September 1st, 2016:

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

http://www.financialmail.co.za/coverstory/2016/09/01/the-bat-whistle-blower-francois-van-der-westhuizen

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.