Category: Illicit Trade

Tobacco Mogul Cleared From Extremism Report

Tribert Rujugiro Ayabatwa (Photo: Pan African Tobacco Group)
Tribert Rujugiro Ayabatwa, an industrialist with ties to the tobacco industry, has welcomed the removal of his name from a report linking him to extremism and illicit trade in Africa.
The April 2021 report, “An Unholy Alliance: Links Between Extremism and Illicit Trade in East Africa,” contained references to Tribert Rujugiro Ayabatwa and his PTG group of companies.
Through his legal counsel, Ayabatwa made representations to the legal counsel for the report’s author, Sir Ivor Roberts, as to Ayabatwa’s history as a Pan-African industrialist and philanthropist operating across Africa and the United Arab Emirates. All references to Ayabatwa in the Roberts’ report have now been removed.
Ayabatwa welcomes this development and is happy to put this matter behind him.
“Regrettably, due to the complexity in the persisting instability and conflict in eastern and central Africa, it is nearly impossible for foreign researchers and analysts to fully grasp positive and negative actors in the region,” said Senior Advisor David Himbara.
“In Ayabatwa’s case, for example, his Congo Tobacco Company has been the only manufacturing business operating in the eastern Democratic Republic of Congo for over four decades. The company is one of the few providers of legitimate employment opportunities in a region devastated by instability and war. It is therefore ironic that Ayabatwa was lumped together with illicit trade and extremism in the Unholy Alliance: Links Between Extremism and Illicit Trade in East Africa report penned by Sir Roberts. “
Tribert Rujugiro Ayabatwa is the founder and controlling shareholder of the Pan African Tobacco Group, Africa’s largest indigenous manufacturer of tobacco products. The company, which in 2018 celebrated its 40th year of operations, manufactures cigarettes in Angola, Burundi, the Democratic Republic of Congo, Nigeria, South Sudan, Tanzania, Uganda and the United Arab Emirates.
Ayabatwa is also one of Africa’s leading philanthropists, according to a press release put out by him. He has invested in education, food security, afforestation and water-access. Through his non-profit foundation, Ayabatwa strives to help young people to gain the practical engineering experience required to enter the job market in Africa. More recently, Ayabatwa assisted governments in the battle against the Covid19 pandemic by contributing medical equipment and foodstuffs during the lockdowns.
Tobacco Reporter profiled the Pan African Tobacco Group in August 2013.
December 24, 2021
Belarusian Cigarette Smuggling at New High

Photo: Tricky Shark
The number of Belarusian cigarettes smuggled through Lithuania is growing at a record pace, reports Belsat, citing figures from Lithuania’s Customs Department.
In the first three quarters of 2021, Lithuanian law enforcement officers seized 328 million smuggled cigarettes, compared to 297 million in 2020.
This year, 16.7 million cigarettes were seized on the railroad alone, twice as many as last year. Cigarettes were usually hidden in bulk cargoes, among fertilizers and crushed stone. The problem is exacerbated by the fact that there is no X-ray equipment at some stations.
Illegal cigarettes account for a quarter of the cigarette market in Lithuania. Of all smuggled cigarettes, 84 percent were produced in Belarus.
Belarus’ state-owned Neman factory has been fingered as a major source of illicit cigarettes in the EU. Around 10 percent of the 5.5 billion cigarettes sold illegally in the U.K. annually are believed to have originated in Belarus.
In September, British American Tobacco in suspended the contract manufacturing of its brands at Neman, following international criticism for Belarus’ heavy-handed suppression of protests against the outcome of last year’s disputed presidential elections.
Accounting for 70 percent of domestic cigarette sales, Neman effectively has a monopoly on the Belarusian tobacco market. Washington says it is one of several entities that receive preferential treatment from the regime in return for providing funds to Lukashenko.
December 20, 2021
Philippines Cracks Down on Unregistered Brands

Photo: Negro Elkha
The Philippines’ The Bureau of Internal Revenue (BIR) has ordered its field officers to seize unregistered cigarette names in a bid to curb smuggling, reports The Manilla Bulletin.
BIR Commissioner Caesar R. Dulay provided regional and district offices with an official list of cigarette brands with their corresponding producers and importers.
“Any product not included in the list shall be considered unauthorized subject to seizure in accordance with existing rules and regulations,” said Dulay.
Dulay also instructed producers and importers to register their new products before launching them in the market.
“Newly registered products will be included in the updated list of products in the BIR website within 30 days from the date of registration,” he said.
Cigarette manufacturers have been complaining for years about revenue losses due to rampant distribution and sale of untaxed cigarettes.

December 14, 2021
No Paper Tiger

SWM’s new technology allows for the creation of patterns, designs and logos inside the gum strip without compromising sticking quality. (Photo: SWM)
Schweitzer-Mauduit International has introduced a new gumming technology to help rolling paper manufacturers protect their brands against counterfeiting.
By Stefanie Rossel
In recent years, cigarette rolling papers have been in high demand; the global roll-your-own tobacco product market, valued at $7.49 billion in 2020, is expected to expand at a compound annual growth rate of 4.2 percent from 2021 to 2028, according to Grand View Research. The increasing preference for handrolled or handmade cigarettes, a cheaper alternative to factory-made cigarettes, has been driving the demand for roll-your-own products. It has been aided by the legalization of cannabis for medical and recreational purposes in a growing number of countries around the world.
As demand for rolling papers has increased, so has counterfeiting of these products. Reports on seizures of significant quantities of fake products, predominantly in the U.S., have repeatedly made the headlines. Rolling paper manufacturers have filed civil actions seeking monetary and punitive damages and injunctive relief from those who traffic in counterfeit goods and who have profited from their sale and distribution. Several leading suppliers of rolling papers have installed dedicated sections on their websites that encourage the reporting of fake products.
While manufacturers fear the financial damage and the harm counterfeit papers cause to their brands’ image, fake products also pose a grave risk to consumers as they are often manufactured using unsafe production practices and unknown and hazardous or toxic ingredients, such as chlorine bleach or petroleum-based adhesives.
Pierre Yves Kervennal
To support its customers in protecting their brands against counterfeiting, Schweitzer-Mauduit International (SWM) has introduced a new generation of gumming technology. “Our new gumming technology is a completely different approach of the existing gumming technology,” explains Pierre Yves Kervennal, product manager for rolling papers at SWM’s engineered papers business unit. “It’s a new space of communication and enhancement of the brand for our customers. The use of natural and colored gum, perfectly in accordance with the legislation, allows us to create patterns, designs and logos inside the gum strip without diminishing the ‘sticking’ quality of the Arabic gum. This opens new opportunities for our clients to differentiate on the market but also communicate with their customers. We called this new service of customization of the gummed band ‘Be Unique.’”
According to Kervennal, tobacco companies are battling counterfeits every day. “It’s not only a financial loss for them but also a reputation hazard,” he says. “And to be fair, the paper industry didn’t bring a lot of solutions to the market over the recent years. Of course, the filigreed papers and the good market practices such as ‘Know Your Customer’ already protect our customers and make it really hard for forgers, but, unfortunately, this is not 100 percent bulletproof. Our clients now have a new weapon at their disposal. Our innovative and patented technology allows to add an additional layer of complexity whilst giving them additional marketing opportunities. In fact, ‘Be unique’ is just an example of the bank note strategy; each time a new bank note is introduced on the market, new technologies are added to the paper to make it safer.”
Driven by Cannabis
In Europe and the Middle East, rolling papers are a historical product of the tobacco industry, Kervennal points out. As such, they face the same kind of issues as any other products from this industry. “It means that major brands can be copied, and with the multiplication of the new distribution channels, the risk of buying counterfeit products is growing for customers. During the Covid crisis and the border closures, we have seen legal markets grow about 10 percent just because the counterfeit products could not come through anymore. In the U.S., this is a very dynamic and trendy market, with some brands already well installed and providing high-quality products. These brands are going to be the ones who will have to fight against counterfeiting—the more dynamic the market is, the more attractive it is for unfair players.”
Responsive to consumer demand, SWM is increasingly focusing on solutions that cater to the growing market for recreational cannabis. “In terms of product design, we develop more and more specific grades and product for cannabis use, such as hemp and unbleached paper,” says Kervennal. Another trend in the roll-your-own market is a desire for differentiation. “We observe an increasing demand from companies creating their own brands and looking for new visual design.”
In the U.S., the RYO papers segment is driven largely by the cannabis market. “Consumers in that market are looking for all-natural products, typically hemp-based products, and brand owners are looking to differentiate their offering through customization,” says Kervennal. “Some additional trend we see in the United States is continuing legalization. Right now, there are 18 states plus the District of Columbia where adult use of cannabis is legal, and that will continue to grow over time. A last trend that we do see is celebrity brand endorsers where brand owners are using celebrities to endorse their brands on social media, which increases demand for roll-your-own papers.”
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

December 1, 2021
Russia to Crack Down on Counterfeit Goods

Photo: Oleg
Russian Prime Minister Mikhail Mishustin has approved new measures to prevent the illicit trafficking of counterfeit goods, which will be effective until 2025, reports Lexology.
The new anti-counterfeiting strategy will include legislation aimed at raising penalties for the manufacture, storage, transport and sale of counterfeit and fake goods, including alcohol and tobacco. Rules are being drafted that require mandatory certification for nicotine-containing products.
Lawmakers are also developing a new mechanism to hold property owners accountable for goods being sold in the commercial spaces they manage.
Meanwhile, the Russian government is amending procedural and criminal codes governing the storage and destruction of seized counterfeit goods. It will also address what is to be done with the equipment used to produce the fake goods and transport them.
Additionally, the government may develop a database of unlawful manufacturers, importers, suppliers and sellers.
There is also talk of developing a labeling-and-tracking system. Beginning this year, random inspections of accredited businesses may take place in order to confirm that they are complying with requirements directed at preventing the sale of counterfeit goods.
November 29, 2021
Lebanon Picks Anti-Counterfeit Technology

David Thomas, sales director at OpSec Security, presenting a commemorative plaque to Regie Libanaise Chairman Eng. Nassif Sobhi Seklaoui.
OpSec Security and Scopsis are partnering with the Lebanese tobacco monopoly, Régie Libanaise des Tabacs et Tombacs, to combat the trade in illicit tobacco.
As part of the deal, OpSec will provide authentication stamps to Régie Libanaise, enabling the protection of the company’s products, beginning with the market-leading Cedars brand of cigarettes. OpSec’s proprietary Insight software platform will be utilized to provide the authentication and traceability of each licit stamped pack throughout the supply chain.
OpSec’s solution will provide advanced mobile authentication of stamp security features and product traceability for Régie Libanaise enforcement staff as well as customs and border officials. Retailers and consumers within Lebanon will also be empowered to authenticate packs and gain visibility of product provenance using the Insight customer engagement functionality, freely available on any mobile device.
OpSec will further utilize its web monitoring technology to ensure any attempt by illicit traders to sell counterfeit stamps via online marketplaces, websites or social media will be captured, removed and reported to enforcement officials.
“As well combatting illicit trade and protecting much needed revenues for the Lebanese Republic, the first phase implementation is a proactive step towards adopting the provisions of the World Health Organization’s Framework Convention on Tobacco Control,” said Mohamad Ali Ahmad, project manager at Beirut-based Scopsis, in a statement. “The project will be amongst the first of its kind in the region and represents a beacon of hope for Lebanon and a demonstration of its commitment to its roadmap for reforms.”
Illicit trade is estimated to account for around 25 percent of the Lebanese tobacco market, causing the government to miss between $200 million and $250 million in revenues annually.
November 22, 2021
MOP2 to ‘Strengthen Implementation’ of Protocol

Photo: Tobacco Reporter archive
The second Meeting of the Parties (MOP2) to the Protocol on Eliminating Illicit Trade in Tobacco Products ended today. This session built on the foundations of the treaty that only entered into force three years ago. The meeting was conducted virtually due to the ongoing Covid-19 pandemic.
The three-day session saw a series of key decisions adopted, including the launch of an innovative plan to ensure reliable funding for the protocol. To strengthen implementation of the protocol, parties agreed to set up a new investment fund to help support the drive to end the illicit tobacco trade.
This new initiative will source financial contributions beyond the traditional health sector, establishing a capital investment fund, the earned revenue of which will be used to support the activities of the protocol.
The protocol provides tools for preventing illicit trade by securing the supply chain. MOP2 has developed a road map that will help improve the global track-and-trace system. The objective is to secure the tobacco supply chain and prevent the manufacture and circulation of illicit tobacco products. Parties to the protocol also agreed to develop a global network so that they can exchange information on the movement of tobacco products.
Fifty-nine parties to the MOP attended the session. The MOP2 also agreed to strengthen international cooperation to ensure greater assistance between parties—a step that is expected to accelerate the adoption of best practices and support the introduction of innovations. The parties also adopted a strategy for mechanisms of assistance and mobilization of financial resources to deepen the implementation of the protocol.
“Taxation is the single most effective tool for reducing tobacco use, but illicit trade in tobacco products undermines the effectiveness of tax policies,” said Tedros Adhanom Ghedreyesus, director general of the WHO, in a statement. “Illicit tobacco products also exacerbate inequalities because they are often cheaper and more accessible to vulnerable populations, such as young people.”
Adriana Blanco Marquizo, head of the WHO FCTC secretariat, said, “The protocol also supports us on matters that have been linked to our very safety and security. It is recognized that illicit trade in tobacco products is connected to transnational organized crime, raising income for its activities. Indeed, we have many reasons to work together to strengthen the effectiveness of the protocol.”
The next Meeting of the Parties to the Protocol will be held in Panama in 2023, along with the 10th Conference of the Parties to the WHO Framework Convention on Tobacco Control.
November 17, 2021
Illicit Trade Protocol Parties Convene

Photo: BAT
The participants in the World Health Organization Protocol to Eliminate Illicit Trade in Tobacco Products will convene Nov. 15–18 in the so-called meeting of the parties (MOP2). The virtual meeting follows the ninth Conference of the Parties to the Framework Convention on Tobacco Control, which concluded last week.
The protocol, which entered into force in 2018, aims to combat illicit trade in tobacco, which according to the parties undermines tobacco control policies and public health. Parties to the protocol have enacted or strengthened national legislation aimed at tackling illicit trade in tobacco products.
Every year, an estimated $47 billion is lost globally to illicit trade in tobacco products. To reduce this loss and improve the effectiveness of tobacco control legislation, the parties this week will consider ways to move forward on implementation of the protocol, including amplifying its effects through improving international cooperation.
“We have serious work to conduct at this meeting,” said Adriana Blanco Marquizo, head of the FCTC secretariat, in a statement ahead of the gathering. “Not only does the illicit trade in tobacco products undermine progress being made on taxing tobacco products, but illicit trade is linked to cross-border organized crime and other activities which threaten our security.”
Among other topics, the parties will discuss ways of securing the supply chain of tobacco products; tracking and tracing technologies are key to achieving this objective. They will also propose the creation of a $25 billion fund to help finance the protocol. This potential new source of financial contributions is targeted at investors outside the traditional health sector.
Along with parties, there will be several state nonparty observers attending as well as a number of tobacco control organizations whose request for observer status is expected to be accepted by the MOP2.
The number of parties to the protocol will soon reach 64 as the treaty enters into force in the most recent country to have ratified it.
November 15, 2021
Trade Body Urges Changes to EU Directive

Photo: ITSA
The International Tax Stamp Association (ITSA) is calling for improvements to the EU Tobacco Products Directive (TPD), which is currently undergoing a mandatory review.
Among other things, the association believes the TPD should be more prescriptive on tobacco product security features, thereby avoiding countries adopting too many different features, which creates confusion.
The tobacco industry’s responsibilities should be limited to ordering, applying and reporting the use of tax stamps, with all other responsibilities reassigned to independent providers selected by government authorities.
ITSA also recommends that the importance of tax stamps be recognized in the legal language of the EU TPD. Therefore, any new version of the directive should encourage the adoption of legal instruments to introduce tax stamps by those member states that currently don’t use them, as well as introduce, as a transitional measure, a security label designed and procured by the issuing authority.
Juan Yanez
Another recommendation is for the language used to describe tax stamps to explicitly require them to have traceability functionality. This is an essential tool for the security of the system and complements the unique identifier directly printed or marked on the product pack. It also improves tracking of the issuance of the tax stamp, secures tighter controls and limits the impact of any fraudulent activity.
“Now, more than ever, the time is right for us all to come together as a united force over illicit trade and lost tax revenues,” said ITSA Chairman Juan Carlos Yanez Arenas.
“With the tobacco traceability requirements of the WHO FCTC Protocol entering into force in 2023, countries that are party to the Protocol have two years left to implement these systems, and we can help them with this by offering practical guidance based on proven best practice. We have identified the best features of the EU TPD, as well as those that can be improved on, which can be taken and used to deliver world class programs that everyone involved in the tobacco sector stands to benefit from.”
November 12, 2021
Revenue Service Urged to Step up Enforcement

Photo: syahrir
The South African Revenue Service (SARS) is failing to use all the tools at its disposal to combat the illicit cigarette trade that is depriving the country of billions of rand in desperately needed taxes, British American Tobacco South Africa (BATSA) wrote in a press release.
On the day that independent research revealed tax-evading cigarettes are now on sale in almost half of stores nationwide, SARS Commissioner Ed Kieswetter appeared to admit defeat when he told MPs the illegal tobacco trade was a problem “significantly bigger than SARS.”
In response, BATSA General Manager Johnny Moloto said: “SARS has the power to tackle the manufacturers of illicit cigarettes and dramatically reduce the huge losses to our fiscus,” said BATSA General Manager Johnny Moloto. “But, for some reason, they are unwilling or unable to act.
“Production Counter Rules were instituted more than a year ago and this should mean all manufacturers are accountable for every cigarette they make. Yet SARS does not seem to be adequately enforcing their policy that would ensure these regulations are being followed.
“SARS published draft CCTV camera rules for public comments two months ago. In light of the commissioner’s own admission, we are calling on SARS to implement these rules as of January 2022 instead of June 2022 to strengthen the control of local production.
“All manufacturers should demonstrate that they follow the Production Counter Rules or explain what they are trying to hide.”
“SARS officials told MPs on Tuesday that the biggest problem is not smuggling, but illicit cigarettes being produced in this country,” said Moloto.
“They know the problem, and they should know who is responsible. Instead of throwing up their hands in despair, they should follow the money and catch the criminals who are siphoning billions out of our beleaguered economy.”
November 11, 2021