Cigarette manufacturers including Adriano Mazzotti’s Carnilinx fear intelligence obtained by surveillance cameras installed by Sars to spy on their operations will land in the lap of British American Tobacco SA (BAT SA) – a rival company owned by billionaire businessman Johann Rupert.
The concerns of the manufacturers, which are affiliated with the Fair-Trade Independent Tobacco Association (Fita), are contained in papers before the Pretoria High Court, wherein Fita members are applying for an order for the introduction of new regulations promulgated by Sars last year to be declared illegal, unlawful and unconstitutional.
The regulations known as Rule 19.09 “have conferred the tax man sweeping big brother powers over all activities at factories where cigarettes are manufactured for constant, permanent and uninterrupted 24/7 surveillance via CCTV by Sars”.
Mazzoti’s Carnilinx and other affiliates argue that surveillance may lead to the leaking of their intellectual property, which would be advantageous to big players such as BAT SA – whom they have blamed for illegal “espionage” activities against competitors in the past.
Rupert’s Reinet has, among its core assets, a stake in BAT SA and Fita said the unlimited surveillance of activities at their factories may well land in the hands of the likes of BAT SA.
Fita cited findings of a research conducted by the University of Bath’s Centre for Good
Governance in Tobacco Control in 2021 titled “British American Tobacco in South Africa: By Any Means Necessary”, which placed BAT SA at the centre of spooking against competitors.
“The report details the manner in which corporate espionage has been rife in the tobacco industry, in particular, at the behest of BAT against its competitors, such as the applicants,” Fita submitted in court papers. “There are serious questions to ask regarding the company [BAT] and its service providers concerning allegations that they spied on competitors via CCTV, drones, vehicle trackers, and other technologies, which may include phone bugging.
“Documents, interviews, industry insiders and affidavits from court cases suggest BAT SA’s operatives appear to have been predominantly occupied with disrupting the company’s opposition, whether they were smuggling or not,” read papers.
According to Fita, the research revealed that BAT SA particularly “undertook a systemic campaign of maximum disruption of the production plans and business’ against Carnilinx, one of BAT’s locally owned competitors in the country.”
Fita added that BAT SA’s targeting of Carnilinx was further documented in a BBC documentary in 2021. The documentary, they said, exposed the “extensive surveillance and corporate espionage” BAT SA competitors were subjected to with the help of state agencies.
With this history by the likes of BAT SA, Fita insisted Sars boss Edward Kieswetter “cannot credibly deny that Sars making and keeping a video recording creates a new and unique risk that trade secrets will be leaked or hacked”.
The new regulations, they go on, cannot be allowed to stand as they will subject cigarette companies to undue interference to their business operations. What made matters worse, Fita said, was that the new rules give Sars power to subject its affiliates to constant spying without even stating the purpose behind its intentions.
According to them, the regulations allow Sars to just notify a licensee that it wishes to subject them to 24/7 surveillance without having to “explain the purpose of such surveillance, nor is Sars required to give reasons for the surveillance, nor is Sars limited in how long they may subject a licensee to surveillance”.
To add salt to injury, charges Fita, Kieswetter “has not explained” how spying on cigarette manufacturers nonstop will assist him and Sars in monitoring compliance with tax laws.
As things stand, having 24/7 video surveillance “will be no different than staring into the abyss”.
Fita were adamant that there was no need for new rules as the existing ones give Sars the privilege to search any cigarette company’s premises.
Additionally, said Fita, the Sars Act compels tobacco companies to allow tax officials to set up offices in their factories and warehouses if necessary.
As a result of this, they said, Sars members were stationed at the premises of various Fita affiliates “for no less than 14 months” in the period from 2018 to 2020.
“During that time, these officials were permitted to roam freely around the warehouse, to inspect any goods, to monitor the entire production process and to request documents, books and any other information they may require,” read the court papers.
But the new rules, which Fita members understand to be meant to “combat the illicit trade of cigarettes” and support, are however, trampling on their right to reasonable privacy as well as the same right of their employees as citizens, they said.
“The commissioner [Kieswetter] has not explained why the existing measures are inadequate… and why the 24-hour CCTV surveillance would be more effective, or if indeed effective at all.
“Fita has been unable to find evidence of this system being used successfully anywhere in the world.”
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