Friday 12 February 2021 – AN EXPLOSIVE new investigation has revealed how South Africa’s illicit cigarette kingpins are deeply entrenched in politically-connected cartels looting state coffers on both sides of the border with Zimbabwe.
Smuggling networks with links as high as Zimbabwe president Emmerson Mnangagwa are robbing billions of dollars in taxes at the expense of ordinary citizens, the report states.
“This report is damning proof that tax criminals are destroying lives and livelihoods in South Africa as well as Zimbabwe,” Tax Justice SA (TJSA) founder Yusuf Abramjee says today.
“It emphasises our urgent need to enforce stricter border controls and to crack down on illicit trade that is robbing vital funds from our people. We must get our house in order if we don’t want to go the way of Zimbabwe.”
The report, Cartel Power Dynamics in Zimbabwe, analyses the illegal trafficking of gold and diamonds and reveals how South African cigarette firms have been enriching themselves via cartels since the ruinous reign of president Robert Mugabe.
The report states:
- Cigarette cartels use middle men in South Africa to collude in smuggling, export fraud and tax evasion
- The Zimbabwean subsidiary of Johannesburg-based Gold Leaf Tobacco Corporation (GLTC) enjoyed the patronage of Robert Mugabe, who leased one of his farms to the family of GLTC owner Simon Rudland
- Simon Rudland said last year: “The financial reward for not paying the sin tax on cigarettes is very attractive”
- Smuggling cartels supply an estimated 27% of the cigarettes consumed in South Africa annually
- Smuggled cigarettes have been found on rail, road and air transport belonging to companies linked to South African tobacco baron Paul de Robillard
- De Robillard is a co-owner of Pietermaritzburg-based Amalgamated Tobacco Manufacturers (ATM), which has been investigated by the South African Revenue Service (SARS) for distributing smuggled cigarettes
The report concludes: “Under the Mnangagwa administration, cigarette smuggling has continued to thrive and the operations of the aforementioned money men have been unhindered.
“Laws and policies aimed at preventing Zimbabwean cigarettes from supplying South Africa’s large demand for cheap cigarettes have largely failed. They have created a sprawling underground network of cigarette smuggling whose tentacles have reached the top offices in both countries.”
Abramjee says: “This report should be a warning to South African authorities that we need to tackle these cartels that threaten to annihilate our economy, destroy jobs and impoverish our citizens.
“We must plug our porous borders so that we stop this contraband flooding in. And we must crack down on the criminal networks that are putting these smuggled, tax-evading products on our streets.”
A recent TJSA investigation showed that illicit cigarettes are now on open sale in mainstream shops across the country.
One of the most widely-available brands is Remington Gold, made in Zimbabwe by Gold Leaf, which was purchased by TJSA researchers for as little as R9.30 per pack – a price less than half the tax that should have been paid on them.
“It is obvious to us that Gold Leaf are one of the leading firms who are not paying their taxes and are robbing South African citizens of over R8 billion a year,” says Abramjee.
“If South African authorities want to show that the rule of law applies in our country, they must bring these smugglers and illicit traders to book. They must lock them up.”