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Tobacco information workshops&
Disposal of seized goodsANTI-ILLICT TRADE CONFERENCE (10 NOVEMBER 2015)
Francois GreylingIndependent Consultant to TISA
TOPICS
• Southern African Customs Union - Enforcement factors• Southern Africa production region & product flow • Enforcement challenges• Workshop dynamics• LEA actions & Prosecutions• Seizures• Destructions
Southern African Customs UnionBotswana Lesotho Namibia Swaziland & South Africa
• One excise system – 5 sovereign states & 5 revenue collection agencies
• Five different versions of Customs & Excise legislation (similar underlying text)
• Different versions of Intellectual Property Protection platforms• Counterfeit Goods Act – South Africa • Merchandise Marks legislation / Industrial
Property Orders
• Different versions and levels of Tobacco Products Control legislation• South Africa• Namibia• Botswana
• Different Law Enforcement Agencies (LEA) with overlapping powers and different levels of enforcement
• Vast land and sea borders to control Source: SAM AIT Intel
ENFORCEMENT FACTORS:
AngolaZambia
Zimbabwe
Manufacturing capability
Special Economic Zone
SOUTHERN AFRICA PRODUCTION REGION & PRODUCT FLOW
Direct supply channelling
Transit supply channelling
ENFORCEMENT CHALLENGES
• More than 60% of the suspect illicit product is locally manufactured and is visually compliant
• There is a perception that visual compliant product cannot be illicit
• Manipulation of the current excise control mechanism (integrity)
• No legal requirement to transport goods with applicable transaction papers
• No track and trace system required by law
• Duplication and falsification of tax invoices
• Sale of products below the applicable tax incidence (minimum tax at risk R14.16)
• Very little control over imports of unmanufactured tobacco
SOUTH AFRICA’S ILLICIT THREAT:
TOBACCO INFORMATION WORKSHOPS
ENFORCEMENT SUPPORT:
• LEA engagement to offer tobacco information workshops – RSA & BLNS
• South African Police Service, South African Revenue Service, South African National Defense Force & other (RSA)
• Customization of material according to country criteria, audiences and time allocations
• Regional/Cluster, Stations/Offices, Ports of Entry
• Product identification & legislative compliance criteria (RSA)• Customs and Excise Act• Tobacco Products Control Act• Counterfeit Goods Act• Agricultural legislation
• National Prosecuting Authority & Asset Forfeiture Unit• Successful prosecution• Money Laundering
INFORMATION SESSIONS FACILITATED:
680
723 368
2274
30121752
Period 2010 - 2015
2010
2011
2012
2013
2014
2015
Period Attendance
2010 680
2011 723
2012 368
2013 2274
2014 3012
2015 1752
TOBACCO INFORMATION SESSIONS
DISCUSSION TOPICS:
• TISA’s identity and goals
• Defining the problem
• Legislative application -Acts and Regulations
• Remedial considerations & actions
• Product differentiation -Unmanufactured and Manufactured
• Documentation
• Methods of smuggling
LEA ACTIONS & PROSECUTIONS
• Better knowledge lead to a higher level of awareness
• Effective LEA initiatives lead to an increase in seizures• Cross border interaction• Multi-agency involvement
• Structured operations allowed for the apprehension of more suspects
• Specialized prosecutions resulted in a higher rate of matters being successfully concluded
• More stringent sentences• Higher deterrent value
SEIZURES
• Increased volumes could not be accommodated by existing storage facilities
• The auctioning off of seized tobacco was no longer a feasible solution• Goods were not stored in ideal conditions
• Contamination and product liability risks
• Threat of negative implications on future taxation compliance
• Risk of legitimate market destabilization
• The historical burning of seized tobacco products was not an option based on environmental considerations
• Cost effective and environmental responsible methods had to be sought • TISA developed such a capacity
• Offered destruction assistance
Destructions Machines• Customized for cigarette
destructions
• Mobile units for easy deployment
• Light delivery vehicles with a 2.5 liter engine capacity can transport it
• Powered by diesel engines -easy to maintain
• Ability to process 50,000 whole display cartons per day
• Team: 1 x machine operator & 8 x labourers
• Realistic destruction rate is 32,500 display cartons per day (logistics)
• TISA has 8 big machines strategically deployed and 1 smaller version
Destructions in progress & destruction residue
Display cartons – destruction residueAgriculture – land rehabilitation – creation of an artificial water table
Display cartons – destruction residueManufacturing – soil mixture – brick manufacture
TOBACCO DESTRUCTION - FIGURES
SOUTH AFRICAN CUSTOMS
Period Disposal category
Cigarettes (sticks)
2010 30,949,776
2011 463,725,330
2012 222,275,068 2013 285,422,091
2014 173,673,707 2015 13,529,520
Total 1,176,045,972
Master case equivalent 117,605
SOUTH AFRICAN CUSTOMS – TOBACCO
Period Disposal category
Tobacco (kg)
2010 -
2011 230,390
2012 464,000
2013 10,080
2014 3,750
2015 -
Total 708,220
Master case equivalent 35,411
SACU CUSTOMS (EXCLUDING RSA)
Period (2010 - 2015)Disposal category
Cigarettes (sticks)
Botswana 144,115,000
Lesotho 4,500,000
Namibia 22,625,200
Total 171,240,200
Master case equivalent 17,124
SOUTH AFRICAN POLICE SERVICE - NORTHWEST
PeriodDisposal category
Cigarettes (sticks)
2014 34,621,830
2015 5,035,000
Total 39,656,830
Master case equivalent 3,966
COMBINED SACU / SARS / SAPS
PeriodDisposal category
Cigarettes (sticks)
2010 – 2015 1,400,472,522
Master case equivalent 140,047
Master case equivalent 175,458
Dr. John C. Maxwell
People working together ultimately succeed or fail, based on their commitment to one another.
Thank you
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