By Pinky Khoabane
Last year I had interactions with a few former senior SARS officials whose view was that the rogue unit story which the Sunday Times published over a period of almost two years, emanated from a fight-back campaign by multi-national tobacco companies.
Senior SARS officials were investigating the tobacco industry and it’s illicit trade. In letters to the industry signed by the then head of the SARS investigations unit, Johann van Loggerenberg, he warns the industry about non-compliance and illicit activity in the sector. One of those letters is here Tisa Doc
The SARS official I spoke to used these letters as part of the evidence which showed the link between the rogue unit accusations and the tobacco industry. “Clearly the big tobacco people realised I was onto them.” He alleged that they had planted attorney Belinda Walter to spy on Sars. Walter started the entire rogue unit story when she confessed to the Sunday Times that she was spying on her clients, most of them alleged tobacco smugglers and other smaller private tobacco producers, and giving the information to the State Security Agency (SSA) and to the multi-national tobacco companies who were in competition with her clients. She also mentioned a romantic relationship with the head of SARS’ investigative unit which was investigating the tobacco industry. She also lodged a complaint against van Loggerenberg with SARS accusing him of having told her that SARS was spying on private individuals including herself.
The investigation by SARS into South Africa’s R5bn annual illicit tobacco trade exposed extensive infiltration of law enforcement agencies by the multinational tobacco companies. This official often spoke about the real state capturers as the multi-national companies which had infiltrated the law enforcement “illicit tobacco task team”. On this team were British American Tobacco (BAT) SA, National Prosecutions Authority (NPA), Hawks, State Security Agency (SSA) and Forensic Security Services (FSS). The role of this unit was to fight illegal activity in the industry but one, Francois van der Westhuisen, formerly a policeman and employed by FSS, resigned after a year after realising he was expected to commit illegal acts.
In an affidavit leaked on a Twitter account @EspionageSA, Westhuisen says the “primary work description from the very beginning was to spy on competitors such as Carnilinx (and) obtain confidential information through the employment of various contacts within the South African Revenue Services and the South African Police Services”. Westhuisen says BAT (SA) was calling the shots in the Illicit Tobacco Task Team. He described BAT (SA) thus: It had “the authority to make decisions and funding/finance” and had “the potential to overcome political and socio-economic obstacles that might have a direct influence of certain aspects of the project management goals”. He said BAT (SA) had the “political connections which members and directors of BAT (SA) cemented within the senior members of the South African Law enforcement circles”. State capture at the highest level.
In an email to me, the SARS officials sent me the following. It is unCensored and is a copy and paste with only his name removed.
“I have been following the discussions about so-called “state capture” and thought to share with you some thoughts.
I don’t have a view on the Gupta-family because I lack facts. I prefer not to form views on matters unless I know something for a fact. But it is of note in my view, that other instances of “state capture” seem to not feature in the social and mainstream media at all. I think its also easy to reflect on a single political party or family or politician, but alas, when other facts are available, it becomes convenient to say nothing.
“State capture” has happened since time immemorial. It is nothing new.
The most dangerous form is where commercial interests infiltrate state agencies at lower levels. This is so because it enables commercial interests to directly manipulate state actions and outcomes in their favour. There are many such examples, probably most obvious recently in the wake of what happened at SARS. And yet, people seem fixated on a single family and a single politician. Again, I state, I have no view on the family or politicians associated. I just think its a question of perspective. When evidence of state capture by others surfaced, everybody kept quiet…
Let me illustrate in no particular order of priority. Please read the linked articles when you have time.
British American Tobacco and KPMG:
“…At the heart of it all now is a controversial report by the auditing firm KPMG which was commissioned by Moyane in December 2014 to conduct a forensic investigation into what has come to be termed a “rogue unit”…
“…Last week Daily Maverick sent a list of questions to KPMG CEO, Trevor Hoole, as well as Olof van Niekerk, KPMG Head of Legal Services, asking whether it was not irregular that an auditing firm would solicit/receive recommendations and findings from the legal firm representing its client….”
“…In their submissions to SARS and the Sikhakane panel, Mr Ivan Pillay and Mr Johann van Loggerenberg provided evidence implicating BAT UK (British American Tobacco) and BAT SA and attorney Ms Belinda Walter in corruption and money-laundering. Does the KPMG report reflect on this evidence?
In March 2015 KPMG was appointed as auditors for BAT. Did KPMG reflect on this potential conflict of interest when undertaking to perform an independent forensic audit?
Did KPMG advise SARS, or alternatively on their own, comply with the statutory provisions of the POCA, FICA and PCCA to report corrupt practices and money-laundering to the Hawks and the FIC? Specifically, the question refers to Section 34 of the Prevention and Combating of Corrupt Activities Act in respect of Ms Walter, British American Tobacco SA and British American Tobacco UK and her declared involvement with BAT UK and BAT SA?…”
Again, British American Tobacco and the so-called “Tobacco Task Team”
Adrian Lackay addressed Parliament and said among others:
“13.4. I believe that what Ms Walter was completely unaware of, but very quickly adapted and utilized to her advantage, was the acrimony that had already existed between Mr. Johann van Loggerenberg in his official capacity and certain officials in other state agencies (more especially the Anti-Illicit Tobacco Task Team referred to) who in his view had busied themselves wittingly or unwittingly with advancing commercial interests of businesses, participating in illegal tracking, allowing smuggling to occur under guise of investigations, duping state agencies into believing certain “intelligence reports”, to name a few. Mr Johann Van Loggerenberg was outspoken about his views on this towards me and other SARS officials.”
13.5. I believe that it certainly “helped” that they were known to her from a period before she and Mr Johann van Loggerenberg had met. For example, Hawks Brigadier Casper Jonker who headed the Anti-Illicit Tobacco Task Team. It was Brigadier Jonker who took Ms Walter’s affidavit for the purposes of her “complaint” to the Hawks and used it as reason why she did not want to testify under oath to the SARS “Khanyane Panel.”
13.6. A further example would be former Colonel Hennie Niemman, who was part of the same Tobacco Task Team, and a member of the police Crime Intelligence Division, and has recently left the police. He had already started to engage private persons as early as April 2014, prior to Ms Walter’s complaint to SARS to seek “dirt” on Mr. Johann van Loggerenberg. This matter was reported by Mr. Johann van Loggerenberg via SARS to General Dramat of the Hawks at the time.
13.7. It is this same Colonel Niemman who collaborated with Ms Walter and Mr Peega in a television broadcast on Carte Blanche on 22 February 2015 about the alleged “SARS rogue unit” and made untrue and slanderous allegations against Mr. Johann van Loggerenberg and others.”
“…23. Mr. Johann van Loggerenberg ended his personal relationship with Ms Walter on 13 May 2014 10 for a variety of reasons, including the fact that she had not been entirely honest with him about the activities that she had been involved in prior to the commencement of their relationship, and in respect of which he had developed serious reservations. For example –
23.1. In documentation seen by me, Ms Walter informed Mr. Johann van Loggerenberg that whilst she was a paid informant of the SSA, and with the knowledge of her respective SSA “handlers”, she was also a paid informant for British American Tobacco UK Pie (“BAT UK”). She informed him on several occasions that this came about as a result of an introduction by her SSA handlers to BAT UK, and that BAT UK and the SSA and Crime Intelligence of the police were aware of this “arrangement”. Ms Walter also provided him with:
a) a copy of the correspondence between BAT UK and British American Tobacco SA confirming such payments; b) two recordings of discussions that she had with a BAT UK “handler” privately and in which reference is made to the respective state agencies who were aware of this “relationship”; and c) photos of 2 Travelex cards which were utilized by her and BAT UK to receive payment for services rendered, and which were not in her name. She utilized such cards to withdraw payments made by BAT UK in the United Kingdom at respective ATM’s in South Africa from time to time .11;
23.2. on various occasions during his tenure at SARS 12 Mr. Johann van Loggerenberg recorded his concerns about the independence of a so-called multi-agency Tobacco Task Team headed by a Brigadier Casper Jonker of the Hawks, [as he was aware of the close relationship between the Tobacco Task Team and certain private investigative firms funded by large tobacco manufacturers]. who in his view exerted inordinate influence over the Tobacco Task Team. According to him, this was unethical and to the disadvantage of the smaller traders in the industry. The fact that Ms Walter informed him that her SSA handlers (Mr. Ferdi Fryer and later Mr. Chris Burger) were part of this team concerned him greatly. Perhaps more importantly, he was extremely worried about Ms Walter’s involvement in these activities in light of the fact that it raised issues about her ethical duties as an attorney of the High Court;…”
Again, British American Tobacco:
…But BAT denied the charges levelled against the company in Zimbabwe.
A spokesperson said BAT “strongly denies any involvement in industrial espionage or illegal activity that may be linked to other local tobacco manufacturers”.
Yet documents obtained by amaBhungane show that, about a year before, in about December 2011, Forensic Security Services (FSS) had recruited a controversy-dogged former South African National Defence Force recce, Michael Peega.
After leaving the military, Peega worked undercover for Sars, but was fired after he was implicated in rhino poaching.
The documents suggest that FSS sent Peega to Zimbabwe to set up a base and deploy surveillance or tracking equipment.
Affidavits signed by Peega state: “I am an adult male who in a consultancy capacity renders a service to the Tobacco Institute of South Africa, aimed at assisting law enforcement agencies to curb the trade in illicit cigarettes.”
Peega was also suspected of being the source of a document hawked around by Julius Malema in February 2010, which accused Sars of targeting allies of President Jacob Zuma (among whom Malema then counted himself) using the covert Sars unit Peega was once a member of.
By December 2011, Peega was working for FSS and the affidavits were apparently required to account for cash that had been given to him to set himself up in Zimbabwe.
Attempts to contact Peega this week for comment were unsuccessful.
FSS provides investigative services to Tisa and is led by a tough and shrewd former apartheid-era intelligence officer, Stephen Botha.
Botha declined to comment for this story, saying: “The terms of our services are governed by confidentiality agreements and, therefore, we are not at liberty to respond to your submissions or questions.”
“…Fast forward to December 2013 and Peega has emerged as one of a number of BAT agents paid in a roundabout way: direct deposits are made into untraceable foreign currency cards by BAT’s global head office in London.
The evidence may prove embarrassing for the cigarette giant, which appears to be running a private intelligence network in Southern Africa enjoying active support from the SSA and other law enforcement entities.
Tisa is said to spend roughly R50‑million a year on services provided by FSS, though neither it nor BAT would confirm the figure.
BAT and FSS representatives, through Tisa, also sit on the multi-agency Illicit Tobacco Task Team, where critics say they get to drive the law enforcement agenda.
For instance, according to a source familiar with the task team’s work, a senior member of BAT United Kingdom, Allen Evans, has presented a detailed project proposal to investigate Gold Leaf Tobacco Corporation, always regarded as BAT’s biggest threat in South Africa.
BAT estimates that the illicit trade in cigarettes deprived the South African government and the Southern African Customs Union of a staggering R50-billion last year.
“Any information handed over to law enforcement agencies, when so requested, is done so primarily on matters related to suspected acts of illicit trade in cigarettes,” the company said in response to amaBhu-ngane questions.
“BAT (SA) remains committed to compliance with the country’s laws and supports free and legitimate competition.”
But according to information from former BAT agents, the interpenetration of state and private intelligence has gone further and has led to the infiltration of BAT’s smaller competitors…”
BAT (SA) told amaBhungane it had no knowledge of this allegation and therefore could not comment.
Some subsequent meetings were also monitored and, in some cases, people employed by competitors of BAT were secretly paid to report to it.
At least six individuals were supplied with Travelex foreign currency cards, which allowed BAT UK to transfer cash to these agents in a way that was not subject to the restrictions of foreign exchange and money-laundering regulations, either in the UK or South Africa.
It appears this may also contravene South African and UK tax legislation.
BAT denies any involvement in illegal activity: “BAT (SA) upholds and complies with all laws applicable to it and the company’s standards of business conduct,” the company said…”
Lonhro, a former SA listed company and formerly listed on London Stock Exchange:
“An amaBhungane investigation into the R5-billion-a-year illicit tobacco industry can reveal how two major multinational companies used their considerable resources to influence South African state security agencies to protect their commercial interests.”
In one case, controversial African conglomerate Lonrho was able to sidetrack a criminal investigation of its logistics subsidiary, Rollex, which in 2010 had been caught smuggling truckloads of illegal cigarettes across the border from Zimbabwe.
The Lonrho example also calls into question the judgment and actions of former State Security Agency (SSA) director Gibson Njenje, who earlier this month launched a private intelligence company.
In another case, the dominant South African cigarette producer, British American Tobacco (BAT), appears to have parlayed its support for law enforcement into preferential access to state security structures – and, with that, the alleged capacity to spy on its competitors.
Both companies have denied any wrongdoing.”
AmaBhungane has interviewed sources in Lonrho, state investigation agencies and BAT – who have sometimes acted as double or even triple agents – and reviewed documents, private correspondence and recorded conversations to piece together an astonishing snapshot of the penetration of private commercial interests into the state.
“The evidence shows how vulnerable the security agencies are to manipulation by big private players with deep pockets, who do so often under the guise of “support” for official projects.”
“…Two sources involved in the events claim that Fryer was subsequently remunerated by Lonrho or its agents.
Correspondence shown to amaBhungane by a confidential source suggests that Njenje was made aware of Fryer’s apparent conflict of interest, but it seems the spy boss did nothing about it before his departure from the SSA in September 2011.
According to the same correspondence, Njenje issued an instruction that Fryer’s alleged relationship with Lonrho was not to be shared with the case officers of the SSA.
AmaBhungane asked Njenje to respond to the chain of events, which, it was put to him, suggested he acted to protect Fryer or Lonrho…
Perhaps if you study these articles, knowing that the primary source of the Mail & Guardian article happened to be Ms Walter, then you will see my point? And yet, the media is silent on these two instances of absolute state capture and there is absolutely no investigation into Ms Walter, BAT, Lonhro, Fryer, Minnaar, Jonker, Niemman, Peega at all?
I just thought to share some thoughts with you. I think it absolute arrogance for KPMG to on the one hand use terms like “reputational risk” and then behave in a manner it did with SARS. It did not disclose its conflict of interests that KPMG UK acts for BAT UK. Consequently nowhere in its report is any mention made of the criminality between BAT UK and Ms Walter. Not a word. More of issue, and few know this, Ms Walter herself acted for KPMG on a tobacco matter with KPMG employee Allen Few. And yet, not a word from SARS, KPMG, Sikhakane or Kroon?
Not Sikhakhane, Kroon or KPMG makes even a mention of the Rollex/Lonhro matter. Nor of BAT. And these cases are probably the most substantiated cases of state capture. Lackay’s letter to Parliament did the same. But not a word of these two…and no action against Ms Walter, Messrs Jonker, Niemman, Minnaar, Fryer, Peega, KPMG, BAT or Rollex…nada.
Now read this: http://f-ita.co.za/fita-press-release-2-of-2016/ And no action from the Hawks?
So who has captured who and at what level in the state?”