In what has been hailed as a breakthrough in the campaign against cigarette smuggling, former Oakbay Trading director DP Naik has been jailed for 10 years after being convicted of fraud and violating the Customs Act and Special taxes.
Naik was found to have forged export documents and returned cigarettes to South Africa without paying excise or duty.
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Naik falsely claimed that he was exporting cigarettes to Zambia to avoid having to pay excise taxes and duties.
Oakbay is one of the companies owned by the Gupta family. In July 2021, Interpol issued ‘red notices’ for two Gupta brothers accused of corruption in South Africa, Atul and Rajesh (and their wives).
Tax Justice South Africa (TJSA) applauded Naik’s incarceration following his conviction for a multi-million rand cigarette tax scam.
TJSA founder Yusuf Abramjee says: “Scams like these ‘ghost exports’ cost South Africa more than 20 billion rand a year when we desperately need that tax revenue to defeat the pandemic.”
Abramjee says authorities must take more action against criminals who plunder the country through rampant illicit trade.
“SA Revenue Service [Sars] Commissioner Edward Kieswetter deserves praise for this revolutionary conviction. But this offense is only the tip of the iceberg.
“Criminal manufacturers are flooding stores across the country with illicit cigarettes. These industrial-scale looters are public enemy number one and it should be a national priority to bring them to justice. ”
Naik was convicted on five counts of fraud and for violating Section 80 (1) of the Customs and Excise Law, causing damage to the Sars of R 18 million.
Kieswetter commended the investigation team and the cooperation of the National Tax Authority (NPA) for achieving a conviction and sentence.
“Sars has repeatedly stated that organizing will make it difficult and costly for taxpayers and merchants who willfully violate the law and undermine the Sars mandate to collect revenue.
“We are committed to helping those taxpayers and merchants who seek to voluntarily comply with their legal obligations. Several digital channels have been created over the years to facilitate and simplify the compliance of these taxpayers ”.
Kieswetter says this conviction sends a signal that Sars has zero tolerance for criminal behavior.
Tobacco growers welcome the news
The conviction was also welcomed by the Black Farmers Association (BFA).
“At least 30 of our members have gone out of business due to the shrinking market for legal tobacco products,” the BFA says in a statement.
“Although Naik’s jail sentence will not bring them back into business immediately, it is certainly an indication that law enforcement authorities and, in particular, Sars are starting to target the ringleaders. Hopefully this will result in legitimate farmers, processors and manufacturers benefiting from increased sales of legal products.
“The dark tobacco growers in South Africa have no sympathy for Naik and his cronies. They should be sent to jail, for as long as possible. The orange monkeys are their future and they should know it. ”