Illicit cigarette wars intensify

via Illicit cigarette wars intensify – The Zimbabwean 15 April 2015 by Tawanda Majoni

The turf war between rival cigarette companies has fuelled a hugely corrupt supply chain, involving regional smuggling activities, big money bribery and complex undercover espionage.

A vicious battle for market share is taking place in the tobacco industry as cigarette companies fight for survival. Investigations by The Zimbabwean have revealed that the war, which pits local companies against established multinationals, involves spying activities of which James Bond would be proud.

“There is very hot ‘cold war’ out there. The big companies like BAT want to maintain a monopoly of the tobacco industry but we as locals are saying that must not happen. You need to be made of steel to survive in this industry,” said Adam Molai, the executive chairman of Savanna Tobacco, in an interview last week.

Savanna is a Zimbabwean cigarette manufacturer established in 2004. The company has made sizeable inroads into the South Africa and Mozambique markets, where it is involved in a joint venture.

In South Africa, it has reached an agreement with the Spar retail chain to exclusively sell its Peterboro cigarette brand under a house branding arrangement.

Mysterious robbery

On May 14 2012, a mysterious robbery occurred at the Savanna Germiston factory, near Johannesburg, where the robbers got away with Peterboro cigarettes worth some $70,000, leaving the other brands untouched.

Over the years, Savanna has been accused of smuggling its products particularly into South Africa. Molai does not deny the fact that Savanna cigarettes have been smuggled out of Zimbabwe, but he sees that as part of the dirty war with BAT. He accuses the multinational of “trying to destroy competition”.

“It must be noted that only 10 percent of the cigarettes that have been impounded as contraband are from Savanna. The majority of the products seized are related to BAT.

“It is unfortunate that BAT has managed to convince the media that only 10 percent of smuggled tobacco products must be the focus of the story, not the other 90 percent,” said Molai.

He insisted that, despite the Savanna contraband being caught in smuggling attempts in and outside Zimbabwe, nothing has linked the leaked products to his company. He maintained that the blame lay with companies that bought the cigarettes and alleged that saboteurs had been hired by BAT.

Molai provided documents that purport to show that BAT is funding surveillance training, possibly as a way of countering illicit tobacco trade but also probably to ensure that it gains a firm foothold in espionage techniques.

Senior officials

The industry power struggle also involves top officials from President Robert Mugabe’s office who Molai alleged were being used by his rivals, as well as senior and junior police officers, ex-military operatives, Zimbabwe Revenue Authority (Zimra) and immigration officers as well as private South African companies.

Molai is married to Mugabe’s niece and has been accused of enjoying protection from the president over alleged smuggling. Recently, Mugabe’s deputy, Emmerson Mnangagwa, vowed to personally fight reported BAT sabotage of Savanna’s business.

Documents shown to The Zimbabwean indicate that Savanna’s rivals based in South Africa have been corresponding with the office of police commissioner Augustine Chihuri through an assistant commissioner called Njodzi.

Savanna has compiled detailed lists of named Central Intelligence Organisation (CIO) operatives, current and former army servicemen, Zimra officials and police officers who they allege are being bribed by BAT to monitor Savanna’s activities.

In correspondence from 2012, a South African private company based in KwaZulu Natal, Forensic Security Services (FSS), headed by one Stephen Botha, gives orders to the local police on how to investigate Savanna “in this project”.

Big money involved

“What is the project and what is the local police doing dealing with a private South African company? It seems big money is exchanging hands here and our own people are involved to kill indigenous companies on behalf of BAT,” said Molai.

The Savanna boss claimed FSS was on the BAT payroll. FSS is part of the Tobacco Industry of Southern Africa (TISA), an outfit that claims to be promoting fair tobacco business in southern Africa but whose activities are limited to South Africa.

BAT has investments worth R1.25 trillion in South Africa alone, meaning that it is running a business about 13 times the size of the entire Zimbabwean economy. Johann Rupert is the major shareholder.

Documents also show that FSS paid a prominent Zimbabwean businessman involved in transport more than $100,000 through CBZ bank in 2012, but the purpose of the transaction remains unclear.

Savanna, however, suspects that FSS has been using the businessman to buy vehicles and surveillance equipment to monitor the activities of the local cigarette producer. A man identified in counter-intelligence reports as Tamangani is alleged to be supplying the vehicles with fake number plates.

Threatening phone call

Botha is heard threatening Molai with unspecified action in a lengthy taped phone conversation that took place from 4.09 pm on November 26 2013.

In the bugged conversation, Botha accuses Molai of causing the arrest of his employees in Zimbabwe but when he is pressed to say if he has deployed his own investigators in the country, he diverts the conversation.

Savanna has countered FSS surveillance by engaging private investigators who produced reports detailing how the South African firm has been snooping on Molai’s establishment.

The reports show that FSS produces weekly reports giving detailed information on Savanna members of staff, meetings held, all the cars that go in and out of the company premises—complete with number plates—and times of entry and departure, cartons of cigarettes taken out, visitors to the firm and even details on recruitment.

The informants include named Savanna insiders, identified undercover investigators who frequent the premises and even vendors stationed at the main gates, who the reports say are paid $2,000 a month for gathering information.

Molai suspects that FSS is colluding with private individuals to smuggle Savanna cigarettes out and once the consignments are in South Africa, authorities in that country are tipped off to give the impression that the firm is responsible for the contraband.