British American Tobacco tactics in Africa a form of ‘modern-day colonialism’ says report

By Jaysim Hanspal
Posted on Tuesday, 5 October 2021 09:18

A man lights a cigarette outside a bar in central Harare, Zimbabwe, May 12, 2017. REUTERS/Philimon Bulawayo

The British American Tobacco group has been making headlines for unlawfully sabotaging their competitors with aggressive tactics aimed to dominate the African market. Some of its tactics are being deemed "a form of modern-day colonialism".

A report published on 14 September made headlines after revealing how the multinational British American Tobacco (BAT) group has been sabotaging their competitors to dominate the African market. The epitome of Big Tobacco in Africa, BAT currently has the largest market share in two-thirds of the country.

Corruption on the cheap

With Western countries generally consuming fewer cigarettes and tobacco, as it has become increasingly less socially acceptable, the African market is a prime target given its young population, with 60% under the age of 24. Across the continent, 13 million women use tobacco products, including 13% of young adolescent girls.

“As smoking rates decline in the West, the industry has a problem: one in two of its long-term users die from smoking-related diseases, and it needs to replace those customers,” Andy Rowell, a senior research fellow at the Tobacco Control Research Group (TCRG) at the University of Bath, who wrote the BAT investigation in conjunction with the global anti-Tobacco organisation STOP , tells The Africa Report.

Researchers were particularly surprised at how cheaply BAT was able to buy influence in the country. With 236 payments totalling $601,502 they were able to bribe politicians, rival companies, journalists and farmers. The company used less than a million dollars to control the chain from production to policy, whilst causing great harm to public health and public funds.

However, as payments were verified through a two-step verification system, many have been left out of the $601,502 total, “an underestimate for the true amount” says Rowell. According to a study by the British Medical Journal in 2017, the economic cost of smoking was estimated to have been $1.4trn, with lower-income countries shouldering 40% of this cost.

The plot thickens

BAT has also been criticised after an investigation by the The Bureau of Investigative Journalism (TBIJ) revealed the company had used FSS, a South African security contractor often used for BAT’s dirty work, to bribe Zimbabwe’s former president Robert Mugabe after three directors were arrested for conspiracy to commit robbery. The amount is said to be between $300,000 and $500,000.

Article 5.3 of the World Health Organization Framework Convention on Tobacco Control (WHO FCTC) legally obligates parties to the treaty “to protect their public health policies related to tobacco control from commercial and other vested interests of the tobacco industry.” By bribing regulatory agencies and governments, BAT has managed to circumvent article 5.3 entirely, averting compliance that would effectively topple their monopoly.

BAT’s official policy on corruption, as stated on its website when this report was written, is: “Corruption causes distortion in markets and harms economic, social and political development, particularly in developing countries. Our Standards of Business Conduct make clear that it is wholly unacceptable for our companies and employees to be involved or implicated in any way in corrupt practice.”

Big fish

BAT is considered to be the largest shark in a group of dominant competitors within Africa. There is “vicious competition” in the continent between BAT and companies such as Gold Leaf Tobacco Corporation, Carnilinx and many others in South Africa, Corné van Walbeek, a professor in the School of Economics at the University of Cape Town and Director of the Research Unit on the Economics of Excisable Products (Reep), tells The Africa Report.

So wherever the regulations and the set-up is such you’ve got a decent chance of getting away with it, I would speculate that they would do everything to get away with it.

In 2019, Simon Rudland of Gold Leaf Tobacco was shot just outside the Fair Trade Independent Tobacco Association (FITA) in Johannesburg, in an attempted assassination attempt suspected to be from one of its competitors.

“I don’t believe for a moment that they’ve [BAT] suddenly become good corporate citizens. They have too much to lose and too much at stake,” says van Walbeek.

BAT denies any wrongdoing and has responded to the accusations with the following statement in August 2021: “BAT has long been committed to fighting the global criminal trade in illicit tobacco. As part of those efforts, BAT has sought to assist national law enforcement agencies in providing support and, in the past, intelligence on suspected illicit operators.

“We emphatically reject the mischaracterisation of our conduct by some media outlets. Our efforts in combating illicit trade have been aimed at helping law enforcement agencies in the fight against the criminal trade in tobacco products. The allegations now being made against BAT have been covered extensively in various news media over several years. They are not new and have been investigated.”

Although BAT had been under investigation by the UK’s Serious Fraud Office (SFO), the five-year inquiry was abandoned, citing insufficient evidence. This is despite key witnesses who claim the SFO inexplicably did not interview them.

In an email to The Africa Report, a spokesperson for the SFO denies these claims saying: “Our case team will have spoken to all relevant individuals who could help progress our lines of enquiry. To maintain a focused investigation we need to consider whether an interview is likely to provide reliable information to progress our investigation before going ahead.”

But is this smoking gun the beginning of the end for BAT? The full report revealed one person was paid using the Travelex system in South America, potentially calling into question the handling of BAT’s other subsidiaries. “If it is that systematised within BAT’s financial structures and systems, and with senior people involved, is this just happening in Africa?” ask Rowell.

For van Walbeek, BAT’s actions in South Africa were aided by “state capture”. But he says he doesn’t believe that BAT is the only “bad corporate apple.”

“So wherever the regulations and the set-up is such, you’ve got a decent chance of getting away with it, I would speculate that they would do everything to get away with it.”

Colonial company

The report suggests that “BAT ultimately used paltry sums of payments as a form of modern-day colonialism to exploit people, resources and governments in Africa for its own benefit.” For Rowell, this colonial-corporate mindset is reflected in the company’s structure.

“Many of the senior decision-makers are white…the control structure goes back to London, and they have a monopoly in many African countries, and they want to exploit the continent to drive growth.”

Carol McGruder, the founder of the African American Tobacco Control Leadership Council (AATCLC), is not surprised by the accusations in the report. In her experience, Big Tobacco’s relationship with communities is all business; but it does not mean African communities are not disproportionately affected. “Because of our status in the world, because of the enslavement of African people, we are so much more vulnerable than most people,” she says.

The AATCLC is currently suing the Food and Drug Administration (FDA) for its inaction against the use of mentholated products, which they say are marketed heavily towards the African American market. But McGruder does not believe the industry will be reprimanded anytime soon. “It is a bitter pill to swallow because they are just allowed to do whatever they want and no one is held personally accountable.”

 It is a bitter pill to swallow because they are just allowed to do whatever they want and no one is held personally accountable.

Communities Under Seige (CUS) is another group McGruder runs, which stands against the “predatory activities” of Multi-National Tobacco companies. It previously worked with the city of San Francisco, and partnered with other anti-tobacco organisations in Africa, sharing information to stand together against the big conglomerates.

McGruder has one share in BAT stock and intends to attend a shareholder meeting in London, something her share allows her to do. As a result, she suspects she has been surveilled; her colleagues are often asked about her in depositions, and BAT has used intimidation tactics like taking photos of her in close range at their meetings in the US.

BAT is still under investigation by the US Department of Justice and the Office of Foreign Assets Control, and other jurisdictions including Kenya.

Some headway

Between 2002 and 2030, tobacco-attributable deaths are projected to double in low and middle-income countries, including in Africa. 42,000 South Africans die every year from smoking-related diseases.

But some African nations are making headway with preventative legislation.

  • In Chad, the 2020 Finance Law introduced a 30% rate of excise duty and a $0.16 specific tax on each cigarette pack, with 30% of the revenue allocated to the National Tobacco, Alcohol and Drug Control Programme.
  • In February 2020, Ethiopia passed legislation to introduce a specific excise rate of $0.25 on each cigarette pack, including a 30% tax on production.

 

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