal cigarette trade after the unprecedented excise increase in November last year that saw consumers down-trading within the legal market.

It cited a market research done by the Confederation of Malaysian Tobacco Manufacturers last December that discovered close to one out of two packs of cigarettes sold in the country was illegal.

The company said in a press release that the total legal domestic market experienced a volume decline of 26.3% in the first half of 2016, and pursuant to that, it saw a contraction in its domestic and duty-free volumes by 28.9% versus the first half of last year.

“The overall volume reduction and its consequent escalating cost pressures resulted in a total revenue decline of 16% and gross profit of 21.5%, both when compared to the first half of 2015.

“This fall in volumes is principally driven by the steep excise increase in November 2015 and the industry has yet to see any signs of recovery,” said BAT managing director Erik Stoel in the press release accompanying the results.

The company saw its second-quarter to end June net profit declining 78.2% year-on-year (y-o-y) to RM47.72mil, while revenue also saw a y-o-y drop of 11.5% to RM962.58mil.

The company has declared a dividend of 45 sen per share, which was a decline from the 78 sen per share dividend in the same period a year ago.

Global standards for vaping products essential to promote innovation

Jul 21st, 2016
by Editor.
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R&D at British American Tobacco

http://www.eurekalert.org/pub_releases/2016-07/raba-gsf072116.php

Against a backdrop of a growing number of e-cigarette users globally, British American Tobacco (BAT) is leading efforts to develop and harmonise standards around vaping products to further reassure consumers of these products potential in reducing the harm from smoking.

Marina Trani, Head of R&D of Nicoventures (a wholly owned subsidiary of British American Tobacco) will tell delegates at the EuroScience Open Forum 2016 on July 26th that standards need to be harmonised in order to promote innovation. ‘Different rules in different jurisdictions make it overly burdensome and expensive, especially for smaller companies. It stifles growth and innovation, which in turn could stifle the potential these products have for reducing the harm of smoking,’ she said.

The EU and the US, for example, are worlds apart in terms of how they regulate e-cigarettes. Draft regulations in the US (to be enacted in August) will require pre-approval before any change is made to a vaping product. Whereas, the EU Tobacco Products Directive requires a less restrictive six month prior notification (rather than approval) for ‘substantial modification.’ There is a growing body of evidence that e-cigarettes are substantially safer than cigarettes. Kevin Fenton, Public Health England’s Director of Health and Wellbeing, recently said, ‘The wider body of evidence consistently finds that e-cigarettes are less harmful than smoking.’

British American Tobacco was the first tobacco company to launch an e-cigarette in 2013 and has been proactive in both developing the first voluntary product standard with the British Standards Institute (BSI), advocating for more harmonised standards and is currently actively contributing to the European standards development work.

BAT has taken a particular leadership position in toxicological risk assessment through the publication of its 2015 best practice guide for how to comply with that aspect of the BSI guidelines. Dr Sandra Costigan, Principal Toxicologist at Nicoventures, explains how the guide helps to safety assess flavours for inhalation rather than ingestion. Costigan says ‘safe to eat is not the same as safe to inhale’ .The guide sets out a scientific rationale that will help determine if particular flavours can be used safely.

As Trani will reinforce at the ESOF, the vaping industry should continue on a journey towards standards that can protect consumers, increase understanding of next generation products, are clear and harmonized globally while not inhibiting innovation.

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