CONTRABAND POLICING IN SOUTH AFRICA: AN
EVALUATIVE STUDY
Godfrey
Thenga 1
1 Senior lecturer in the Department of Police Practice,
College of Law at the University of South Africa, Office No. 432E, Tswelopele
Building, Christian de Wet Rd & Pioneer Avenue Roodepoort, South Africa,
1709. Email: tshabg@unisa.ac.za.
|
|
|
ABSTRACT |
|
Keywords: Policing; contraband; goods;South Africa; corruption; intellectual
property; crime; money laundering; |
|
South Africa forms part
of the global village and is not indemnified against the contraband menace.
These substandard goods pose physical and health risks to consumers. Despite
comprehensive legislation that prohibits the trade in contraband goods, the crime
still continues. This study explored ways in which
policing of contraband goods is conducted in South Africa and the capacity of
law enforcement agencies to police this crime amid other serious crimes
ravaging the country. A qualitative research design was adopted in this
study. A literature review, interviews and observations were conducted to
provide an aerial view of this problem. The interview schedule with
open-ended questions was used, which allowed participants to explain their
viewpoints on the policing of contraband goods. Data was collected from
members of the Specialised Commercial Crime Unit, the South African Police
Service’s Crime Prevention Unit, the Department of Trade and Industry, brand
holders, attorneys and prosecutors who prosecute contraband crimes. The
involvement of organised criminals exacerbates the problem as indications are
that corruption is rampant in law enforcement agencies and government.
Corrupt law enforcement officials and senior government officials allow
contraband trade to thrive. A shortage of skilled police members and a lack
of training are identified as some of the problems. The findings of this
study can serve as guidelines for preventative and reactive response
mechanisms and can suggest ways of improving efficiency and effectiveness in
policing contraband goods. Publisher All rights reserved. |
INTRODUCTION
South Africa is awash
with contraband goods. It costs the country a great deal of money to dispose of
them safely (South African
Institute of Intellectual Property Law,
2015). The streets and shops in the country’s biggest cities are inundated with
traders who, daily, sell contraband goods to knowing and unsuspecting
consumers, despite the fact that trading in contraband
goods is an intellectual property crime. Contraband dealing is a crime that,
among others, infringes on intellectual property and it is consumer fraud as
some of the goods are smuggled into the country in violation of the laws. Some
of the goods are registered to be sold only in specific markets and may not be
suitable for the other markets into which they were smuggled. Contraband
dealing takes place in both branded and generic products (Chorev,
2015: 171)The crime hampers innovation and creativity
in all nations (Pascu, Nedea & Milea,
2012: 150). Goods that are protected by intellectual property rights
enjoy a domination status conferred by the state to prevent exploitation by
unscrupulous people who would want to steal creative and innovative products of
others (Staake & Fleisch, 2008:33). By law, only legitimate manufacturers should
produce and distribute goods, without having to compete with illegitimate
dealers in the market. It is the duty of law enforcement officials in every
country to enforce the law and prevent crime. In South Africa, the South African
Police Service (SAPS) is responsible for enforcing the law and policing crime
that occurs within the borders of the country.
Contraband
goods manufacturers are located in countries around
the world. Often, the manufacturers of contraband goods and dealers form part
of organised criminal groupings and, to make matters worse, they make use of
unregulated and hazardous materials in producing such goods. Contraband goods
are often an imitation of genuine goods that are smuggled into the country in
dubious ways by the criminals without the permission of the owners of original
goods (Beauchamp, 1998:278).
Consumer fraud involves the use
of falsehood to misrepresent facts to deceive consumers. Production of
contraband goods that resemble genuine goods, and the selling of such goods
purported to be what they are not, with the ultimate goal
of making an exorbitant profit, amounts to consumer fraud (Treadwell, 2011:176). Criminals who reproduce goods
that are owned by other people, earn an unlawful income because they had not
spent money on conducting research, developing the goods and procuring quality
materials. A study conducted by BASCAP (2009:i) on
the dangers and extent of contrabands and pirated goods, revealed the grievous
losses that contraband goods cause governments and the lawful owners of genuine
goods to suffer. Contraband goods stall economic growth as taxes are not paid
to the tax collector, the South African Revenue Services in the case of South
Africa. Jobs are lost as criminals do not employ many people, nor do they have
research and development teams working in their organisations as opposed to the
genuine goods industry. Innovation suffers because contraband products
discourage creativity and slow sector or industry expansions, which lead to mass
job creation. Consumers across the world may suffer injuries. Finally, the
legitimate owners of genuine goods become reluctant to invest in expansion
drives and increase their presence in businesses.
Contraband
goods have not been tested by authoritative and accredited institutions to
determine if the materials used in producing them may be harmful to people and
environment. Even the consumers of contraband goods find it difficult, if not
impossible, to distinguish between genuine and contraband products without
carrying out tests (Bian & Veloutsou, 2007: 212).
Owing to this, criminals leverage on this lag and continue to sell these goods
on the street and in shops to consumers in many countries, including South
Africa.
Despite a considerable body of
literature on the dangers that contraband products and goods piracy pose to
people both nationally and internationally, no research study has yet been
conducted on the policing of contraband goods in South Africa and on the
African continent. It is against this background that the article will
highlight the extent of the problem in South Africa from a policing perspective
and the issues which complicate the policing of it. Furthermore, this study
will suggest guidelines for the policing of such goods in order to suffocate
the trade.
Definition of Concepts
THE PURPOSE OF THE RESEARCH
The main purpose of this research is to evaluate
the policing of contraband in South Africa due to the increase in dealing in
contraband goods and its financial implications on the economic wellbeing of
the country. From the onset, it has to be acknowledged that the upsurge in
contraband is not only a challenge in South Africa, but a universal challenge,
as asserted by Basu and Lee (2015:39); the European
Commission (2014:7); and the OECD (1998:4). Since
dealing in contraband is a financial crime that is growing significantly all
over the world, article 61 of the Agreement on Trade-Related Aspects of
Intellectual Property Rights, 1995, requires countries to provide for criminal
procedure and penalties for dealing in contraband, and recommends that
sanctions should include imprisonment or monetary fines that are sufficient to
deter perpetrators from infringement.
The extent and magnitude of
contraband could also be attributed to its ability to generate huge financial
benefits for the dealers. Heinonen and Wilson
(2012:273) and Zibas (2012:22) state that it is
difficult to resist committing this crime due to its huge annual turnover, and Bikoff, Heasley, Sherman and Stipelman (2015:246) indicate that, in 2015, contraband
trade accounted for 10% of the global trade. This explains why some organised
crime syndicates embark on the trade because they perceive it as a lucrative
business (Rojek, 2016:1). Policing therefore becomes
more difficult, largely because of the money involved in the trade that enables
dealers to be innovative in smuggling contraband into the country to sell to
consumers. Contraband decreases the status of genuine products and undermines the
legitimate business of brand holders (Basu & Lee,
2015:40), ultimately affecting consumers’ confidence in legitimate goods and
damaging the reputation of legitimate companies. It also has a ripple effect in
terms of the loss of revenues, increased costs associated with the containment
of infringement as well as threatening job security and consumers’ health and
safety (Whitelaw, Smith & Hansen, 2012:418).
Mackenzie and Hamilton-Smith
(2011:20) and Heinonen and Wilson (2012:274) state
that the proactive policing of contraband relies more on the positive
identification of the goods as being contraband goods. The effectiveness of
this approach is negatively affected by concealment of goods’ provenance and
the high technology used in production which minimises their detectability by
law enforcement officers. The CEPOL (2015:14)
emphasises the need for and importance of a multi-agency approach and use of
intelligence operatives to deal with contraband problems effectively and
efficiently. The use of informants and community participation in policing
would assist to lessen the crime. According to Newham and Faull (2011:47), this
can also be supplemented by shared policing duties between public, community
and private law enforcement agencies in the identification and detection of
contraband goods, considering that private investigators are employed by brand
holders and do have the resources to test whether the goods are contraband or
genuine.
In South Africa, contraband
dealing is a punishable offence and genuine goods holders are empowered by
legislation such as the Counterfeit Goods Act 37 of 1997, the Copyright Act 98
of 1978, the Trademarks Act 194 of 1993 and the Merchandise Marks Act 17 of
1941, to institute either civil and/or criminal proceedings in this matter. The
advantage of civil proceedings to goods owners is the higher level of
compensation they get on successful prosecution of cases of contraband dealing
(Thenga, 2018: 108). Added to this is the low level of the burden of proof in
civil cases that is based on a balance of probability as opposed to proof
beyond reasonable doubt in criminal cases. This study focuses on the policing
of contraband in South Africa and analyses the competences and aptitudes of the
SAPS and other law enforcement agencies to police it.
MAGNITUDE AND DRIVERS OF CONTRABAND
In 2008, contraband dealing business in the
globe stood at around 10% of the world’s trade, with the industry estimated to
be making about $600 billion annually (Lewis, 2009:47). The amount involved in
contraband has increased dramatically, as can be deduced from Moneyweb (2011:1), who indicates that contraband seizures globally
increased by 46% annually from 2011. In the African continent, contrabands
medicines cause the death of over 100 000 people annually (Bikoff,
Heasley, Sherman & Stipelman,
2015: 246).
Depending on the market and
economic conditions in a country, contraband goods are commonly sold to the
public at a discounted price, while in some instances, they are sold at the
same price as the genuine goods, advertently hiding the fact that goods are
contraband in order to hide their true state (Chorev,
2015:163). Contraband dealers turn to target young people due to their gullibility
and desire to purchase fashionable goods as well as contraband goods being a
lucrative market (Spoor & Fisher, 2013:3), but this target becomes broader
due to the variety of goods that are contraband and the demand for such goods. The African continent becomes a target as it
has the largest concentration of young people in the world (UN, 2017:1). In
addition, South Africa has a lucrative market with a booming business in
contraband goods. The good quality of some contraband goods appeals to most people,
convincing them that contraband are genuine goods that meet the standards for a
market and worth the amount of money they pay (Bian
& Veloutsou, 2007:212 & 214).
Technological innovation plays
a big role in the spread of contraband by facilitating their distribution and sales, and concealing their status as well as their illicit
operations. This is amplified by the use of internet
and social media to spread the illicit business all over the world, which also
makes it easier to manufacture goods in one geographic location and distribute
them all over the world (The Patent Office, 2006:2). This situation is
exacerbated by the significantly low
risk of arresting contraband dealers and sellers, given the fact that in many
developing countries the police tend not to consider contraband dealing a
top-priority crime and the high legal cost incurred by brand owners in the
prosecution of contraband dealing. Moreover, the outcomes of court processes
are uncertain, and enforcement of court orders is tedious and costly (Deveymaeker, 2015:34). Mohamed and Wahid (2014:252)
emphasise that, even though contraband goods have dire consequences for the
economic wellbeing of the affected countries, penalties in the
majority of countries as taxes were not paid when they were smuggled
into the country. Moreover, penalties in most countries are less severe in
comparison to other related crimes.
Poor
management of ports of entry are facilitators of contrabands (Cabezas, 2010:
181). For instance, in 2008, OR Tambo International Airport was identified as a
major destination of inbound contraband goods (SAFACT, 2009:2), resulting in
South Africa being rated number 16 out of the 20 countries that lose up to R21
million annually on intellectual property violations (Spoor & Fisher, 2008).
In
South Africa, contraband goods are sold in busy streets and transportation
hubs. Price-quality
inference is another factor that lures consumers into buying contraband goods.
This was confirmed by the study conducted in South Africa in 2016 by Chuchu, Chinomona and Pamacheche (2016:328). The higher the price discount, the
more consumers are enticed into buying contraband (Penz,
Schlehelmilch & Stottinger,
2009:75). Despite the fact that, in some instances, consumers purchase the goods not knowing that they are
contraband goods, it still constitutes product fraud, as prescribed by the
Consumer Protection Act 68 of 2008.
THE IMPACT OF CONTRABAND
In addition to the fact that dealing in
contraband constitutes a crime in South Africa and many other countries, it
also impacts negatively on the running of businesses and the tax revenue of the
affected countries, and has a severely negative impact on international trade
and the global economy (Pascu, Nedea
& Milea, 2012: 148). Businesses lose revenue, which
has negative consequences for business sustainability, as it ultimately hampers
new product development owing to a lack of money for product research and
development. These negative factors lead to disinvestment and/or capital flight
(Ampratwum, 2009:74). In a nutshell, contraband
dealing causes businesses to lose money due to lost sales, lower profits, less
royalties, and loss of trust in the brand. Eventually, businesses reduce the
financial loss by cutting jobs and reducing investment, ultimately leading to
lower economic growth for a country as there would not be any tax contribution.
The financial cost to businesses and the country
of dealing with contraband is huge, because it ranges from the cost involved in
its policing to tax evasion. In terms of policing, the government might have to
increase the deployment of police officers, which, according to Cohen
(2000:272), might warrant increasing the policing budget by hiring additional
police officers dedicated to dealing with this crime. In terms of revenues,
governments also lose revenue that could have been collected from legitimate
businesses (BASCAP, 2009:10). Ultimately, contraband trade stifles the sale of
the genuine and legitimate goods manufactured in South Africa and those that
are legally imported from outside the country (Dlabay
& Scott, 2011:200).
Contraband goods damage the
brand name of genuine goods, because the dealers deceive the buyers on the
status of the goods that they are buying, thus causing them to second-guess the
status of that brand every time they consider purchasing it. Ultimately, that
affects the relationship that people have with the legal good (De Chermatony, Mcdonald &
Wallace, 2011:397), which is in turn exacerbated by the fact that the expertise
and the sophistication with which contraband are produced, enhance their
ability to resemble genuine goods, making it difficult if not impossible for
people to distinguish between them. Most contraband dealers use sophisticated skills and expertise to make
contraband goods look like genuine goods or products (Von Lampe, 2011:158).
That places an extra
burden on businesses to guard against the risk of being wrongly litigated due
to harmful products sold by them that consumers mistake for genuine brands (Heinonen & Wilson, 2012: 273).
Legislative framework and the policing of contrabands
South Africa has several pieces of legislation
that criminalise dealing in contraband and intellectual property violations,
that are grounded in the Constitution, and which protect private property
(South Africa, 1996). Legislation is manifested in various acts, such as the
Trademarks Act 194 of 1993 that criminalises trademark infringements; the Tobacco Product Control Act 83 of 1993 that
criminalises deceptive or misleading packaging on tobacco products and physical
goods that do not meet the stipulated specifications; and the
Counterfeit Goods Act 37 of 1997, which criminalises counterfeiting and
contraband dealing in South Africa and empowers the police to arrest and
facilitate the prosecution of infringers. The Copyright Act 98 of 1978 and Trademarks
Act 194 of 1993 punish goods piracy and the Customs and Excise Act 91 of 1964 empowers the customs
officers to detain any imported goods into South Africa to ascertain goods that
are counterfeit (in terms of section 15 of the Counterfeit Act) and those that
infringe on copyright in terms of section 113A of the Copyright Act. In an attempt to
protect and enforce intellectual property rights, it provides for both civil
and criminal remedies against offenders. Criminal proceedings are preferred in
deliberate infringements or infringements for commercial purpose that harm
brand holders’ products (Thenga, 2018:83). Many of
the contraband products bear famous and well-known brand names, which violate
both the Trademarks Act and the Counterfeit Goods Act.
Strategies that are designed
to deal with contraband goods in South Africa are mostly directed towards
arresting the sellers of contraband goods and not necessarily contraband
dealers and producers. Therefore, the enforcement does not deter the suppliers
of contraband goods (WIPO, 2009:19).
An orthodox policing approach
in the policing of contraband goods is not effective due to the complex and
multidimensional nature of this crime. The internationalisation of this crime,
its magnitude and the sophistication with which it is committed, renders it
impossible for any business to address the problem on its own (Blackstone &
Hakim, 2013:157). Currently, there are
fragmented law enforcement agencies, such as the border police and Specialised
Commercial Crime Unit of the South African Police Service, customs and excise officials from the South African
Revenue Service, and officials from the Department of Trade and Industry. The
Specialised Commercial Crime Unit and the Department of Trade and Industry
officials police contraband goods that have already entered the country through
the borders and are sold on the open market (Thenga, 2018:84). The Specialised
Commercial Crime Unit uses prosecution-guided investigation as opposed to
prosecution-led investigation in this regard (South Africa, 2006:112).
Trademarks enable brand
holders and producers to distinguish their goods from other competing goods (Welchy, 2010:361), and the police rely on these identifying
characteristics to police and investigate infringements. They are then able to track where the goods
originate from and locate the owners.
Over the last few decades,
sales of contraband goods have increased astronomically in the world, including
South Africa (Penz et al., 2009:89). This has stimulated private
investigators of the brand owners to conduct surveillance that is succeeded by
test purchases, where investigators masquerade as buyers in order
to have evidence of contraband goods for court purposes. When they find
evidence of violations, they contact the police or other competent law
enforcement agencies to investigate.
These private investigators
then provide the police with all the available information on the infringement
so that a warrant of search may be sought, and prosecution proceedings
initiated. If the brand owner believes that the goods may be hidden or
destroyed by the suspect, he or she may apply for a preservation order to
obtain and preserve evidence of contrabands so that they do not get
destroyed and/or hidden away by the infringers. This order enables the police
to safekeep the goods, pending the application of a warrant of search and seizure
subsequently (Mogase, 2011:65).
Challenges in Policing Contraband Goods
According to Naude (2015:257), the police do not
conduct spontaneous raids or sting operations in order to avoid litigations as
they must be certain that a search and seizure warrant would have been issued
for the raid. This poses a huge
challenge to the police as they could be litigated and required to pay a lot of
money. In the 2014/2015 financial year, the pending civil claims against the
SAPS stood at over R26 billion (Deveymaeker,
2015:29).
The SAPS has generally lost
skilled members who could make a huge difference in reducing the crime rate
(Mofokeng, 2012:71). This loss of expertise left the SAPS with few members in
the SAPS to police contraband goods. This tends to be exacerbated by the
failure of these officers to call the brand holders’ experts to test and
analyse the goods so that proof of contraband dealing can be produced in court
(Thenga, 2018:87).
Many
police members are not trained in the policing of contraband goods, except a
few who are attached to the Specialised Commercial Crime Unit, some members of
the Customs and Excise division and officials of the Department of Trade and
Industry (Thenga, 2018:84). According to Nalla and
Newham (2013:63), even the training that is offered to police officers is
insufficient; moreover, the police are also poorly resourced. This overwhelms the police,
and the fact that both the police and custom officials lack sufficient
expertise to identify the intellectual property rights infringements,
exacerbates the situation. According to Thenga (2018:86), the fact that the buying of contraband goods for personal use
is not a crime in South Africa makes policing more challenging, as the police
will have to prove that the person is dealing in contraband goods. This
would necessitate the use of a multi-agency approach that could use collective
resources and expertise to deal with contrabands. Currently, the existing law
enforcement strategies do not bring together different parts of government,
industry, policymakers, and the police to create a coordinated approach in
dealing with contraband goods (The Patent Office, 2006:4). Most of these law
enforcement agencies operate in isolation, with each looking to increase
confiscation statistics and chasing to meet the target, other than arrest the
dealers. That is compounded by the trust deficit between the police and the
community where trust levels have seriously deteriorated, which leads to
community apathy towards the police (Burger, 2011:13).
The
policing of contraband is also made worse by uninformed consumers, modest
resources of the country and porous borders between different African
countries, which yields easy transit points (Ferguson & Schneider,
2015:270). Steinberg (2005:4) reveals that contraband goods are smuggled over
land borders and also by means of light aircraft
across neighbouring countries as this activity is not easily suspected by the
police. This modus operandi requires high police intelligence for successful
policing in this regard. That is why Ratcliffe (2003:2) encourages the use of intelligence as a tool in
preventing and fighting crime, especially when one considers that the equipment
used in pirating goods produce the exact duplicate of the product being
pirated, making it difficult to notice the difference. Criminals also use
reverse engineering, whereby they purchase and strip genuine items to study how
they could be replicated (Naude, 2015:252). Once it is known how they are made,
they replicate them in large quantities and sell them to distributors and
consumers.
The situation is compounded by
the need for expert testimony for successful adjudication in contraband cases.
That should be preceded by the testing of the contraband product, especially in
cases where the accused disputes that the product is a contraband. This is
difficult for police, as the police do not have expert testers within the organisation, and getting the services of brand holders’
experts is a tedious and expensive process. However, without that expertise, it
is difficult for the police to prove the goods are contraband and/or to prefer
a charge of contraband dealing on a suspect (Bumatay,
2015:342). The problem of lenient sentences to perpetrators exacerbates the
problem (Cabezas, 2010:180).
RESEARCH METHODOLOGY
Although this article
deals with the policing of contraband goods in South Africa as a whole, the
provinces Gauteng, Western Cape, Mpumalanga and KwaZulu-Natal were especially
selected for this empirical research because they have task teams that are responsible for
policing contraband and are attached to the Specialised Commercial Crime Units.
Secondly, these four provinces have a
higher incidence of contrabands in the country. The succeeding three
research methods were used to collect data:
Purposive sampling – Purposive sampling was used to
identify and interview investigators
who investigate contraband. Gauteng
had six investigators, all of whom were interviewed; Mpumalanga had three, all
of whom were interviewed; KwaZulu-Natal had six, all of whom were interviewed;
and the Western Cape had five, all of whom were interviewed. These
investigators were selected for interviews based on their intimate knowledge
and experience in the policing of contraband goods. Purposive sampling was also
used to identify and interview prosecutors who prosecute counterfeit crimes.
The interviewed prosecutors were as follows: two in the Western Cape, three in
Mpumalanga, three in KwaZulu-Natal, and six in Gauteng.
Snowball sampling - Crime
Prevention Unit members working at cluster police stations next to Specialised
Commercial Crime Units who police contraband goods by arresting
vendors trading in such goods and confiscating suspicious contraband goods,
were selected through snowball sampling, and interviewed. The numbers
interviewed are as follows: Gauteng 125, Mpumalanga 84, KwaZulu-Natal 68, and
Western Cape 55.
Brand holders were
identified though snowball sampling, as follows: seven in Gauteng, one in
KwaZulu-Natal, and two in the Western Cape. Brand holders that were interviewed
in these provinces also service other provinces in South Africa. Members of the
Department of Trade and Industry who deal with contraband goods were
interviewed as follows: four in Gauteng, one in Mpumalanga, two in
KwaZulu-Natal and two in the Western Cape. Attorneys who, in most cases,
legally represent accused in contraband dealing cases and others who are
employed by brand owners or represent them in court cases, were interviewed as
follows: ten in Gauteng, two in Mpumalanga, five in KwaZulu-Natal, and four in
the Western Cape.
Observation - Observations were conducted on
how participants (police officers and
the Department of Trade and Industry officials) conduct themselves during the
raids, and notes were taken. Permission was granted by the responsible
employers that observation be conducted without those being observed knowing
that they were being observed. This would ensure that they did not modify their
practice due to being observed, as this could have led to inaccurate findings.
The
research focused on the policing of contrabands goods from 01 April 1998 to 31
March 2018, a period of 20 years. This period is significant as a result of its
association with the start of the democratic dispensation in South Africa. It
is characterised by increased trade with the international community and
augmented migrant intake, as the country had opened its doors to the world.
FINDINGS
The literature, supported by most participants
from the Specialised Commercial Crime Units, Crime Prevention Units and
prosecutors, indicate that dealing in contraband is extremely lucrative for
perpetrators. That is why there is constant innovation and increasing
sophistication to selling contraband into South Africa. According to several
participants, some of the illegal and prohibited goods are transported to and
from neighbouring countries and cities with private jets, which law enforcement
would not suspect. Other contraband goods are brought from various countries in
different batches without identifiable marks, and once they are in the country,
marks are affixed to the goods and they are sold by the victims in the markets.
Literature reveals that
successful policing of prohibited goods requires a collaborative approach
between the police and the private investigators hired by brand owners who test
disputed contraband goods. Since private
investigators working for brand owners are located in big and economically
thriving cities such as Johannesburg, Pretoria, Durban, Bloemfontein, Mbombela,
Polokwane, Kimberly, East London, Mahikeng, and Cape
Town, they are not readily available in most areas to assist in the fight
against prohibited goods. Even though brand owners explain that such a location
is based on sound financial considerations for their business, it does hamper
the effective and efficient policing of their goods.
Members of the Specialised
Commercial Crime Units and Crime Prevention Units indicated that corruption is
another factor that stifles an effective fight against contraband, because some
police officials demand bribes and abdicate their responsibility of
confiscating illegal goods and arresting the perpetrators. Members of the
Specialised Commercial Crime Units stated that the effective policing of
contraband is further hampered by the fact that not all owners of legitimate
gods are available to confirm if alleged contraband goods are legitimate or
not.
Members from Specialised
Commercial Crime Units, Crime Prevention Units, the Department of Trade and
Industry, Department of Home Affairs and brand owners stated that arrested
contraband goods sellers are represented by reputable lawyers and, if
convicted, they mostly do not go to prison because they are given the option of
paying a fine. This was emphasised by one member of the Crime Prevention Unit
who stated that “even the presiding
officers do not impose sentences that are proportional to crimes committed”.
Members of the Specialised
Commercial Crime Units, prosecutors and attorneys of the owners of legitimate
goods indicated the difficulty of identifying and arresting leaders of
organised crime trading in prohibited goods because they live all over the
world. This is coupled with the difficulty of producing sufficient
evidence that directly links them to dealing in prohibited goods that are found
elsewhere so that they could be successfully convicted, because they make use
of other people to sell their consignments in various countries. They also
mentioned the tedious process of extraditing those who are arrested for
prosecution in South Africa, because not all countries have extradition
treaties with South Africa.
In South Africa, most
prohibited goods are sold from unmarked stalls and undemarcated
areas and, according to members of the Specialised Commercial Crime Units,
prosecutors, some members of the Crime Prevention Units and brand owners, this
makes it difficult for the police to obtain a warrant of search and seizure, as
the fixed physical address is a prerequisite for granting such a warrant.
Pinpointing unmarked stalls could lead to search and seizure at the wrong place
and expose the police to litigation.
According to some members of
the Crime Prevention Units, Specialised Commercial Crime Units, Department of
Trade and Industry, attorneys for brand owners and prosecutors, most prohibited
goods sellers in South Africa are desperate economic migrants, who eventually
become contraband vendors without renting a selling space. Instead, they sell
in areas such as taxi ranks, bus ranks, open streets, streets opposite shops,
and in trains and train stations to make a living. Members from the Specialised
Commercial Crime Units, Crime Prevention Units, Department of Trade and
Industry and brand owners are of the view that there is no synergy amongst the
departments that are dealing in contraband in South Africa. Consequently, the
major departments that deal with contraband, which are the Department of Trade
and Industry, Customs and Excise and the SAPS, do not have a single system for
statistics on contraband, piracy, counterfeiting and pirates. Moreover, these
departments are characterised by the absence or poor use of information and
communications technology, which severely hampers the fight against prohibited
goods, because some contraband dealers use sophisticated information and
communications technology to communicate and transact. Proper use of synergised
information and communications technology by these departments is critical in
the effective and efficient policing of contraband goods.
According
to members of Crime Prevention Units and Specialised Commercial Crime Units,
ordinary police officers at police stations are not trained in contraband goods
policing. As a result, they do not know how to police contraband goods or to
properly process the reported cases of contraband goods. Some crime prevention
members indicated that when confronted with this challenge, they opt not to
vigorously pursue perpetrators of these crimes in order to avoid unnecessary
litigation, should their actions be incorrect. They indicate that, in most
instances, the police confiscate the contrabands from vendors and keep them at
police stations and if they are not claimed back after a certain period, they
are destroyed.
The
researcher, supported by members of Crime Prevention Units and some members of
Specialised Commercial Crime Units, observed that there are no guidelines on
how to process contraband cases at police stations. This is exacerbated by the
absence of a support structure, such as the contact details of members of the
Specialised Commercial Crime Units, who should be contacted should the police
station receive cases of dealing in contraband goods. Some members of the
Specialised Commercial Crime Units and Crime Prevention Units attribute these
challenges to the centralisation and compartmentalisation of the policing of
contrabands.
Members of the Specialised
Commercial Crime Units, Crime Prevention Units, the Department of Trade and
Industry officials, brand holders, prosecutors and attorneys are of the view
that corruption in the policing of contraband goods fuels criminality even at
the ports of entry, where Customs and Excise officials and the police allow
contraband goods to enter the country. That is then often sold by victims of
human trafficking in the streets, shops, at flea markets and transport terminals.
In some cases, unscrupulous police officials do not confiscate the contrabands
but allow vendors to sell them and extort money from them regularly. If the
goods were confiscated by other members, the dishonest members would resell
back the goods to the contraband goods dealers and/or vendors at a lower price
so that they can continue with business. According to members of the Crime
Prevention Units, this puts the lives of committed, dedicated and honest police
officers at risk as they constantly receive death threats from criminals who
mastermind these sales and are suspected to be in cahoots with corrupt police
officials. One of them emphasised this by stating that “many police officials are themselves criminals”. Corruption in this
regard was further emphasised by members of the Specialised Commercial Crime
Units, Crime Prevention Units, the Department of Trade and Industry officials,
brand owners and their attorneys, who stated that some police officers tip off
criminals regarding impending police operations, such as search and seizure of
contraband goods. Moreover, sometimes, police members at ports of entry are
instructed by senior officers of the police and Customs and Excise not to
search specific consignments that are entering the country, which raises
suspicion that some crime syndicates have links with senior officers and pay
them bribes in exchange for protection so that their illegal businesses can be
continued.
Members of Specialised
Commercial Crime Units, some members of Crime Prevention Units and officials
from the Department of Trade and Industry stated that some contraband goods
highly resemble the legitimate goods due to using high-quality manufacturing
equipment, thus making identification by the police difficult if not
impossible. Since the confiscated goods need to be tested, and some legitimate
producers live in foreign countries, it is very expensive for them to avail
their testers and equipment to conduct analysis and tests in South Africa. One
Crime Prevention Unit member emphasised this by stating that “a naked eye cannot see what contrabands are
and what are not”.
RECOMMENDATIONS
An effective and efficient contraband policing strategy needs to be backed
up by an effective anti-corruption drive for the law enforcement agencies, including suppressing the
desire to accept bribes. A dedicated Anti-Corruption Unit comprising police
officials, Department of Home Affairs, Metro Police Departments and
Municipality Police, Department of Trade and Industry officials as well as
officials from Customs and Excise should be established at the ports of entry.
Such units will conduct observations, surveillance monitoring and entrapments
at these points of entry to increase the potential offender’s perceptions of
being caught and punished. This could enhance the security at the ports of
entry and ultimately minimise the inflow of contraband into the country.
This reactive measure should
be supported by compulsory vetting and regular lifestyle audits of the
officials of these departments who work at the ports of entry, to ensure that
they are not contaminated. Regular lifestyle audits would deter the members
from being susceptible to corrupt practices.
There is a need to deal with
the current fragmented and uncoordinated approach among the Department of Trade
and Industry, Customs and Excise and the SAPS in policing contraband through
effective and efficient collaboration that should extend to the interface in
their information and communications technology to capture and share the
captured information on contraband and contrabands dealers. This should be
augmented by joint operations conducted by the SAPS and Metropolitan and
Municipality Police Departments and supported by expertise from brand holders
to get rid of the contraband that are sold on many street corners. This will
enable all entities to achieve their organisational objectives, as the SAPS
will be reducing contraband, the Metropolitan and Municipality Police
Departments will be effectively enforcing the municipal by-laws, and the brand
holders will be protecting their businesses and brand reputation.
Policing contraband needs a specialised skills set and a dedicated Anti-Contraband Unit
to deal with it in major cities in the country, namely Johannesburg, Pretoria,
Durban, Bloemfontein, Mbombela, Polokwane, Kimberly, East London, Mahikeng, and Cape Town. This will deal with the source and feeder of
contraband, because it is relatively easy to establish a legitimate business
that could be used as a front to disguise the production of such goods in big
cities due to the density of the population and industries. This will be
difficult to achieve in small towns with few industrial areas and a strong
societal bond. Focusing on big cities could go a long way in stabilising this
rampant crime and gradually reducing it until it is eradicated.
The focus on big cities will
not negatively affect the prevention, detection, investigation and prosecution
of this crime in small towns, villages, informal settlements and rural areas
because the SAPS operate nationally. However, they should develop standard
operating procedures and guidelines on how the Anti-Contraband Unit should work
with police stations in their respective provinces to deal with contraband.
Having a specialised unit in big cities will also enable it to work with brand
owners and other agencies such as the Department of Trade and Industry,
Department of Home Affairs and Customs and Excise, who are largely found in big
cities, as the capacity and expertise of brand owners are critical for dealing
effectively with contraband. The proposed Anti-Contraband Unit should have
members who specialise in online intelligence to monitor online advertisements
and sales. This would enable this unit to detect and shut down such websites
and arrest the alleged dealers, which is essential, as the contraband business
modality is moving online where sellers order and purchase the goods.
Based on the variety and quantity
of contraband goods in circulation, it will be
unrealistic to expect the brand owners to have all the equipment and experts to
test disputed goods at all times in all instances. The magnitude, harmfulness and the financial value of the contraband
could be used as criteria to prioritise the goods that should be focused on.
This should not be construed
as placing less value on other types of contraband, but should be understood as
acknowledging the magnitude and complexity of what must be done and the capacity
to do it thoroughly, procedurally and systematically to outwit the intelligence
and sophistication used by criminals in contraband trade.
The selling of contraband from unmarked stalls in various cities and towns
makes it difficult for the police to obtain a warrant of search and seizure,
because the fixed physical address is a prerequisite for granting such a
warrant. To obviate this, there will be a need for a collaborative approach
between the proposed Anti-Contraband Unit, brand holders and the municipalities
to deal with the challenges of unmarked stalls by ensuring that the
municipalities mark stalls and enforce the by-laws. This will ensure that
vendors operate from the designated areas and marked stalls, particularly for
the prioritised goods of that time period. Adherence to this will minimise
litigation against the police for searching, seizing and arresting the wrong
people.
Contraband cannot be
successfully policed by only focusing on the sellers and not dealing with or
closing available markets. As the growth of trade in contraband is largely
influenced by available markets, closing production sites will minimise the
need to produce large quantities of contraband, as the sellers will have no
market for their products. Criminalising the purchase and the
possession of contraband goods, knowing it to be prohibited and illegal goods,
could go a long way in minimising this crime, compared to the current situation
where only sellers and dealers are arrested and prosecuted. The arrest and
prosecution of buyers of contraband, knowing it to be contraband, will
consolidate the fight against it by incorporating the arrest and prosecution of
producers and sellers, as well as the buyers and consumers of such products.
Dealers
in contraband often make use of vulnerable, undocumented foreign nationals to
sell goods for them. South Africa should enforce immigration laws to curb
abusive practices by the dealers of contraband goods. Law enforcement agencies
should arrest and deport people who have not entered the country legally. This
will stop the abuse of vulnerable people by illicit dealers and will also put a
stop to law enforcement officials who constantly demand bribes from
perpetrators of crime.
In developing countries, including South Africa, contraband trade is a
complex, multimillion-dollar crime that cannot be effectively policed by the
SAPS alone. The police need the cooperation and expertise of all concerned,
considering the sophistication and skills that are used to produce and smuggle
contraband inter-countries. The intricate involvement of syndicates in the
trade augments the problem for the police. The findings and the implementation
of the recommendations of this article could contribute to the effective and
efficient policing of contraband in South Africa, especially since current
policing strategies used to deal with this crime are not producing the desired
results. This is evidenced by the availability of contraband in most
marketplaces across the country, and the impunity with which contraband goods
are sold on most street corners in the country. This is despite contraband not
having been approved to be sold to people. They have the potential to pose a
threat to humans and negatively affect the environment. Policing of contraband
cannot be conducted efficiently and effectively by a single entity without the
involvement of intelligence and communities.
REFERENCES
Ampratwum, E.F. (2009). Advance fee fraud ‘419’ and investor
confidence in the economics of sub-Saharan African. Journal of Financial
Crime. Vol. 16(1): 67-79.
Basu, M.M. & Lee, Y. (2015). Factors affecting intention to
buy counterfeit products. Marketing Management Association. Springs 2015
Proceedings: 39-47.
Beauchamp, E.R.
(1998). Dimensions of contemporary Japan: A collection of Essays. New
York: Garland.
Bian, X. & Veloutsou, C. (2007). Consumers’
attitudes regarding non-deceptive counterfeit brands in the UK and China. Journal
of Brand Management, Vol.14:
211-222.
Bikoff, J.L., Heasley, D.K., Sherman, V. & Stipelman, J. (2015). Fake it ‘till we make it: Regulating
dangerous counterfeit goods. Journal of International Property Law &
Practice, Vol. 10 (4): 246-254.
Blackstone, E.A. & Hakim, S. (2013).
Competition versus monopoly in the provision of police. Security Journal,
Vol. 26(2):157-179.
Bumatay, A. (2015). A look at trade key: Shifting policing
burdens from trademark owners to online marketplaces. Hastings Business Law
Journal, Vol. 11(2): 341-360.
Burger, J. (2011).
To Protect and Serve: Restoring public confidence in the SAPS. South African
Crime Quarterly, 36:13-19.
Cabezas, M.D.
(2010). Counterfeit medicines as global treat. Pharmaceuticals Policy and Law,
12 2010: 179-192. DOI 10. 3233/PPL-2010-0304 IOS Press.
CEPOL. (2015). European Police Research
& Science Conference. Lisbon: CEPOL.
Cohen, M. (2000). Measuring the costs and benefits of crime and justice. In
Duffee, D (ed), Criminal justice: Measuring and analysis of crime and justice.
Washington DC. NIJ, Vol 4.
Chorev, N. (2015). Narrowing the
Gaps in Global Disputes The case of Counterfeits in Kenya. St. Comp. Int. Dev.,
2015, 50: 157-186. DOI 10:1007/s12116-015-9183-5.
Chuchu, T, Chinomona,
R. & Pamacheche, R. (2016). Factors that
influence the purchase of counterfeit products by students: A case of South
Africa. International Conference on Ethics of Business, Economics and Social
Sciences- ICEBESS Proceedings, 324-337.
De Chermatony, L., Mcdonald, M. & Wallace, E. (2011). Creating
powerful brands. 4th edition. Oxford: Butterworth-Heinemann.
Deveymaeker, G. (2015). Making sense of
the numbers: Civil claims against the SAPS. South
African Crime Quarterly,
54: 29-41.
Dlabay, L.R. & Scott, J.C. (2011). International
business. 4th edition. Mason. South Western Cengage Learning.
European Commission. (2014). Report on EU customs enforcement of
intellectual property rights: Results at the EU border. Luxembourg:
European Commission Taxation and Customs Union.
Ferguson, V & Schneider, M. (2016).
Enforcement of intellectual property rights in Africa. Journal of Intellectual Property Law & Practice, Vol. 10 (4):
269-279. DOI: 10. 1093/jiplp/jpv034.
Heike, S. (2010). Effects of counterfeits in the
image of luxury brands: An empirical study from the consumer perspectives. Journal of Brand Management, Vol. 18
(2): 159-173.
Heinonen, J.A. & Wilson, J.M.
(2012). Product counterfeit at the state level: An empirical examination of
Michigan related incidents. International
Journal of Comparative and Applied Criminal Justice, Vol. 36 (4): 273-290.
Joossens, L., Chaloupka, F., Merriman, D. & Yurekli, A. (2000). Issues
in the smuggling of tobacco products. New York: Oxford University Press.
Lewis, K. (2009). The fake and the fatal: The consequences of counterfeits. London:
The Park Place Economist.
Mackenzie, S. & Hamilton-Smith, N. (2011).
Measuring police impact on Organised crime: Performance management and harm
reduction. An International Journal of
Police Strategies & Management, Vol 3 (1): 7-30.
Mofokeng, J.T.
(2012). Perspectives of supervision and mentorship with in
the SAP detective service. Acta Criminologica, Vol.1: 70-84.
Mogase, K.
(2011). The battle against counterfeiting. Intellectual property. Without Prejudice, Vol. 11 (10): 64-65.
Mohamed, K. &
Wahid, R. (2014). Fighting counterfeiting: importance of enforcement of
intellectual property rights. Journal of
International Commercial Law and Technology, Vol. 9 (4): 249-257.
Moneyweb. (2011). South African
counterfeit industry worth R362 billion. Available from http:www.moneyweb.co.za/archive/sa-content-industry-worthr362bn.
Accessed on 18 February 2020.
Nalla, M.K. & Newman,<<AUTHOR: Newman or Newham? See page 10. G.R. (2013). Community policing in indigenous communities. London: CRC Press.
Naude, M.J. (2015). The fight against
counterfeit products in Zimbabwe: A case study at a South African automobile
component manufacturer. Journal of
Contemporary Management, Vol. 12: 249-267.
Newham, G. & Faull, A. (2011). Protector or
predator: Tackling police corruption in South Africa. Pretoria, Institute of Security Studies, Monograph
182: i-64.
OECD. (1998). The economic impact of counterfeit. Paris: OECD.
OECD. (1998). The economic impact of
counterfeit. Paris: OECD.
Pascu, E, Nedea, P.S. & Milea, O.M. (2012).
The non-quality of counterfeit products and their effect on consumers
and the intellectual property right. The USV Annals of Economics and Public
Administration, Vol 12(2) 16. 148-154.
Penz, E., Schlehelmilch, B.A. & Stottinger, B. (2009). Volunteer purchase of counterfeit
products: Empirical evidence from four countries. Journal of International Consumer Marketing, Vol. 21: 67-84.
Ratcliffe, J. H.
(2003). Intelligence-led Policing: Trends
and Issues in Crime and Criminal Justice. Canberra: Australian Institute of
Criminology.
Rojek, C. (2016). Counterfeit Commerce: Relations of production, distribution
and exchange. Cultural sociology.
1-16. Sage.
SAFACT. (2009). Piracy in South Africa.
Available from http://safact.co.za/piracy-facts. Accessed 20 October 2019.
South African Police Services. (2014). National
Crime statistics for the South African
Police
Services. Pretoria: Government Printers.
South Africa. (2008).
Consumer Protection Act, 2008 (Act 68 of 2008). Pretoria: Government Printer.
South Africa. (2006). Khampepe
Commission of Inquiry report 2006: The commission of Inquiry into the Mandate
and location of the Directorate of Special Operations. Final report, February.
Pretoria: Government Printer.
South Africa. (1997). Counterfeit goods Act, 1997. (Act 37 of 1997). Pretoria:
Government Printer.
South Africa. (1996). Constitution of the
Republic of South Africa, 1996 (Act 108 of 1996). Pretoria: Government Printer.
South Africa. (1993). Tobacco Product Control Act, 1993. (Act 83 of 1993).
Pretoria: Government Printer.
South Africa. (1993). Trademarks Act, 1993. (Act
194 of 1993). Pretoria: Government Printer.
South Africa. (1978). Copyright Act, 1978. (Act
98 of 1978). Pretoria: Government Printer.
South Africa. (1978). Patents Act, 1978. (Act 57
of 1978). Pretoria: Government Printer.
South Africa. (1977). Criminal procedure Act,
1977. (Act 51 of 1977). Pretoria: Government Printer.
South Africa. (1964). Customs Excise Act, 1964.
(Act 91 of 1964). Pretoria: Government
Printer.
South Africa. (1941). Merchandise marks Act,
1941. (Act 17 of 1941). Pretoria: Government Printer.
South African Institute of Intellectual Property
law. (2015). South Africa dumping ground
for counterfeit. Johannesburg: SAIIPL.
Spilsbury, R. (2009). Counterfeit: Stopping fakes and forgeries.
Los Angeles: Enslow.
Spoor & Fisher. (2013). The Allure of Africa’s rapidly Growing
economy to counterfeiters. Pretoria: Spoor & Fisher.
Spoor & Fisher. (2008). Counterfeiting: A South African Perspective. Pretoria: Spoor &
Fisher.
Staake, T & Fleisch,
E. (2008). Countering Trade: illicit
market insights best–practice strategies and management toolbox.
Heidelberg: Springer.
Steinberg,
J. (2005). The illicit abalone trade in South Africa. Institute of Security
Studies, Paper 105: 1-13. Pretoria: Institute of Security Studies.
Treadwell, J. (2011). From the
car boot to booting it up? Ebay,
online counterfeit crime and transformation of the criminal market. Criminology
and Criminal Justice, Vol. 12
(2): 175-191.
TRIPS.
(1995). Agreement on Trade-Related Aspects of Intellectual Property Rights.
Geneva: World Trade Organization.
Thenga, G. (2018:80). A critical analysis of the policing of
contrabands in South
Africa. Unpublished thesis. PhD in
Criminal Justice. University of South Africa,
Pretoria.
The Patent Office. (2006). Counter offensive: An Intellectual Property
crime strategy. Available from http://www.ipo.gov.uk/ipcrimeStratedy.ptf. Accessed on 10 January 2020.
UN. (2017). ECOSOC Youth
forum. (30-31 January 2017): The role of youth in poverty eradication and
promoting prosperity un a changing world. Office of the Special Adviser in
Africa: OSAA.
Von Lampe, K. (2011). The
application of the framework of situational crime prevention to Organized
crime. Criminology and Criminal Justice,
Vol.11(2):145-163.
Ward, M. (2011). A straight forward
guide to intellectual property and the law. Brighton: Straightforward
Publishers.
Whitelaw, B., Smith, R. &
Hansen, S. (2012). Policing disorder: Calgary Transit peace officers and the
Alberta law enforcement framework. The
Institute of Public Administration of Canada, Vol. 55 (3): 411-432.
WIPO. (2009). Advisory
Committee on enforcement. 5th session. Geneva: WIPO.
Welchy, V. (2010). Contributory
Trademark infringement: Who bears the burden of policing online counterfeit
activity? SMU Science and Technology Law
Review, Vol. XIII: 361-376.
WIPO. (2014). What is
Intellectual Property? Available from http.www.wipo.int/edocs/ pubdocs/en/intproperty/450/wipo -pub-450. pdf. Accessed on 25 February 2020.
Zibas, J.C. (2012). Defending the distributor in counterfeit cases. London:
Aspen.