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      TOBACCO WARS

      Inside the spy games and dirty tricks of southern Africa’s cigarette trade

      JOHANN VAN LOGGERENBERG

      Tafelberg

      I dedicate this book to my wife, Nicole. As always, thank you for the many hours of support, patience, advice and guidance, for listening and, above all, your unconditional love. By the time this book is published, our baby girl, Gabriella, will be with us. For you too, my love.

      I would also like to dedicate this book to the countless honest and hardworkng law enforcement and South African Revenue Service officials engaged in the incredibly difficult and risky task of combating crime in the cigarette industry. The reason why our old tobacco investigation was named after the honey badger was that, although small in stature, it is an animal known for its toughness and determination in the face of adversity. I hope that this book may help you to pick up where we left off, never to give up and ultimately to ensure that justice is served and that truth triumphs.

      Preface

      I worked for the South African Revenue Service (SARS) for close to sixteen years. Before that I was a policeman investigating organised crime. During my time in the civil service, I came to understand the dark side of the tobacco trade in southern Africa and elsewhere. By the time I left SARS in early 2015, I was overseeing over eighty different projects, of which one focused on the cigarette market in South Africa and our neighbouring states. This project was the main reason why I came to understand the trade a little better than most. Whereas I am limited by law in providing information about taxpayers and SARS operations which are not in the public domain, this has not been a hindrance for me in telling this story. Everything I reveal in this book is publicly available and verifiable, except where I say otherwise. Much of what I tell I was able to confirm after I had left SARS. In some instances, I protect the identities of people by agreement or for fear of their and their loved ones’ safety. In some chapters, as I shall indicate, I have also used some fictional licence to give the reader a sense of the stories I was told, while also protecting the identities of some of those involved. These stories are denoted by their italicised titles. Some of what I share in this book has to some extent been simplified. To include all entities and people involved in the entire value chain, and all the intricacies and goings-on in the tobacco trade, in a single book would be an impossibility. There are the growers, traders, leaf processors, markets, transporters, clearing agents, warehousing and logistical agents, to name a few. That some of them are also involved in scams and dirty tricks is not in any doubt, but for the sake of simplicity I limit the focus of this story to the primary role-players in the sector.

      I have spent many hours finding old court records, interviewing people, searching out evidence and researching documents and reports available in the public domain, in order to ensure that I do not breach my oath of secrecy. For every tale I tell, I have documentary evidence, records, emails, recordings, text exchanges and other data whose origins I explain in this book. Some aspects that I would have been unable to write about on account of the legal limitations imposed on me as a former SARS official no longer applied to me because I was able to obtain access to certain records, documents and information in the public domain as a civilian after having resigned from SARS in 2015. There is also some precedence for publishing information about SARS and its investigations. Since 2012, SARS has used the services of external authors to study real cases, interview SARS officials and then write them up for public dissemination as case studies using pseudonyms. SARS has also collaborated with academic institutions over the years and allowed them to publish studies and books about SARS and its inner workings. Just to be sure, I had lawyers check the contents.

      For ease of reading I have limited the number of my footnotes but include at the back of the book a list of references and further reading for those interested in the topic. I am no expert in the field of cigarette-making, and don’t pass myself off as such. Most of what the reader will learn from reading this book came to my attention in some instances by chance, in the course of my duties and thereafter. The information contained here gives an inside glimpse into the murky world that lurks beneath this scandal-infested industry. I believe it is in the public interest to know what I came to discover. Though none of our law enforcement agencies have ever acted upon the evidence I present here of serious offences, it is in the interest of justice that these stories be exposed.

      Johann van Loggerenberg

      Foreword

      In the pages that follow, Johann van Loggerenberg takes us through one of our darkest days since the dawn of democracy. Coinciding as it does with efforts to rebuild SARS, Tobacco Wars is a timely and essential story that should be prescribed reading material for lawmakers, civil servants, regulators, civil society organisations and the media, as well as alert citizens concerned with the protection of key institutions of the state against greedy and corrupt mercenaries for profit.

      What Van Loggerenberg tells us in these pages is more than just the story of dedicated civil servants at SARS falling victim to unbridled greed; it is also a lesson in how we as a nation failed to properly exercise our hard-won democratic right to safeguard that which we should hold precious and dear.

      As he did in his previous two books, Rogue, and Death and Taxes, Van Loggerenberg has in Tobacco Wars told how a professional, efficient and progressive tax collection agency was gutted by determined and unaccountable officials.

      Not only was the institution hollowed out, families were destabilised, and the lives and livelihoods of hardworkng and honest civil servants were destroyed. Yet good men and women have refused to just sit by and give up. Hence you are reading this book, which tells the story of capture and plunder, courtesy of one of the bravest former dedicated civil servants.

      The story of the illicit tobacco trade is intrinsically linked to, and is the extension of, the story of state capture. The treasonous crime of state capture could not have succeeded without the hollowing out of SARS. In fact, SARS was for a long time the only government agency that stood in the way of the criminal gangs. In order for the crime to flourish, SARS had to go the way of the South African Police Service. And flourish the crime did.

      The success of this campaign of crime over the past ten years, in which elected public office bearers commandeered civil servants to tirelessly work for the private profit of their friends and underworld paymasters, starkly shows itself in the increasing taxes ordinary people are forced to endure daily.

      In the 2019 national budget, Finance Minister Tito Mboweni raised taxes on essentials such as bread, flour and fuel, in order to pay for the corruption of state capture. This Mboweni did in order to find about R12 billion more in taxes to pay for the corruption at Eskom and elsewhere in government. The 2018 jump in the VAT rate to 15% of the price of goods can and must also be directly linked to SAR’s inability to collect all taxes due on tobacco and organised commercial crimes.

      For the next two to four years, the country will have no choice but to raise taxes to pay for the ever-increasing funding needs of a poorly performing economy. An economy riddled with crime, such as ours, will tap the already burdened taxpayer. That will be the case until two things happen: the economy starts generating more taxes and the investigative and enforcement capacity of SARS is completely rebuilt.

      A 2018 study by the Tobacco Institute of Southern Africa shows that illicit tobacco costs the country about R8–R9 billion in unpaid taxes every year. Of course, as Van Loggerenberg shows, tax-paying tobacco companies themselves are not the most innocent bystanders in the hollowing out of SARS. Their strong objections to raised taxes on their products should be seen for what they really are: a self-serving agenda to maximise the profits of their members while letting them off the monetary costs of looking after the healthcare of customers, who become yet another burden of the heavily taxed public.

      Which does not change the ugly reality and cost of the illicit tobacco trade on the nation. Nor is this to say that other organised commercial crimes are less important. In such an impoverished country as South Africa, unregulated and untaxed cigarettes place an additional burden of care on the already collapsing public healthcare sector, which hits the poor

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