Tag / illicit goods

by Mike Poverello

Gucci – Pokes fun at Counterfeiters with “Fake/Not” collection

Italian designer brand Gucci has been battling counterfeiting of its products for decades, and has drawn attention to the problem with a tongue-in-cheek new collection.

According to Gucci, the “Fake/Not” collection for Fall/Winter 2020 – which includes men’s and women’s wear as well as bags and shoes – “began with a print inspired by a retro appropriation of the Gucci logo featuring the bicolour stripe.”

It goes on: “Entering a new chapter, the green and red design mixes with ‘Fake/Not’—a playful commentary on the idea of imitation.”

‘Fake’ is printed in bold lettering on one side of the item – in fact, it looks a lot like the real/fake comparisons one might see in pictures online – with ‘Not’ on the other.

Source: SecuringIndustry.com

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by Mike Poverello

USCBP extends secure e-commerce supply chain pilot

Customs and Border Protection (CBP) has expanded its pilot of a new, voluntary scheme to try to improve the security of low-value shipments entering US borders.

The Section 321 Data Pilot is focused in particular on e-commerce, and aims to improve data-sharing between online marketplaces, carriers, technology firms and logistics provider to help protect American consumers from illicit goods arriving by air, ocean, truck, or rail.

That includes, “illicit narcotics, unregulated prescription drugs, brand counterfeits, and unsafe food and beauty products”, according to the CBP, which plans to run the pilot until August 2021.

Nine companies have been selected to participate in the pilot, including e-commerce giants Amazon and eBay, carriers Zulily, FedEx, DHL and UPS, as well as technology firm PreClear and logistics providers XB Fulfillment and BoxC Logistics.

CBP has said that it plans to expand access to all interested and qualified participants “in early 2020.”

The participants will provide cargo origin, content, tracking, recipient and other information to CBP upfront, in addition to the information that is currently legally required for Section 321 shipments – in other words one shipment per day for eligible importers, individuals or companies with a value of $800 or less.

CBP says it wants to see whether having that additional information will enable it to perform “more effective and efficient targeted screening” of these low-value shipments.

Research published in 2018 has suggested that two-thirds of counterfeit goods intercepted by customs around the world are discovered in small parcels sent through postal or courier services.

In part because they are harder for customs officials to track and seize, and also because in many jurisdictions they have not required detailed manifests for their contents. The US stepped up the manifest requirements for Section 321 shipments from January 1, 2019.

CBP broadened the scope of the 321 Data Pilot last month, shortly after the pilot was launched in August, to include ocean shipments and international mail which weren’t included in the original plan.

“Combined with the exponential growth of the online shopping market in the US over the past five years, CBP has seen a significant increase in small, low-value packages,” said the agency in a statement.

“Today, CBP processes more than 600 million express consignment and international mail shipments a year – approximately 1.8m a day. The unprecedented growth in volume of these low-value shipments requires creative solutions to interdict illicit and dangerous products to enter the US.”

Source: article by Phil Taylor, Securityindustry.com, 20 January 2020

by Mike Poverello

Food tops EU customs’ counterfeit seizure list in 2017

TAXUDCustoms officers seized 31m counterfeit items at the EU’s borders last year worth more than €580m – with food, toys and cigarettes intercepted most frequently.

The total numbers of seized products has declined since 2016, but there is a worrying trend towards a higher proportion of potentially dangerous items such as food, medicines, electrical goods and toys, which accounted for 43 per cent of all detained goods. That’s up from 26 per cent in 2015 and 34 per cent in 2016.

Almost a quarter (24 per cent) of the seizures were for foodstuffs, followed by toys making up 11 per cent, cigarettes at 9 per cent and clothes at 7 per cent of the total.

“The EU’s customs union is on the front line when it comes to protecting citizens from fake, counterfeit and sometimes highly dangerous goods,” said  Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs.

“Stopping imports of counterfeits into the EU also supports jobs and the wider economy as a whole,” he added. Given the increasingly likelihood that the UK will no longer be part of the customs union post-Brexit, it’s worth noting that UK customs seized almost 1.5m goods last year.

Once again, China and Hong Kong were the primary sources for the vast majority of illicit goods, at 73 and 10 per cent, respectively, with China down from 81 per cent in the prior year and Hong Kong up from around 8 per cent. Other countries have emerged as hot spots for particular product categories, however, with Moldova a source of illicit alcohol, the US for other fake beverages and Turkey for counterfeit clothing. India was the top country of origin for fake, and potentially harmful, medicines.

In terms of modes of transport, two thirds (65 per cent) of all detained articles entered the EU via the maritime route, usually in large consignments. This was followed by air traffic which transported 14 per cent, and courier/postal traffic which together accounted for 11 per cent and mainly involved consumer goods ordered online such as shoes, clothing, bags and watches.

The Commission said the downturn in seizures comes after it implemented new measures aimed at protecting intellectual property rights last year, with a particular emphasis on helping smaller companies and startups respond to breaches.

Source: Securingindustry.com, P.Taylor, 2018.09.27

by Mike Poverello

How SA’s abalone ends up on China’s plates

Abalone Shells

Oxpeckers’ environmental investigative journalist, Crystal Chow,  digs up the dirt on the illicit abalone trade.

Abalone tops the list of the most exquisite seafood in Chinese cuisine, and fresh South African abalone are always the first choice for feasts in Cantonese restaurants, where one fresh abalone alone can cost up to HK$2,000 (about R3,000). In recent years, the overfishing and smuggling of wild abalone has pushed this endemic species of the South African coast towards extinction.

“The South African wild abalone are heavier, and they are better than the farmed Japanese and Australian ones in terms of fresh flavour and texture,” said Chit-yu Lau, general manager of Ah Yat Abalones restaurant in Hong Kong. “Our fresh South African abalone are all imported through legitimate channels. The smuggled ones are usually dried, and are rare in Hong Kong.”

Nonetheless, the illicit abalone trade has been gathering significant attention from conservationists combating wildlife trafficking, who believe the profitable contraband market of abalone is linked to the black market of ivory and rhino horns – both of which are driven by high demand from the Chinese market. To read the full story Click here!

Source: oxpeckers.org, author – Chow. C, June 9, 2017.

by Mike Poverello

ZIMRA Warehouse Burns Amid Protests

Zimbabweans protesting against restrictions on imports of basic goods from South Africa have forced the closure of the border post between Zimbabwe and South Africa on Friday.

On June 17, the Zimbabwean government said that it was suspending imports of products including bottled water, furniture, building materials, steel products, cereals, potato crisps and dairy products, most of which arrive from South Africa. A Statutory Instrument No. 64 of 2016 which effectively tightens the screws on the import of these products is purportedly intended to target businesses and not ordinary travellers buying goods for personal consumption. However, Zimbabwean Revenue Authority (ZIMRA) officials continued to demand permits and confiscate the listed goods, sparking the chaos.

A warehouse owned by ZIMRA for the storing of illicit goods seized from people crossing the border was set alight by the protesters on Friday, 1 July 2016.

More than 85% of working age Zimbabweans have no formal job and many make a living by buying goods in South Africa to sell in Zimbabwe. Source: New Zimbabwean/ Reuters.

by Mike Poverello

Australia seizes $900m of liquid meth hidden in bra inserts

Aus-drug-bustAustralian law enforcement agencies have seized methylamphetamine worth AUS$1.26bn in the country’s largest-ever haul of the illicit drug in its liquid form, officials said Monday.

Four Hong Kong passport holders were arrested in Sydney last month over the import from China of 720 liters of the drug hidden in boxes of silicon bra inserts and art supplies, police said in a statement

The liquid could have made about 500kg of high-grade crystal meth, commonly known in Australia as ice, Australian Federal Police Commander Chris Sheehan said.

Officials also seized 2kg of the crystalized form of the drug.

Justice Minister Michael Keenan said the operation used information gathered through new cooperation between Australian Federal Police and China’s National Narcotics Control Commission. The Australian and Chinese agencies established a joint task force in November to investigate criminal syndicates trafficking methamphetamine.

“This largest seizure of liquid methylamphetamine to date is the result of organized criminals targeting the lucrative Australian ice market from offshore,” Keenan told reporters.

The four will appear in a Sydney court next month charged with importing and manufacturing commercial quantities of illegal drugs. Each suspect faces a potential life sentence if convicted.

Keenan said the seizure was one the largest hauls of illicit drugs in Australian history. Source: Perth News

by Mike Poverello

Customs Vietnam make 2nd huge Ivory Bust in a fortnight

Vietnam Custom ivory seizureCustoms officers in central Vietnam have seized a tonne of ivory and four tonnes of the scaly hide of the pangolin, according to authorities today.

Officials found the contraband on Tuesday inside a shipping container labelled as carrying red beans from Malaysia that arrived at the central port city of Da Nang on Aug 10.

“This is the largest amount of ivory and pangolin smuggling we have discovered in Da Nang,” Dang Van Toan, the port’s head of customs, told the German Press Agency.

The pangolin is an endangered type of armoured anteater found in parts of Asia and Africa. The flesh is sold as an exclusive, but illegal, meat, and the hide is used for traditional medicine and fashion.

The weight of the hides found this week corresponds to around 4,000 individuals, Le Xuan Canh, former head of the Institute of Ecology and Biological Resources, told DPA. Tuesday’s haul brings to nearly eight tonnes the total of tusks, horns and hide from endangered species impounded over the past two weeks in Da Nang.

Last Friday the port’s customs officers seized more than two tonnes of elephant tusks. Eight days earlier they confiscated nearly a tonne of elephant tusks and rhinoceros horns, authorities said.

The three shipments were posted to two local companies, which have denied any knowledge of the smuggling, said Pham Van Thieng, deputy head of the central region’s anti-smuggling team.

Trafficking of endangered species and their parts violates international law. Like elephant ivory and rhino horn, pangolin is considered a sign of status among some of Vietnam’s wealthy elite.

by Mike Poverello

Zimbabwean Customs seizes 48kg illicit South African gold worth R20m

goldZimbabwean Customs (ZIMRA) seized 48 kg illicit gold worth R 20 million and arrested 46 people for initial investigations. Forged gold serial-number stamps, specially designed armoured vehicles, clandestine refineries, fake customs clearance papers and documents with links to the black market.

These and other pieces of evidence are the keys that the Hawks believe link a Zimbabwean and South African gold-smuggling syndicate to scores of buyers in Europe masquerading as dealers in precious metals. For two years police have been zeroing in on the syndicate, whose roots are in illegal gold mining in Zimbabwe. Inside were 48kg of gold bars valued at R20-million.On Friday, they acted. In the early hours teams from the Hawks, the Special Task Force and Crime Intelligence raided luxury homes and farms across Gauteng and the North West.

In one of the raids police discovered a walk-in vault at a warehouse outside OR Tambo International Airport. Inside were 48kg of gold bars valued at R20-million. They were being prepared for stamping with official South African gold serial numbers designating that the metal had been officially mined and refined in the country. Police sources say the gold was to have been flown to at least three European countries at the weekend before being smelted, re-refined and distributed.

A source with knowledge of the investigation has revealed the inner workings of the syndicate, from how and where the gold is mined to how corrupt customs and mining officials facilitate the metal’s passage across borders.(Now should’nt this prompt some serious cause for concern, if true?)

“The amount this syndicate has handled is immeasurable. We have known about them for two years and in that short time we have recovered R40-million,” he said.

“They have operated both in South Africa and Zimbabwe as well as other SADC [Southern African Development Community] countries for years, well before we even discovered them”

Illegal miners in Zimbabwe supplied the syndicate. “With the instability and corruption there [South Africa?] it’s dangerous but easy. Once they have the gold, runners take it to the border where, through corrupt officials, it is smuggled across disguised as things such as household products.”

The gold was taken to farms in and around Modimolle in Limpopo where illicit refineries smelted and refined it, the source said. With the help of South African mining officials, gold clearance documentation and special serial and insignia stamps were sourced.

“Once stamped you would never know the difference. We have placed it next to legitimate bars and it looks and feels the same.” He said the gold was distributed through legitimate channels in Europe.

“Those running the syndicate know what they are doing. They are well-connected and influential businessmen with ties to Africa, Europe, the US and Asia”.

“They are linked to the gold powerhouses of the world. These are not ‘mickey-mouse’ people. They are immensely powerful and extremely well connected to some of the world’s top legal firms. Within hours of Friday’s raids lawyers were arriving at their clients’ homes and businesses.”

He said police seized hundreds of official gold clearance documents, serial stamps and other paperwork with links to mines and importers and exporters. Source and picture: CustomsToday.com

by Mike Poverello

Mugabe family linked to illicit SA cigarette trade

Pacific Blue_SnapseedRelatives of President Robert Mugabe are being linked to illegal tobacco smuggling networks suspected of bringing more than $48 million in contraband through South Africa’s borders, reports NewZimbabwe.com.

Harare-based Savanna Tobacco is owned by a prominent Zimbabwean businessman, Adam Molai, who is married to Sandra Mugabe, one of Mugabe’s nieces. Molai has previously worked with Sandra as co-director of the Zimbabwe Tobacco Growing Company. Savanna has allegedly moved tons of illegal tobacco into South Africa.

The company’s main brand, Pacific cigarettes, has been found in concealed consignments by police in South Africa and abroad, according to two private investigators who track tobacco busts and work for the industry to counter the trade in illicit tobacco. The products have been linked to a huge tobacco smuggling operation whose base in South Africa was shut down in 2010 by the South African Revenue Service (SARS), which is engaged in a crackdown on the country’s illegal tobacco markets.

Images taken at the scene of two busts in South Africa and one in Zimbabwe show the extent of the smuggling operation. SARS has refused to confirm or deny whether it is investigating Savanna, citing the confidentiality requirements of the Tax Administration Act.

The frequency of the busts, the methods used and the quantities of illegal Pacific cigarettes found have led sources close to the investigations to claim that Savanna has been centrally involved for at least four years. It also increases suspicions that Zimbabwe is using smuggling to keep its economy afloat. Mugabe has openly supported Savanna. A year ago, he accused rival British American Tobacco (BAT) of spying on Savanna and hijacking its trucks. “If this is what you are doing in order to kill competition and you do it in a bad way, somebody will answer for it,” Mugabe warned.

Boxes of cigarettes that can be made for as little as R1.50 are easy to slip into the local market to avoid the R13 tax a box. Whereas popular brands of cigarettes can retail at R35 a pack, illegal cigarettes sell for between R4 and R12 a pack. With margins approaching 1000%, the illicit trade has become one of the largest elements in organised crime in South Africa.

According to research commissioned by the Tobacco Institute of South Africa, which is predominantly funded by BAT, 9.5billion illegal cigarettes with a street value of about R4-billion were smoked locally last year.

Savanna has captured almost 10% of this market, according to the institute, with about 700 million of its illegal cigarettes smoked last year. Pacific’s illegal cigarettes are sold mostly on the streets of Cape Town.

In one of the biggest busts in October, 1.6million Pacific cigarettes were found hidden on a train in Plumtree. Pacific cigarettes have also been seized at the Beitbridge border post near Musina and in Boksburg, on the East Rand, during busts in November. Trucks were found carrying Pacific cigarettes in concealed compartments.

This month, a consignment of Pacific cigarettes was found hidden behind electronic goods on a truck in the Western Cape. Similar busts have been made in Mozambique and at a border post between Zambia and Namibia, according to private investigators.

Evidence from the Plumtree train bust showed that the smuggling route had its origin as Savanna’s factory in Zimbabwe and South Africa’s black market as its destination. In the Plumtree bust on October 12, Zimbabwean police confiscated 40 tons of illicit Pacific cigarettes that had come from Bulawayo. The train was said to be carrying gum poles.

Records reveal that between September 2012 and August 2013 at least 23 shipments with 44 wagons of “gum poles” had followed the same route. A number of these consignments appear to have arrived at the South African business PFC Integration. According to an investigator who has studied the operation, PFC is “not into the gum pole business at all”.

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by Mike Poverello

A study in Corruption and Firm Behavior

Extensive literature argues that reducing trade costs can substantially increase income and improve welfare in trading countries, particularly in the developing world where these costs are highest. In 2007, a shipping a container from a firm located in the main city of the average country in Sub-Saharan Africa was still twice as expensive, and six times more time-consuming, than shipping it from the US. It was also twice as expensive and just as time-consuming as shipping a similar container from India or Brazil, according to the World Bank. As a result, a significant portion of international aid efforts has in recent years been channeled to reducing trade costs and improving logistics in the developing world. Evidence is growing on how corruption in transport networks can significantly increase the cost of moving goods across borders.

A recent paper “Corruption and Firm Behaviour” investigates how different types of corruption affect company behavior. Firms can face two types of corruption when seeking a public service: cost-reducing, “collusive” corruption and cost-increasing “coercive” corruption. Using an original and unusually rich dataset on bribe payments at ports matched to firm-level data, the authors observe how firms respond to each type of corruption by adjusting their shipping and sourcing strategies. Cost-reducing “collusive” corruption is associated with higher usage of the corrupt port, while cost-increasing “coercive” corruption is associated with reduced demand for port services. Data suggests that firms respond to the opportunities and challenges created by different types of corruption, organizing production in a way that increases or decreases demand for the public service. This can have important implications for how we identify and measure the overall impact of corruption on economic activity. The data further allows us to understand the bribe setting behavior of different types of public officials with implications for the design of anti-corruption strategies.

In our setup, firms have the choice to ship through two ports: Maputo in Mozambique, and Durban in South Africa. The majority of firms in our sample are equidistant to both ports while a subset of firms will be significantly closer to the more corrupt port of Maputo. Survey data revealed that the choice of port is driven primarily by the interaction between transport and corruption costs at each port. Transport costs are linear to the distance between each rm and the ports, while corruption costs are determined by the type of product the firm ships. Our main measure of the distortion caused by corruption is how rms shipping products that are more vulnerable to corruption will opt to go the long way around to avoid a closer, but more corrupt port. We also nd suggestive correlations between the level and type of corruption rms face at each port, which directly affects the cost of using port services, and firms’ decision to source inputs from domestic or international markets.

Source: Corruption and Firm Behavior (December 2011) by Sandra Sequeira and Simeon Djankov.

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by Mike Poverello

Trade costs and corruption in Ports of Durban and Maputo

Recent years have brought an increased awareness of the importance of trade costs in hindering trade, particularly in the developing world where these costs are highest, says a report in the latest edition of Port Technology. The most salient type of trade costs have often been tariff duties and costs associated with the physical transportation of goods. As a result, several countries embarked on extensive programmes of tariff liberalisation and a significant portion of aid effort was channelled to investments in hard transport infrastructure, such as rebuilding railways and ports (the World Bank alone devotes more than 20 percent of its budget to transport infrastructure projects worldwide).

More recently, new light has been cast on the importance of a different type of trade cost: the cost imposed by the soft infrastructure of transport, defined as the bureaucratic infrastructure handling the movement of goods across borders. While there are many possible sources of inefficiencies stemming from the soft infrastructure of transport, recent research is beginning to document the role played by corruption in transport bureaucracies in driving trade costs. This article provides an overview of this research.

Research into corruption

Corruption can take many forms and emerge in many different phases of the process of clearing goods across borders. Sequeira and Djankov (2011) documented in great detail the ways in which port corruption emerges in Durban and Maputo in Southern Africa – this report is featured in my next post. This research was based on a unique dataset of directly observed bribe payments to each port bureaucracy for a random sample of 1,300 shipments.

The study began by defining two broad categories of port officials that differed in their administrative authority and in their discretion to stop cargo and generate opportunities for bribe extraction: customs officials and port operators. In principle, customs officials hold greater discretionary power to extract bribes than regular port operators, given their broader bureaucratic mandate and the fact that they can access full information on each shipment, and each shipper, at all times. Customs officials possess discretionary power to singlehandedly decide which cargo to stop and whether to reassess the classification of goods for tariff purposes, validate reported prices of goods, or request additional documentation from the shipper.

Regular port operators, on the other hand, have a narrower mandate to move or protect cargo on the docks, and at times even lack access to the cargo’s documentation specifying the value of the cargo and the client firm. This category of officials includes those receiving bribes to adjust reefer temperatures for refrigerated cargo stationed at the port; port gate officials who determine the acceptance of late cargo arrivals; stevedores who auction off forklifts and equipment on the docks; document clerks who stamp import, export and transit documentation for submission to customs; port security who oversee high value cargo vulnerable to theft; shipping planners who auction off priority slots in shipping vessels, and scanner agents who move cargo through non- intrusive scanning technology.

The organisational structure of each port created different opportunities for each type of port official to extract bribes: the high extractive types -customs agents- or the low extractive types -port operators. These opportunities were determined by the extent of face to face interactions between customs officials and clearing agents, the type of management overseeing port operations, and the time horizons of each type of official.

Durban and Maputo

In Durban, direct interaction between clearing agents and customs’ agents was kept to a minimum since all clearance documentation was processed online. In contrast, all clearance documentation was submitted in person by the clearing agent in the Port of Maputo. The close interaction between clearing agents and customs officials in Maputo created more opportunities for corrupt behaviour to emerge in customs relative to Durban.

In Maputo, port operators were privately managed but in Durban, most terminals (for containerised cargo) were under public control, with very lax monitoring and punishment strategies for those engaging in corrupt behaviour. Private management in Maputo was associated with fewer opportunities for bribe payments due to better monitoring and stricter punishment for misconduct. As a result, the organisational features of each bureaucracy determined that the high extractive types in customs had more opportunities to extract bribes in Maputo, while the low extractive types in port operations had more opportunities to extract bribes in Durban. While corruption levels were high in both ports, bribes were higher and more frequent in Maputo relative to Durban.

Finally, port officials with opportunities to extract bribes at each port differed in their time horizons. Customs in Maputo adopted a policy of frequently rotating agents across different terminals and ports, and since bribes varied significantly by the type of terminal at the port, customs agents were aware of the risk of being assigned to terminals with lower levels of extractive potential. On the other hand, port operators in Durban had extended time horizons given the stable support received from dock workers’ unions. Customs officials were therefore the high extractive types with the shortest time horizons, the broadest bureaucratic mandates and more opportunities to interact face to face with clearing agents. As a result, they extracted higher and more frequent bribes, relative to port operators in Durban (the low extractive types) who had longer time horizons and narrower bureaucratic mandates. Source: Port Technology.

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by Mike Poverello

SARS issues Compliance Programme 2012/13 – 2016/17

SARS has issued its inaugural SARS Compliance Programme, a high-level overview of its plans for the next five years to further grow compliance with tax and customs legislation. More so than perhaps any other time in history, the current global economic conditions have thrust domestic resource mobilisation into the spotlight, highlighting sustainability built on a foundation of tax compliance. Countries lacking this solid base have found their room for manoeuvre in these uncertain times severely curtailed and, in some cases, completely absent. The impact of self-reliance on self-determination is self-evident.

Many tax administrations publish similar compliance programmes (including Australia, Brazil, Canada, Denmark, Netherlands, New Zealand, Poland, Spain, Sweden, Turkey, USA, UK) and SARS has based it’s Compliance Programme on their ground-breaking work. To download and read the SARS Compliance Programme, click here! For Customs specialists and trade practitioners no less than 3 priority areas involve Customs –

Illicit cigarettes: the trade in and consumption of illicit cigarettes is detrimental to the fiscus and to the health of South Africans. SARS interventions will continue to focus on clamping down on cigarettes smuggled via warehouses as well the diversion of cigarettes destined for export back into the local market. SARS also plans to modernise it’s warehousing management and acquittal system.

Undervaluation of imports in the clothing and textile industry: Undervalued imports pose a significant risk not only to the fiscus but to local industry and job creation. SARS will continue to work together with other government agencies and industry stakeholders to clamp down on this practice including through the establishment and frequent revision of a reference pricing database to detect undervaluation, increasing inspections as well as supporting an integrated border management model.

Tax Practitioners and Trader Intermediaries: Regulation of this industry will be pursued to ensure that tax practitioners and trade intermediaries are all persons of good standing, are fully tax compliant in their personal capacity and provide a high quality service and advice to their clients. SARS will also develop a rigorous risk profiling system to identify high risk practitioners and trade intermediaries.

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by Mike Poverello

Decay in ‘morals’ – irrational and corrupt behaviour

My recent post – Harbour mafia busted! – prompts a serious look at human judgement and the cause and effects of corrupt behaviour. The tragedy of the hit on Johan Nortje brings to reality the result of playing with danger. Those that will subsequently be convicted, most likely never conceived this ‘danger’ at the moment of their initial courtship with the criminal underworld. Neither did they perceive that a fellow law enforcement colleague would bear the brunt of their wrong-doing. That’s the reality of consequence of choice.

The origin of customs collection and control dates back more than 2000 years, as do attempts to undermine a country’s fiscal and economic security. Therefore the scourge of corruption is as old as the laws which gave rise to ‘controls’ at borders and ports of entry. The levying of taxes has always resulted in attempts to circumvent the payment thereof. Corruption of senior officials and politicians is the Achilles heel of poor and developing countries. It is a crime that is largely invisible but its consequences can be far reaching. It destroys confidence and morale in law enforcement structures, and robs local laborers and companies trying to etch out a decent living.

Over the centuries, and particularly the latter decades, governments and their law enforcement arms have fought against fraud in various ways. Populous countries (in the past) always had an abundance of people to staff the Customs or Border agency. Above all it was important for the government of the day to be seen as providing employment, hence a measure of comfort at election time. The close-knit command and control of port and border officials under strict observation of their respective port commanders – who in the past had ultimate control over their regions – proved effective in the main in preventing cross border crimes. However, the emergence of bootlegging and the mafia in the 1930’s (USA) proved a real challenge given that these ‘movements’ had an enormous amount of money to neutralise uncooperative customs officials and law enforcement officers. Buying the cooperation of officials left ‘blackmail’ hanging over the heads of the unfortunate officers. In many cases, breaking silence or turning state witness meant possible assassination for the individual and possibly his family as well. Yet, let it be said that such cross-border crime was very much tangible by way of the persons and the modus operandi involved. No, I’m not suggesting it was easy to contain, but it was certainly a whole lot more visible and localised for the authorities to contend with and address. Still, the manpower and the cost to deploy large task forces on the ground were inhibitive for law enforcement agencies.

Today, the world of ‘illicit goods’ is global; the operators can direct activities from the remotest parts of the world thanks to the information super-highway and all means of information and communication technology available today. Similarly, technology ensures near real-time payments to willing participants in crime. Despite this, the matter of ‘illicit goods’ remains a physical movement requiring ‘people’ to arrange and oversee transportation, and distribution to the buyer. It is a well-known fact that the movement of ‘illicit goods’ has a corresponding financial pipeline through which the profits of crime are channeled. Law enforcement has a challenge in trying to piece these activities together. This will involve cooperation of multiple agencies to bring about a result. More often than not, the selfish ambition of one or other agency overrides the collective approach to smash a syndicate. Once again its the age of key performance areas and indicators, and outcomes based initiatives which get ahead of the real issue – to neutralise an enemy. Today furthermore, unfortunately, its better to secure a huge penalty or forfeiture than to apprehend criminals and face months if not years in court – the revenue target is the primary goal. Money drives both the state and the criminal underworld.

Maybe I will be censured yet. Nonetheless, I will conclude with exercising some freedom of expression concerning views on what I believe fundamentally contributes to criminal and irrational behaviour. The democratic way of modern life has indeed perpetuated a lot of freedoms. With this, however, comes a corresponding responsibility and ability to discern between what is right or wrong. Freedom comes in both guises, sometimes simultaneously so as to confuse the mind – not unlike the ‘forbidden fruit’ in the Garden of Eden – making a choice between the right or wrong path. A flaw in democracy is that it tends to present everything in a “yes we can!” mentality. What this does is ‘challenge’ the individual or group to ‘achieve’. There might be little wrong with this, however, there are no documented guidelines on how to ‘achieve’, hence it is concluded that one must ‘achieve at all costs’. So what has this to do with corruption? The multiplicity of (false) ‘comforts’ offered by the modern world tend to excite the senses and numb the conscience. After all democracy tends to advocate equality in everything, so what can be wrong with a bit of excess, since one has freedom of choice? Wrong! unfortunately, this is the very mentality which drives ‘corrupt’ behaviour. There will always be consequences. Add to this indiscretion some measure of peer pressure, jealousy, or avarice and you have a recipe for a corrupt organisation.

The causes are multi-facetted –

  • The blatant disrespect of corporate structures in not recognising the need for staff to spend quality time with their families. (Less work = less profit and poor returns)
  • Parents too focused on personal gain or pleasing the shareholder, rather than tending to the real needs of their children to build honest citizens.
  • Ill-disciplined ‘educators’ who care little about their ‘learners’ and more about their rights!
  • Law enforcement agencies focused on revenue collection rather than law enforcement.
  • Lack of knowledge amongst politicians and heads of government agencies as to what their real mission ought to be.
  • Lack of a real support base within law enforcement agencies to deal with the threats being faced by their organisation.
  • Lack of role models in our society.

Is it little wonder then that the majority of tendencies today follow corruption? I’ve yet to note a single statesman (sorry states-person) who is morally upright. I would however like to concede that at least that maverick Prof. Jonathan Jansen (University of the Orange Freestate) is not afraid to stand up and talk straight.

Those interested in the topic of organised crime in Africa should can an interesting analysis (below) which the Internet has freely allowed me to obtain. ICT is without doubt a necessary evil!

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by Mike Poverello

Durban – Harbour mafia busted!

A 3-year covert investigation into a multi-billion rand racket at the Durban harbour has exposed an international mafia, allegedly bribing customs and police officials to allow in container-loads of contraband.

This week, a former Sars customs official was taken by surprise when Hawks and Sars investigators swooped on his Umbilo home and arrested him on 80 counts of alleged corruption. Etienne Kellerman, 47, a former Sars anti-corruption task team member, appeared in the Durban Regional Court on Tuesday. He was released on R100 000 bail and the matter was adjourned to next week. Kellerman is suspected of receiving substantial benefits for allowing contraband through. It is alleged that Sars lost millions of rand in revenue as a result. He resigned from Sars three years ago, days after he was quizzed by Sars investigators about his alleged role in the racket. His job had been to profile and identify high risk companies and containers entering the country.

A further seven Sars officials from Durban and Johannesburg were suspended for their alleged roles in the smuggling racket. Hawks investigator and project manager of this undercover operation, Colonel Brian Dafel, said that in coming weeks they would swoop on 100 more suspects in the country, including Sars officials, police and syndicate members, on charges ranging from racketeering, corruption, money laundering, extortion, murder and attempted murder.

Warrant Officer - Johan NortjeHe said the investigation was triggered by informers who tipped them off about the alleged crooked activities and racketeering at the harbour. The undercover investigation was a joint operation by the Hawks, Sars, independent law enforcement agencies and other key role players, Dafel said. He said they were also closing in on suspects believed to have ordered the hit on Warrant Officer Johan Nortjé, an officer in the police’s protection security service. He was responsible for investigating smuggling of goods and drugs through Durban harbour. A hit was allegedly ordered on his life days after he made a R100m counterfeit bust at the harbour. Nortjé was gunned down outside his Montclair home on January 17 last year, 10 days after he had made the bust.

“Nortjé was one of the few honest cops. He was aware of the container racket and was determined to expose it. He was killed because he was hampering the operation of the syndicate members,” Dafel said.

“This is a very dangerous investigation that involves extremely high levels of corruption. “Durban harbour is the biggest port authority that handles 40 percent of the containers nationally. In the past two years, during this investigation, we have seized over R1 billion worth of counterfeit goods and contraband.” He said that several witnesses had been placed in witness protection programmes as they feared for their lives. “People’s lives have been threatened and hits have been ordered. But, none of this will deter this investigation.

Dafel told the Daily News that investigations had revealed that certain SARS and police officials were working in teams between KZN and Gauteng. “This could not be done alone. They worked in groups, including those who cleared the documentation to those who inspected the containers and gave them the final clearance.

Thousands of containers pass through the harbour daily and it is impossible to check each and every one. That is how the counterfeit goods and contraband got through so easily. The syndicate members also communicate through cellphones making it a very smooth operation. He said every member of the syndicate was paid for his or her role in allowing the illegal goods through. The potential value of the illegal commodities was between R10 and R20 million for each container. The international mafia pays bribes of up to R30 000 per container that is allowed to pass through customs undetected. It is reported that one of the biggest problems is the clearing agents who work in cahoots with the police and syndicate members.

Dafel said many of the SARS and SAPS officials who were being investigated stood accused of allowing counterfeit goods or contraband to enter the country illegally, or under-evaluating containers. Since the investigation started, much stricter measures are in place at the harbour making it difficult to smuggle goods into the country. “We have closed the gap significantly for any form of corruption to take place. Also, staff know that they will be arrested and charged if they break the law,” Dafel said.

He said they were also working closely with people abroad and international law enforcement agencies to close in on the racketeers. “There are big name international companies, mainly from China, that are also being investigated. In fact, the goods imported from China are the biggest problem.” Source: Daily News E-edition

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