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Did the false KPMG Report help tobacco companies to not pay the R12 billion they reportedly owe SARS

Was the tobacco industry a beneficiary of the false KPMG report which led to the incorrect labelling of the SARS investigative unit as ‘rogue’? The question has to be asked as Ivan Pillay, acting SARS Commissioner, had in 2013, asked the National Prosecuting Authority to prosecute 15 local tobacco manufacturers and importers for involvement in the illicit tobacco trade and for tax evasion to the value of R12 billion (Daily Maverick, 24/2/2016). There is no evidence that this money has been paid.

KPMG International were appointed as auditors of BAT International at the same time as they were working for SARS to report on the role of the SARS investigative unit – the same SARS investigative unit tasked to find out the relationship between BATSA and 14 other tobacco companies in South Africa and the illicit trade in cigarettes and tax evasion. KPMG never raised this conflict of interest.

KPMG International also worked for BAT in the 1990s to help BAT to rebrand itself as a “responsible company, within a controversial industry”. KPMG internal documents at the time noted that there were three core problems with trying to reposition BAT as “responsible”. These three core problems remain today:

  • “Tobacco products kill people”;

  • “They also cause serious illness and impose an unreasonable burden on health facilities worldwide”;

  • “Tobacco products are addictive”;

KPMG’s reports on the scale of the illicit trade in tobacco products in the European Union (EU), and on plain packaging in Australia have been strongly criticised for peddling misinformation by independent researchers and the Australian government.

There is clearly a long history of KPMG working with the tobacco industry both in South Africa and globally to mislead the public about the harm caused by the product, the size of the illicit tobacco trade and the role of the tobacco industry in the illicit trade of cigarettes.

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