Dirty Secrets of the Cigarette Business

Panorama: British American Tobacco's Illegal Practices

Overview

  • Panorama investigates British American Tobacco (BAT), revealing evidence of bribery, industrial espionage, and illegal activities to undermine competitors and boost cigarette sales.

Illegal Activities in South Africa

  • Whistleblowers: Peter Snyders and Francois van der Westhausen, former employees of Forensic Security Services (FSS), detail their involvement in illegal activities on behalf of BAT.

  • Activities:

    • Tapping telephones.

    • Physical surveillance of competitors' trucks.

    • Paying bribes to informants.

    • Using tracking devices.

    • Hiring spies.

  • Knowledge and Approval:

    • Whistleblowers claim BAT was aware of and approved these illegal activities, even specifying the use of funds in invoices.

  • Market Domination: BAT controls 70% of the South African cigarette market, selling billions of cigarettes annually.

  • Pretext of Fighting Illicit Trade: BAT claimed to assist the South African Revenue Service (SARS) in combating illicit trade but allegedly used this as a cover to undermine rivals.

  • Forensic Security Services (FSS): A private security company employed by BAT to gather intelligence and disrupt competitors.

    • The focus was on undermining rivals rather than genuine prosecutions (no successful prosecutions remembered by whistleblowers).

    • Instructions from BAT management to close down opposition.

  • Industrial Espionage: BAT recruited spies and informants within rival companies, paying them for information on production and truck movements.

    • Almost 200 informants were registered and paid.

    • Payments approved by local BAT managers.

  • London Headquarters Involvement: Staff from BAT's London headquarters were involved in managing and paying informants.

    • Corrupt payments made directly from London using pre-paid credit cards, a method often used by organized crime.

  • Targeting Competitors:

    • Factory workers at rival companies like Gold Leaf were paid to report truck movements.

    • Surveillance teams followed trucks, tipping off customs and police to detain them, disrupting business.

    • Tracking devices were placed on competitors' trucks.

  • Gold Leaf Tobacco: Targeted by BAT despite having a clean record with no fines or prosecutions.

    • BAT bribed at least six Gold Leaf workers, from shop floor to managers.

  • Bribery of Officials:

    • Customs officers and police were allegedly bribed to target BAT's rivals.

    • Police units were manipulated through bribery to disrupt competitors.

    • Police cameras were used to watch competitors' factories.

Ethical Implications and Reactions

  • Ethical Concerns: The actions are seen as appalling due to the large multinational status of BAT and the feeling of immunity from prosecution.

  • Reactions: Shock and disgust expressed at BAT's behavior, especially given its status as a blue-chip stock market company.

  • BAT's Response: Claims allegations are not new and have been investigated, denying any actions aimed at impacting legitimate competitors.

Illegal Activities in Zimbabwe

  • Expansion of Illegal Operations: BAT's illegal operations extended to Zimbabwe.

  • Bribery of Robert Mugabe: Documents suggest a bribe was paid to Zimbabwe's former dictator, Robert Mugabe.

    • Documents show a plan to reduce production capacity at factories, ultimately closing three of them.

  • Mugabe Regime Involvement:

    • FSS relied on a local firm due to the Mugabe regime's opposition.

    • When the Zimbabwean company was caught spying, BAT negotiated to free the directors involved.

  • Payment Details:

    • A donation to Mugabe's party, ZANU, was requested to pave the way for negotiations.

    • Payments were made to set up meetings with Zimbabwean government officials.

    • References in documents: SOS Zimbabwe, with payments such as R90,000 (approximately 6,000USD6,000 USD).

    • A bribe of between 300,000300,000 and 500,000USD500,000 USD was requested for Mugabe.

  • Outcome: The directors were released within days of the deal, and FSS resumed work in Zimbabwe for BAT.

Consequences and Investigation

  • Impunity: Concerns raised about the level of impunity and disregard for the law shown by BAT.

  • BAT's Response: Did not deny bribing a dictator but stated it cut ties with FSS in 02/2016.

  • Serious Fraud Office (SFO): The SFO's previous investigation concluded without prosecution due to insufficient evidence.

  • Call for Further Investigation: Whistleblowers urge the SFO to contact them and investigate their bank accounts.

Conclusion

  • Panorama's investigation reveals a pattern of bribery and corruption by British American Tobacco over sixteen years to damage rivals and boost cigarette sales.