Tobacco war may singe Zuma pals
BUSINESS associates of Edward Zuma, the eldest son of the president, are set to come under fire as the SA Revenue Service intensifies its war on illegal tobacco.
Last week, SARS sent a letter to the tobacco industry warning of its plan to target “high-risk” tobacco markets.
The letter details SARS’s intention to crack down on traders who smuggle cigarettes as well as those who dodge tax and excise duty.
The letter implied that the likes of British American Tobacco could be in line for greater scrutiny over sophisticated financial structures that may have the effect of thwarting the tax authority.
Asked to clarify which entities it was looking at, SARS said: “The tobacco sector is rife with noncompliance, and practices are not restricted to any particular entity or person.”
A number of industry sources believe the crackdown will include the controversial Pietermaritzburg business Amalgamated Tobacco Manu- facturing, which is linked to Zuma. ATM is run by Yusuf Kajee, a business associate of Zuma and Paul de Robillard.
The trio are listed as directors of Fastjet Holdings, which plans to offer low-cost flights in South Africa. Kajee and De Robillard have been linked to a high-profile investigation into a “tobacco-smuggling ring”, identified by SARS in 2010.
Zuma is a former director of ATM, and Kajee has confirmed previously that Zuma is a shareholder in the business.
In response to questions this week, a lawyer representing both ATM and Zuma said Zuma “has no business interest in that company”. He said Zuma was removed as a director of the company because of “all the judgments” against him and because his involvement would have impeded its application for a licence to make cigarettes.
However, e-mails show that in March Zuma attempted to help secure visas for ATM’s Chinese staff. Zuma and De Robillard are also copied on emails sent by Kajee to industry players.
In March, SARS and the police seized a “huge consignment” of cigarettes belonging to ATM. Later, eight of ATM’s Chinese staff were arrested.
The SARS letter says that “suspects have in the past attempted to use their access to other high offices or connected individuals to access SARS’s leadership with a view to divert investigations, discredit investigators and obfuscate the merits of cases. It would be worthwhile to note that no single person in SARS can influence a case unduly.”
Sources told Business Times that Zuma held meetings with former SARS commissioner Oupa Magashula, who was fired this year. Insiders said Zuma tried to leverage his family name to defer scrutiny by tax officials.
The meetings are said to have taken place before SARS gave ATM a licence in May.
The 2010 investigation resulted in Kajee’s previous business, Delta Tobacco, being shut down. SARS is prohibited from granting a licence to any entity known to have broken the Tax and Excise Act. This led to speculation that Magashula leant on SARS officials to grant ATM its new licence.