Johann van Loggerenberg, Tobacco Wars: Inside the Spy Games and Dirty Tricks of Southern Africa’s Cigarette Trade (Tafelberg, 2019)

SMOKING is considered by many a filthy habit, but according to Johann van Loggerenberg it is nothing compared with the business in general, which is ‘as dirty and nasty as it is dangerous’, a ‘scandal-infested industry’ in which ‘non-compliance … has reached epidemic proportions.’ Illicit tobacco cost the fiscus R8–9 billion in the last tax year.

South Africa is not alone: in Canada in the early 1990s, 30% of the cigarette market was illicit and international companies engaged in illegal activity on a grand scale. Here, the big multinationals are constrained by a shrinking market and, since 2000, pressure from new manufacturers producing ‘cheapies’ – so cheap that tax evasion is a given. Two of the operators are the Zimbabwean sanctions buster and alleged arms trader John Bredenkamp and the apartheid police special branch letter bomb despatcher Craig Williamson. Business does not get much dirtier than this. And even Pietermaritzburg is part of the action: Yusuf Khan’s Amalgamated Tobacco Manufacturers operates out of Mkondeni.

Tax evasion is highly complex and hard to unravel, especially in the case of profit shifting and transfer pricing across national jurisdictions. Some of the scams are more straightforward: ghost exports to evade VAT, old-fashioned smuggling and unrecorded cash transactions. This situation has flourished because the inter-departmental Illegal Tobacco Task Team (ITTT) was thoroughly compromised.

The South African Revenue Service (SARS), for whom Van Loggerenberg worked until 2015, was excluded from this team. Instead, in 2010 SARS set up an operation called Honey Badger under a special projects unit whose aim was to squeeze the tobacco industry until corruption was stifled. It was to snuff out this threat that the myth of a rogue unit indulging in illegal spying with a racist bent was created; and subsequently appropriated by state capture apologists with long-term consequences. Honey Badger was closed down by captured SARS commissioner Tom Moyane and from to 2014 onwards tobacco tax revenue went into sharp decline, the illicit component of the 2017 cigarette trade rocketing to 40%. While fake news accelerated the rogue unit story, SARS imploded with the loss of 500 staff. Yet the Nugent Commission concluded this year that Honey Badger had indeed been lawfully constituted.

Meanwhile, illegality within the tobacco industry has run riot. The big players like British American Tobacco (BAT) have practised industrial espionage and tracked, and possibly hijacked, the trucks of competitors. BAT employed numbers of spies who were illegally paid in foreign currency via Travelex cards. The smaller outfits have been no better, known to plant illegal cartons and then arrange busts. And counterfeiting in neighbouring countries continues to cost local jobs.

Haunting the pages of this book is the enigmatic Belinda Walter, a lawyer with whom Van Loggerenberg had a short-lived relationship. It would seem (with her record it is advisable to be tentative) that she is State Security Agency (SSA)agent 5332, but she worked in rapid succession and probably simultaneously for BAT, the Fair Trade Independent Tobacco Association (apparently as chairperson), the ITTT, and one of the newer companies Carnilinx. It is hard to comprehend how Walter, who changed her tune with regularity and could well be a character from a soap opera, was taken seriously by anyone, above all the SSA. (Conveniently, she now seems to have disappeared altogether.)

But Van Loggerenberg provides some clues. There are, he argues, ‘no good guys in the industry. They’re all questionable in one way or another’. There are multiple corrupt relationships between it, the SSA and crooked politicians. So, according to Van Loggerenberg, this is a major component of state capture. There are, of course, claims such as those published in Noseweek that he has a questionable agenda and that there was indeed an illegal rogue unit. Nugent’s finding has yet to be tested in court. However, recent South African history, well-tuned political antennae, common sense and the evidence produced in this book all suggest that the rogue unit narrative is a fabrication designed to deflect attention from massive corruption to which the tobacco business seems irresistibly attracted. Smoking, it seems, could be fatal for the national as well as individual health.