UnCensored will be publishing a series of articles, comments, criminal cases, evidence involving the dirty wars of the tobacco industry. Our first contributor in the series “The Truth about Tobacco from Insiders” is from Benson Craig.
I was a founder member of Fita. I even suggested the name, Fair-Trade Independent Tobacco Association, because I felt that the name should reflect a philosophical approach beyond the immediate issues with Bat and its security branch, FSS. The propaganda war between British American Tobacco (BAT) and independent tobacco manufacturers is merely a symptom of a far larger problem. Essentially the whole tobacco industry in South Africa and beyond has been hijacked by transnational corporations and this situation has its roots far in the colonial past. The Gupta’s are “johnny come lately amateurs” when it comes to regulatory capture!
Tobacco farming in SA has been strangled by BAT. They determine what is produced, by who and at what price.
BAT has closed most of its cigarette manufacturing plants throughout the Southern African region: Mozambique, Zimbabwe, Zambia, Angola. Cigarettes for those markets are made in SA and exported to them with all the benefits of transfer pricing.
You know the game: make in SA, sell to a company registered in Panama which banks in the Dutch Antilles etc, etc which sells to the end user country etc etc.
By the way Japan Tobacco Industry and Philip Morris International have closed their factories in SA and now import their brands, manufactured elsewhere but exported to SA using a Swiss company which enjoys an import duty tariff reduction – but that’s another story.
FSS is a useful example of BAT’s absolute and total disregard for any real transformation in SA. NOT ONE manager in FSS is black. In 2016 a company running a contract for one of the biggest multi -national’s on earth hasn’t got even one token black in management. All the managers are white, male, former South African Police (SAP) and South African Defence Force (SADF) members. The reason is simple to understand.
Since colonial times the tobacco industry has been close to government. It’s a cash cow and the deal is basically to split the cash. Government mustn’t look too hard at the big players or push expensive health regulations too much and the money will keep being channeled through.
Throughout the apartheid era the industry and government were particularly cosy and this relationship has continued.
Just think about this – a pack of 20 cigarettes costs a manufacturer with economies of scale somewhat less than R2.75. Government excise is R13.24 per pack so we get to almost R16/pack plus vat must also be added for government. Seven million packs are sold a day in SA.
The multinationals average price per pack is probably double the R16. It’s all about the money.
This is the legal drug trade.
More profitable and less risky, especially if you can control government regulatory and tax interventions and if you can get law enforcement to squash any nuisance, low price local competition.
I left FITA this week because I feel that it is time for a new, transformed, democratic and transparent tobacco industry body which will fairly represent all the role players in the industry.