Diplomats allegedly diverting alcohol, cigarettes worth R423m into SA illicit market

Pretoria – Several foreign diplomats are in hot water for allegedly diverting alcohol and cigarettes purchased from duty-free shops into a booming South African illicit market.

This has reportedly cheated the South African Revenue Service (SARS) of an estimated R100 million (US$6.9m) in unpaid taxes every month. The alcohol and cigarettes are reportedly sold in large volumes to businesses and liquor traders.

Foreign diplomats found to be involved in the high-level dodgy deals will face repercussions, said Lunga Ngqengelele, spokesman for International Relations and Cooperation Minister Dr Naledi Pandor.

“I can confirm that we are aware of the investigation and we are working with the SARS, and we are working with other law enforcement authorities to make sure that we get to the root of this issue,” Ngqengelele said via telephone from Mozambique where regional heads of state and ministers are meeting to discuss Islamist-linked terror attacks.

He declined to disclose which countries the implicated diplomats were from, but added: “I can tell you that we would want those that are found guilty to be brought to book so that we can stop this thing from going on.”

The diplomats allegedly purchase the duty-free products, mainly alcohol and cigarettes, purportedly for their own consumption, only to re-sell them in the country. The illicit trade in alcohol and cigarettes in South Africa has exponentially increased under a year-long Covid-19 lockdown which has seen intermittent bans on the legal sale of the products.

SARS said it has obtained information from licensed duty-free shops regarding the sales values, product quantities and the details of the foreign diplomats who have been purchasing items. It is believed that the stores were requested to supply complete lists of all transactions.

In accordance with South African legislation, 171 embassies and international organisations are permitted to purchase from these duty-free shops which were established to service the diplomatic community.

More than 2 200 diplomats and family members have made purchases, the most common commodities being rum, whiskey, brandy, liqueurs, cigarettes and cigars.

Information shows that over a 6-month period, duty-free stores recorded sales of R423m, with 2 200 diplomats accounting on average for R70.5m per month.

International affairs expert, Dr Siphamandla Zondi, said under the Geneva Convention and through national laws, diplomats enjoyed the privilege of being able to import free from tax and duties the products they need for their consumption.

“The expectation is that as professionals and persons of high integrity, they could not abuse these privileges and import goods on behalf of sellers as they have done in this case,” said Zondi, an academic from the Department of Politics at the University of Johannesburg.

He said the alleged culprits would have breached the country’s tax laws and diplomatic privileges.

“This does not only undermine the SA goods market and distort terms of trade, but it violates the diplomatic privileges they sign up when they are posted to South Africa. It also violates the tax laws including duties agreements between South Africa and the sending countries. These are therefore not just dishonourable and unfriendly actions, but they also amount to illegal and criminal conduct.”

Zondi said those found guilty would have embarrassed their own countries and governments and broken the trust of the peoples of both countries. “These actions have a damaging effect on the noble profession of diplomats, effects that may lead changes in diplomatic privileges generally.”

Mabasa Crispen Mukome of MC Mukome Legal Practitioners said the diplomats faced charges of breaching the International Privileges and Immunities Act.

However, they were immune from criminal prosecutions by virtue of their diplomatic status.

“Whoever is involved in these illicit deals is abusing that Act. Unfortunately, because of the privileges of immunity, South Africa cannot prosecute them, but this creates tension with SARS and the country where the diplomats came from,” Mukome said.

According to Mukome, the implicated diplomats were likely to be recalled by their countries for breaching trust and embarrassing them.

“The most probable result from this scandal would be a recall of those diplomats because they abused their privileges in South Africa. This will be very embarrassing for the sending countries and it will not augur well for a country to be associated with such quiet petty crimes. That is petty crime, misdemeanors in terms of International Relations laws, even though huge money was involved.”

The DA yesterday called for the expansion of ongoing investigations and the prosecution of implicated diplomats.

“While the DA welcomes the new sets of regulations to regulate the amount of liquor and cigarettes diplomats would be allowed to buy, SARS and the department must approach the Pan-African Parliament and the African Union to enlist their help in prosecuting diplomats found guilty of cheating the taxman out of an estimated R100m in taxes every month,” DA legislator Darren Bergman said.

“They should also be fined heavily to recuperate the lost income.”

African News Agency (ANA)