Dirty tricks claims resurface as Project Smoke is revealed

CLAIMS that British American Tobacco (BAT) has been involved in corporate espionage in South Africa first surfaced in 2002 when a high court judge granted an Anton Pillar search and seizure order on the company’s local office.

At that time, tobacco rival Apollo, run by millionaire Hennie Delport, claimed that BAT had bugged his office at least three times.

In 2008, a research paper titled “BAT and the insidious impact of illicit trade in cigarettes across Africa”, drew evidence from internal BAT documents to argue that the company had been involved in smuggling cigarettes across Africa while ostensibly campaigning against the illicit trade in tobacco products.

Business Times has obtained documents in which government intelligence officials, understood to be from the State Security Agency, set out their plans for setting up a covert operation, Project Smoke, intended to uncover whether BAT had broken any laws.

The Project Smoke memorandum, marked “Private and confidential”, said that “initial evidence shows that [BAT] has advanced its corporate interests by systematically exploiting strategic opportunities to supply contraband cigarettes throughout Africa”.

The memorandum laid out a plan for finding evidence of BAT’s “complicity . . . in the illicit trade in cigarettes”.

“The most effective way to collect information and intelligence within [the] industry is to trade in the market,” it said.

State Security Agency agents “set up” tobacco-related organisations to report on what was going on in the industry.

Asked about Project Smoke, State Security Agency spokesman Brian Dube said the agency “does not comment on its investigations”.

Well-placed sources said that the state’s secret investigation into BAT’s activities was derailed when BAT hired at least one of the state’s agents.

One agent described how intelligence operatives bugged the first meeting of the Fair Trade Independent Tobacco Association, set up to represent smaller tobacco merchants which typically sell cigarettes in competition with BAT.

The equipment used by the state to bug the association’s meeting was said to have been supplied by private investiga- tions company Forensic Security Services, which is run by Stephen Botha.

However, Forensic Security Services has also been contracted to do work for BAT.

An invoice obtained by Business Times shows that Forensic Security Services billed BAT for R1.38-million in December 2012 for a “surveillance trailer” and other equipment associated with its “command centre”, including “satellite equipment” and “fibreoptic cables”.

Other evidence in this newspaper’s possession shows that Forensic Security Services has mounted surveillance operations on BAT competitors in South Africa and Zimbabwe, and planted a tracking device on a truck belonging to one of BAT's rivals.

Its employees have accompanied state agencies’ officials on raids on the premises of BAT competitors.

Brian Finch, managing director of BAT South Africa, said his company worked with Forensic Security Services and had never seen illegal behaviour.

Forensic Security Services in effect functions as the intelligence arm of the Tobacco Institute of SA, which is funded primarily by BAT.

The institute’s chairman, Francois van der Merwe, said his organisation “does not engage in any illegal activity whatsoever and we hold our service providers to the same conditions”.

When asked, Forensic Security Services’s Botha refused to respond to questions about his company’s activities on the grounds of confidentiality agreements with clients.