Press release FITA 10 April 2019

Press release – FITA – for immediate release

We note the recent press statement by multinational British American Tobacco which, true to form, arrogantly dismisses a claim by the South African Revenue Service (“SARS”) that they owe the receiver R 143 million for alleged tax fraud after the company received undue rebates from SARS from certain misrepresentations it made to the receiver. This is characteristic of multinationals to strong-arm government and its enforcement arms due to their financial muscle which they use to constantly bully government into enforcing policies which favour their commercial interests at the expense of local entrepreneurs who contribute just as significantly to job creation and economic growth.

This is also not the only tax dispute the multinational is currently engaged in with SARS. It has been widely reported and published in their company prospectus that they owe SARS in excess of R 2 billion in a separate tax dispute.

In this regard we would like to take the public back a few years:

  1. In May 2014, a full-scale audit commences at BATSA;
  1. In a prospectus issued in May 2014 to raise £15-billion, British American Tobacco Plc (“BAT Plc”) said: “SARS has challenged the debt financing of British American Tobacco SA and reassessed the years 2006–2008 in the sum of R600-million.”
  1. Included in the audit were the expenses paid to security company Forensic Services Security (Pty) Ltd (“FSS”);
  1. FSS employed primarily former Apartheid regime policemen who worked in conjunction with captured SAPS officials, and its primary function was to spy on all of BATSA’s commercial competitors, most of whom, if not all, were or are local manufacturers and FITA members, to obtain confidential information through the employment of various contacts within the South African Revenue Service (“SARS”) and the South African Police Service (“SAPS”). In essence FSS’ primary function was to deploy the investigative skills of its employees together with backup from cooperating corrupt SAPS and SARS officials in order to disrupt the business of BATSA’s competitors;
  1. FSS was paid around R 50 000 000.00 per year by BATSA for these services;
  1. The aforementioned audit would therefore have enabled SARS to audit the complete “SIN database” of spies and agents working covertly for BATSA to spy on its competitors, and the payments made to said agents;
  1. This would have resulted in implicating members of the deceptive Illicit Tobacco Task Team which included representatives from BATSA, the Hawks, Crime Intelligence, the State Security Agency (“SSA”) and the National Prosecuting Authority (“NPA”);
  1. This would’ve exposed inter alia corruption and money-laundering;
  1. It is also crucial to remember that this aforementioned audit was only for the financial years 2006 to 2008. The full-scale audit only commenced in May 2014. That initial R 600 000 000.00 would also only have reflected the capital amount due. Not interest and penalties. But it gives a sense of the values involved.

A lot of questions remain unanswered in respect of British American Tobacco’s tax compliance. Perhaps SARS can shed light on the above.

Issued by the Fair-trade Independent Tobacco Association: 10 April 2019

For queries kindly contact Monique Vogel t: 072 720 7919; e: Monique@fita.co.za

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