The illicit tobacco market is still thriving. The counterfeit tobacco industry avoids any type of health regulation as well as circumventing any imaginable tax along the way – costing respective governments unseemly sums, and the lives of citizens along the way. In the interim, the EU commission on tobacco attempts to find a viable method for tracking the sale and smuggling of counterfeit tobacco products. Inexto’s Codentify is one of the solutions proposed. The following points lay out – in as profound and irrefutable terms as possible – why investing in Inexto would be a destructive and irresponsible course of action for the EU in tackling the issue of illicit tobacco smuggling.
At its core, working with Inexto is akin to working with the tobacco industry itself. Inexto is essentially an offshoot of Codentify, a system developed by PMI itself. On paper, Inexto is distinct from Codentify. However Inexto has been found to be linked to the tobacco industry as well, albeit in a subtler fashion. Not only is this a blatant conflict of interest, but a contradictory path to solving the issue of tobacco smuggling. The regulatory solution must not only be independent on paper but truly free of the industry’s influence.
A look at Codentify reveals more than ten years of development by the same people who were meant to be monitored. Selling the product to Inexto and moving with it not just the technology but all of the tobacco men behind the product won’t erase that contradiction.
Codentify was initially developed to meet the internal tobacco industry needs unrelated to regulation. The system was developed to actually assist the big 4 in hiding information from each other. This was done by producing a code that provided limited useful information. This is in fact the core technological element of Codentify. Later it was adapted into the so called “track and trace” solution meant to satisfy the EU’s desire for transparency. Inexto now offers the same technology that was developed by PMI under the DCTA. In that case, it would be reckless to consider Inexto considering the technology was produced by the same institution the EU is attempting to regulate. In fact any proven independent solution should be immediately considered before Big Tobacco’s proprietary technology, even if the holder of that technology is a third party. Ultimately, what matters is the method used to regulate and stop illicit tobacco.
Inexto’s Codentify does not just lack basic tracking and tracing capabilities but was built with no intent on attempting to fulfill such a role.
It is crucial as well that any opportunity to prevent a compromised regulatory solution is employed. The eventual solution must protect respective governments and their citizenry from any potential of fraud, collusion or sabotage by tobacco insiders. In its current form, Data from Inexto’s Codentify is vulnerable to be tampered with or exploited by numerous inside players who can be divided up into three level.
1) Big Tobacco executives – use of data against smaller competitors or influence governmental authorities.
2) Local manufacturers- potentially without company knowledge manipulate production stats or divert products to illicit paths
3) Individual employees- IT staff can commit fraud on an individual level.
This must be prevented at all costs, and using Inexto would certainly add to that risk. I have previously spoken with whistleblowers who described low security standards surrounding Codentify in the factories.
The consequences of such a vulnerability are important to note. Such a system would be strategically problematic in that any tobacco company with access to Inexto and its procedures can easily decide to exploit the system in order to avoid taxes and/or regulation. This can be done through the means of overproduction, for example, and this goes the same for any manufacturer as well as any tobacco worker.
Therefore, the ideal system would be under the complete auspices of the government in that all regulatory and taxation policy and measures would be in the domain of both the EU and its member states, as opposed to any third party like Inexto and its parent developers. These government bodies should maintain the legal means to audit and check the production volume of any tobacco-related manufacturer, freighter or distributor without previous notice. Such a system would ensure that the law was being followed.
The same goes for how tax policy on tobacco is instituted. As taxation policy changes, many countries rely on earmarked tobacco taxes for crucial things such as health education budgets Big Tobacco insiders who attempt to influence tax policy in their favor are doing so exclusively for their own market interest and constitute a direct harm to each country’s well-being. . Similarly, tobacco representatives should be restricted access not just to the halls of influence but to government findings as well. For example, Big Tobacco should not be privy to a government-sponsored study drawing links between tobacco tax policy and tobacco consumption, lest they use the conclusions to their own benefit.
Additionally the governments should be able to investigate and audit independently of the industry.
If the EU were to institute Inexto, many tobacco industry employees would have precise knowledge of the system’s vulnerability and loopholes and would exploit the system accordingly. Such a security breach cannot be undone without reverted to a completely new system of regulation.
Lastly, beyond the strategic concerns associated Inexto lies evidence that reveals the character of Big Tobacco as an industry. We can’t forget the plethora of examples and cases showing the tobacco industry’s blatant misuse of power and influence over government authorities whenever it was given the opportunity. There has been evidence of tobacco companies using law enforcement agencies to harass and spy on competitors. Moreover, there are countless examples of Big Tobacco lobbying to promote tobacco policies that directly benefit their own industry, regardless of its effect on the public.
Therefore, employing Inexto would ultimately be one more overarching case of influence by Big Tobacco over the European Union.