Tobacco Smuggling in Africa

Tu2TL

As the anti-tobacco world turns its gaze to the mass smuggling in Africa, we need to be looking at Europe’s policy on Codentify, which could make worldwide smuggling even worse.

For years now, people have been taking notice of the sickening levels of tobacco smuggling around the world. As research as shown, not only does it contribute to failings in public health, whereby regulatory bodies can’t properly identify the ingredients of smuggled tobacco, but also it has been linked to various terrorist groups who use their profits from counterfeit tobacco to commit violent atrocities across the world.

 
According to the Times of Malta, worldwide tobacco smuggling is up 28% this year.

 
But nowhere is tobacco smuggling more rampant than in Africa. Just last week, Front Page Magazine did an expose about how tobacco smuggling supports worldwide terrorism, and they put a particular spotlight on the illegal trade in Africa. They brought up our old friend Mokhtar Belmokhtar (aka “Mr. Marlboro”) as a prime example of how profits from the African counterfeit tobacco trade is funneled into terrorist organizations like Al-Mourabitoun.

 
All over the continent, authorities are catching people trying to smuggle cigarettes. Like this story from last week about two Zimbabwean truck drivers smuggling a cargo of illicit cigarettes valued at N$11.3 million (US $800,000) through Namibia.

 

According to Joseph Megero, Director of Africa Tobacco-Free Initiative an initiative that seeks to advance development and advocacy for tobacco control measures regionally: “Tobacco companies tend to raise the counterfeit issue with governments in Africa whenever the governments want to raise taxes on tobacco  products. This is done to ensure the poor smoker is still able to sustain his addiction to tobacco by affording to buy cigarettes.”
Many more stories like these come in daily. Some with more, some with less. But, considering the rampant corruption in Africa, this is only the tip of the iceberg, since these stories are those where the authorities do their jobs without taking bribes.
Unfortunately, the problem will only get worse before it gets better. As corruption in Africa deepens, and terrorist organizations and their adherents get more desperate, smuggling tobacco will be their ultimate cash cow.
Meanwhile, the EU (The recipients of much of this tobacco) is still trying to get their act together to prevent an influx of illegal tobacco, which could trigger a continental health crisis as well as billions of euros lost from unreported taxes.
Now, you would think that the first people that would want to put a stop to this are the tobacco companies themselves, Big Tobacco. After all, if someone is smuggling their products it must mean that they are stealing it right? It must mean that the smugglers are taking profits away from Big Tobacco.
You would be wrong. In fact, smuggling has a positive effect on industry executives. For one, the industry avoids millions of Euros in taxes since their product is traded out of the sight of authorities. That also means cheaper production costs per cigarette overall and a higher markup. And lastly, if consumers are paying less for cigarettes, it means there are more likely customers – especially those with less disposable income. Namely, the young and poor. Counterfeit cigarettes are a great way for Big Tobacco to get young kids addicted early – giving the industry a handful of long term customers.
But while policymakers around the world scramble to find a legitimate technology that would properly track-and-trace sales of tobacco, why would Big Tobacco want to get involved if it is benefiting from smuggled tobacco?
Because if you can manipulate the technology, you can manipulate the entire system. You could essentially oversee your own counterfeit empire.
Which is why it would be in their own interest to work with the EU to develop a signature technology as the choice fight against tobacco smuggling.
And that’s exactly what’s happened with Codentify. Developed and lobbied by Big Tobacco in order to be the puppeteers of a vast network of tobacco smuggling cells across the world, and particularly in Africa, where smuggling is currently off the charts. But it’s possible that Codentify’s imminent implementation into EU policy has revved up efforts to trade illicit cigarettes across the Mediterranean and in and out of Europe, where cigarette taxes are heavy.

 

That is why it’s imperative that Codentify not be allowed to be implemented. If it is chosen as the EU’s official technology, time will tell its effect. Smuggling – already at crippling levels – will skyrocket to unfathomable heights.
And meanwhile, Big Tobacco will be rolling in the riches; chuckling at how easily they duped the European Commission to take the system that they engineered for the very purpose of filling their own pockets.
So as the murmurs of Codentify’s instatement continue to fill the halls of the European Parliament, and as its members deliberate the pros and cons of the technology while Big Tobacco lobbyists indoctrinate and inflict their agenda – those with common sense must stand up and warn the people – and the politicians – what they are bringing upon themselves.
Whether it’s Codentify, Inexto or whatever the next front company Big Tobacco uses to market their useless and self-serving technology, it cannot be allowed to pass.

Could the EU breaking from PMI Be a Sign of Things to Come?

The European Union has decided to end its longtime partnership with Philip Morris International. The controversial $1.255 billion partnership was initially set up in order to combat the issue of tobacco smuggling in the free-flowing continent. Many perceived this partnership to be unnecessary legitimization of a corrupt industry by the EU.

 

Now, finally, the EU has decided to wise up to this colossal mistake in judgment.

 

The Financial Times consulted tobacco control expert Luk Joossens, who has been lobbying against the EU working with tobacco companies for years. He said that, “There is always suspicion from other countries because the EU collaborates with the industries.”

 

He is right, and hopefully this move is a sign of things to come. The EU should know that collaborating with tobacco companies to “fight” issues within their industry is profoundly counterproductive. And such counter measures end up costing the European taxpayers billions at their own expense.

 

I expect and hope that the EU will continue to down the path they have started and reject working with companies- especially tobacco companies- to regulate their own industry. Among the EU’s first prerogatives should be to avoid any conflict of interest.

 

That goes well for Codentify. As we know, Codentify is a deeply flawed system that was actually developed by the tobacco companies themselves. Not only is their involvement an issue, but the technology itself is dramatically subpar, and will do nothing to prevent more smuggling. If anything, it might just increase it (and the companies will benefit).

 

Cigarette smuggling has been a major issue in Europe for some time. Not only is there a major circumvention of tax revenue through illegal sales, but the lack of monitoring can prove harmful for the average smoker, since no government officially oversaw the ingredients in the cigarette.

The EU has long been considering Codentify as their new mandated track-and-trace system for smuggling. Many tried to counter the controversy by pointing to its recent sale to Enexto, which some claim to be a legitimate third party.

 

 

But, alas, this is only a front to keep the power in the hands of the tobacco industry.

 

 

At any rate, it’s incumbent on the EU to reject Codentify outright and find a more suitable-and neutral-track and trace system to regulate tobacco smuggling. And these new signs of the EU backing off from Big Tobacco are a sight for sore eyes.

 

 

Let’s hope the EU pushes the envelope, and rejects capitulation to Big Tobacco. With that, European citizens can be secure in the fight against illicit cigarette sales.

 

Sale of Codentify to Inexto Means Business as Usual for Big Tobacco

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Today, Peter Teffer from the EU Observer published a hard hitting article about the DCTA’s sale of Codentify to what at first glance seems like a third party company. I felt it important to provide as much detail as possible to shed even more light on the important issues he raised.

 

Just a small reminder before we proceed – DCTA stands for “Digital Coding & Tracking Association”, which is a very “techy” brand-name for an association consisting of the Big Tobacco companies (I guess Deception Campaign for Tobacco Affiliates would sound a bit too sincere…).
It seems that the industry’s efforts to portray Codentify as a legitimate “Digital Coding and Tracing” solution have finally crumbled, because at the beginning of the June DCTA’s official web page released a statement that all of its technology was allegedly transferred to an independent third party company named “Inexto”. If that was entirely true, it would be good news for the advocates of an independent Track & Trace solution, such as the FCTC protocol and this blog – but unfortunately in this case, it is only an additional layer of deceit.
The press release states that Inexto, an affiliate of the French group Impala, has acquired the DCTA’s Track & Trace and product authentication technology (i.e. Codentify). It must raise a question – who is really behind this Inexto company that decided to buy a controversial product such as this?
Meet Inexto’s managing director, Philippe Chatelain. You might know him from his former role as PMI’s Director Product Tracking Intelligence & Security in the past 14 years (as a matter of fact, his LinkedIn page states he still holds this position):

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Moreover, according to Codentify’s European patent registration (EP1719070) he is also the inventor of Codentify(!), along with Erwan Fradet:

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Erwan Fradet was a senior engineer in PMI’s tracking and security activities over the past 10+ years, in fact, since 2010 he was Codentify’s project manager. But where does he work these days? He is Inexto’s new Chief Technology Officer!

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And the list goes on… Inexto’s Chief Operating Officer, Patrick Chanez, is also a senior PMI manager:

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And so is Inexto’s Development Manager, Nicolas Stubi:

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The question that remains unanswered is: What type of severance and pension plans did these employees receive from PMI?

 

By now the bottom line is clear: Inexto did not acquire Codentify – Inexto IS Codentify.
Same people, same interests. In fact, these are high ranking PMI managers, who were (and still are) in the core of Codentify operations. A name change and a couple of money transfers from one corporation to another does not change this reality, and simply cannot be enough to satisfy the rightful demands of the FCTC protocol for a truly impartial solution, not one that has a decade’s worth of ties to the tobacco industry.

Monumental decision by the EUs High Court Leaves out Codentify

It was day for anti-tobacco activists in Europe as its High Court confirms anti-tobacco laws, but this modest win still does not address Codentify, which could prove most harmful to citizens.

Recently the New York Times’s columnist David Jolly reported on the recent upholding of new anti-tobacco laws that will take effect at the end of May. The laws included in the EU High Court decision were the legal right of the legislative coalition to restrict and regulate the newly established e-cigarette industry, a ban on menthols, as well as obliging all cigarette packs to contain an image of diseased lungs, also known as “Plain Packaging”.

Despite this monumental confirmation of anti-tobacco laws, the article reports that twenty-eight countries in the EU aren’t necessarily bound by all of the laws’ stipulations, and can essentially customize the laws to their specific needs. Therefore, the binding nature, and the net positive effect henceforth, of this new set of laws can be put into serious doubt.

Luckily, however, the article notes that even with the addendum of flexibility, the general ruling cannot be appealed by the tobacco industry, which can be considered a win in its own right. Nevertheless, the EU should prepare for an assault by Big Tobacco to reverse these common-sense laws that have only now been cleared by the High Court. According to most experts, the tobacco lobby will most likely consolidate its fight against plain packaging.

The law was originally passed in 2014, and yet these stipulations are only going to be put into effect this month. That’s because, according to the article, certain countries appealed the legality of the 2014 laws because their populations and economies could “suffer” as a result, particularly Poland, Romania and England. Their courts begged whether the law should be indiscriminately extended across of all member states.

Take Poland: according to the New York Times, “Poland…has one of the world’s highest rates of menthol cigarette consumption,” which certainly clears the air as to where Poland (and its ally in this instance, Romania) stands in the fight against tobacco, and why they pioneered the appeal of these laws, particularly the part banning menthols.

That’s why this case has taken particularly long, and had to be ratified by the Court of Justice in Luxembourg, which essentially serves as the EU’s main appeals court to member states. Ultimately, however, the Court of Justice ruled that the law was legal and should be “applied evenly across the bloc”.

Additionally, the regulation of e-cigarettes is a big step forward in the fight against Big Tobacco in Europe. Yet the article mentions no detailed analysis of these restrictions, and happen to note that the restrictions will certainly be weaker than that of traditional cigarettes.

The article notes that while the United States lacks federal laws against e-cigarettes, many individual states have taken it upon themselves to limit their use in public. In this regard, Europe has lots of catching up to do if it aims to sustain its reputation as being a pro-health coalition.

However, what grossly overshadows this modest legislative success is the complete lack of mention of the most dangerous policy in the European tobacco market: Codentify.
Without the prevention of Codentify, all the aforementioned laws, and any future laws could prove completely obsolete.

For those who aren’t aware, Codentify is a technological regulatory system aimed at preventing the manufacturing, shipping and sale of counterfeit tobacco products. The purpose of such a system is to be able to track and trace all legitimate sales, and thus determine what is or is not a legal form of tobacco.

The reason such a system needed remains multifold. Firstly, the counterfeit tobacco market tends to use lower-quality and more harmful tobacco in their products since they are beyond the scope of health regulations. The source and delivery of these products are even linked to terrorist organizations in the Middle East and North Africa. This inevitably makes the customer more at risk of health issues, and without the proper knowledge of the carcinogenic potential in the cigarette he or she was smoking.

Moreover, the counterfeit market allows many large tobacco corporations to evade millions of Euros in taxes that they would otherwise be giving back to citizens. This gives a major incentive for these tobacco corporations to actually participate in the counterfeit market. In fact, there have been many cases linking direct involvement between tobacco executives and the illegal sale of tobacco products both domestically and overseas.

Which makes it all the more ironic that the Codentify system was actually conjured up by Big Tobacco, and lobbied by them as well. This conflict of interest alone should be reason enough to be skeptical of the Codentify and block any attempt of implementing it in Europe.

Yet even the system itself has proven to be unreliable – primarily because it lacks any real track and trace system necessary for monitoring the counterfeit movement and sale of tobacco. When we look at all these reasons, the fact that Codentify still receives a general level of support in the EU Parliament is astonishing and baffling – especially when we receive news of superficial laws like those the New York Times relayed this week.

In closing, while anti-tobacco leaders have a right to celebrate their win in the EU High Court today, they must not lose the forest for the trees, and should concentrate their efforts on blocking Codentify from being implemented in the European Union as soon as possible.

The Tobacco Control Community and Regulaiton

Why The tobacco control community needs to re-address Codentify and industry regulation in general.

As time goes on more and more people seem to be writing me. Sometimes with questions, and sometimes with comments. I have received both threats and praises alike and obviously prefer the latter. Recently, I was asked why I take the time to write so much about Codentify instead of other important tobacco control issues.

I felt it important to answer publicly: Codentify is a stealthy move the tobacco industry is making in order to subvert even the most basic capabilities of the European Union and member state governments to keep tabs on their production process. This has massive implications on all other aspects of the industry’s impact in Europe and to a greater extent, the world.

This critical initiative on behalf of the tobacco industry is highly intricate and technical in nature. The minutia and technicality of the issue is how the matter has remained out of critical public Eye. Unlike the health affects of smoking or other mainstream tobacco control critiques, Codentify and regulation fraud is an unfamiliar language to the average European

Interestingly enough, those in the know have reached out to me from as far away as South Africa, Indonesia and the United States asking to collaborate.

I think in the coming months the public will begin to hear more and more about the tobacco industries attempts to steal the regulatory capabilities away from third parties and create a monopoly on insight into their production practices.

The Tobacco industry is extremely sophisticated and it seems they will try to sell Codentify to other industries in an attempt to look back and say “look it’s being used elsewhere.” we cannot let that happen and early awareness is critical.

In the coming months I will be more formally reaching out to critical activists around the world to bring attention to this overlooked issue that could become the linchpin for the tobacco industries greatest victory against humanity in decades.
Conversely, early awareness can lead to the tobacco control movements greatest success since the introduction of plain packaging and massive warning labels.

The European Union Must Divorce Philip Morris International

If the EU doesn’t divorce PMI, Codentify will only be the beginning of our problems.

In my previous posts I’ve expressed my honest support of the FCTC protocol, and today I would like to give you the counter-example of a REALLY BAD deal, that most likely will expire in a few months, and I certainly won’t miss it – I’m talking about the EU’s agreement with PMI:

In general, under this agreement PMI was obligated to pay the EU over $ 1.1 billion, to prevent illicit trade of their products (through several measures, such as creating the Codentify system, allowing governments access to their data, cooperating with customs, etc.).

Moreover, supporters of the renewal of this agreement claim that thanks to it, illicit trade of genuine PMI product had been reduced in 85% (and that’s seemingly impressive).
At this point skeptics would probably think – WHY IS IT BAD?

Let’s say I’m a very popular and successful teddy-bear manufacturer (bear with me), and I’m not only agreeing to pay over a billion dollars to help the authorities catch contraband teddy-bears, but also succeeding in doing so by 85%. Why in the world should you refuse continuing this arrangement?

The EU commission and its member states shouldn’t even consider renewal of the agreements for at least three good reasons:

1.    Big Tobacco were no teddy-bear resellers in the first place:
Prior to the negotiations upon the initial agreement between PMI and the EU, the EU commission and member states had launched a huge lawsuit against PMI and two other Big Tobacco companies, for (and this is an actual quote):
“‘an ongoing global scheme to smuggle cigarettes, launder the proceeds of narcotics trafficking, obstruct government oversight of the tobacco industry, fix prices, bribe foreign public officials, and conduct illegal trade with terrorist groups and state sponsors of terrorism”
Normally I put the most problematic parts in bold, but here I found nothing to leave unmarked.

2.    Big tobacco are definitely not teddy-bear resellers today:
Their product has more complexed relationship with authorities and regulators and have a much broader effects on a country’s budget than most industries’. Without diving into the debate on public health promotion strategies, but especially in countries that are highly invested in public healthcare policies – reducing nationwide smoking rates, are in the government’s best interests. It is not only about general fake products and tax evasions, and as I said in many of my previous posts – it is a decision between making the industry the solution (not even a part of it… the whole solution) and accepting it as (a major) part of the problem.

3.     Possible renewal of the agreement will be used to legitimize the industry’s self-regulation. “If you agree to take our money, something we do must be working, right?”
Wrong. First of all, let’s address the issue of 85% decline in genuine PMI product seizures – the main part of the previous sentence is GENUINE PMI PRODUCT – although it is not clear from the agreement itself, but from what I’ve personally heard from my sources , it is up for PMI employees to decide if a package caught by customs are indeed genuine.

In parallel, while the amounts of seized genuine product is decreasing, the amount of what is called “cheap whites” cigarettes are rising rapidly. Therefore, it is not an example of the industries achievements, but of what happens when you allow it to influence regulation statistics…

Second, from a budgetary point of view, the money received from PMI goes directly to the EU commission and member state’s general budget. Which means it is not earmarked directly to tackle illicit tobacco trade. Hence, without using harsh words, it is PMI’s money paid to keep authorities and governments in a certain status, which benefits PMI directly – as opposed to a fine, or an obligation to sponsor independent regulatory measures that benefit public causes at PMI’s expense (which was, allegedly, the original plan…).

And last but not least, continuation of this agreement, at this stage, means total support for Codentify against any attempt for independent track & trace solution. From PMI’s perspective, it would be rational to argue that you cannot make the company pay these amounts of money to develop Codentify to match EU standards, and in the same time force it to invest additional efforts to integrate with an independent solution. The irrational decision is to allow this situation in the first place.

So where does the decision stand now?

Last month  the European Parliament gave the commission a very clear say against the renewal of this deal – 414 MEPs voted against the deal, 214 backed it and 66 abstained. Now let’s hope that the European commission will not let the public and its brave representatives down.

World Health Organization is the Solution for Codentify

FCTC_PosterI would like to dedicate my post to the World Health Organization (WHO) Framework Convention on Tobacco Control (FCTC) protocol, and why all European countries should ratify it as soon as possible, or in other words – “why it’s good”:

What is FCTC

The FCTC protocol is an international treaty that specifically addresses the issues of illicit tobacco trade. The protocol has already be adopted by France. The protocol’s purpose is to set ground rules for establishing a multi-national system that would fight illegal tobacco sales all over the world. Such a system stands on two “legs”:
The first is a technological solution to provide EVERY national authority with VITAL information to pinpoint the breaches in the supply chain, in order to tackle smugglers and fraudsters. The second is providing a mutual “legal framework” to enable smooth collaboration between different authorities and countries, and to ensure effective regulations.

Even from a broader international perspective (i.e. unrelated to tobacco issues whatsoever), the protocol is comprehensive and inspirational in terms of the thought invested into providing a balanced and scalable solution to a global problem. I’m sure that when considering collaborations in the fields of global warming, human trafficking, etc. – this protocol sets a good example.

The FCTC protocol’s solution is based on the mutual work done by several parties back-to-back in a transparent process, in which crucial information is being shared around the clock. These parties are regulators, customs, local and international police forces, etc. One of the protocol’s fundamental principles is that the tobacco industry is NOT one of these parties. They are not the “enemy”, and they are not necessarily the problem – but they CANNOT be viewed as part of the solution. At least not by a protocol that is obligated to reduce illegal tobacco trade and promote public health on a global scale.

FCTC in Depth

When it comes to tracking and tracing, ARTICLE 8 of the protocol sets a very clear technical standard regarding the information that needs to be provided by the system. In addition to “trivial” details (such as product description, manufacturer details and time of production), PARAGRAPH 4.1-4.3 states that each product MUST be marked with information about SHIPPING details and the FIRST CUSTOMER (i.e. the first party that is not the manufacturer).

This information is critical to tracing the exact path of diverted products, and to fully understanding how genuine products end up on markets where they are not authorized to be sold, or how a counterfeit products receive “real” credentials… As you remember, this is the information which is NOT PROVIDED BY CODENTIFY. When crosschecking a Codentify-marked illicit product – it does not reference the hierarchy of boxes and shipments, and most definitely has no information regarding the market it is destined to reach.

ARTICLE 8 also sets in its last 3 paragraphs the accepted relationship with the tobacco industry in the field of tracking and tracing – PARAGRAPH 12 states that NO track & trace obligations should be performed by or delegated to the industry. Moreover, PARAGRAPH 13 also emphasizes that ANY connection between protocol parties and the industry should ONLY be allowed in order to efficiently regulate the manufacturing process. Finally, PARAGRAPH 14 gives the protocol parties the necessary legal protection from the industry – by stating that the industry would bear the cost of adjusting itself to illicit trade regulations.

There is a clear reason why the relations between the industry and regulators is established in this way, and it implies that the exact “counter attacks” made by the industry – at first by providing a self-regulation solution (Codentify), then by donations to INTERPOL and other authorities in order to “fight illicit trade”, and later by arguing that choosing other solutions would cost governments a fortune.

The first paragraph of ARTICLE 10 that deals with security measures, also touches a very important issue that I’ve raised before on the blog, and it is the prevention (and regulation) of overproduction by the tobacco manufacturers. PARAGRAPH 1.b states that the amount of “licenses” that a factory receives should be proportional to the size of the intended market. Something that Codentify not only doesn’t provide, but overlooks by design.

ARTICLES 20-24 describe in various ways the proposed collaboration between protocol parties in terms of transparent information sharing on the one hand, and securing confidential information on the other hand. Excluding the tobacco industry from this “information pool” (and definitely not allowing it to control it) is a key element in order to make it work. First, because the flow of the more tactical information I’ve described earlier is exactly what provides the authorities with more efficient “clues” to stop smugglers and counterfeiters. Second, because law enforcement agencies’ restricted information should not be used for the commercial interests of any company, and most definitely not by Big Tobacco.

Bottom line, I advise you to read the full protocol here:
http://apps.who.int/iris/bitstream/10665/80873/1/9789241505246_eng.pdf

(Or at least the short summarized version here):
http://www.who.int/fctc/protocol/Protocol_summary_en.pdf

and form your own opinion on the matter. You know mine