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TIMB wields axe on rogue traders

TINASHE MAKICHI
THE Tobacco Industry and Marketing Board (TIMB) has wielded the axe on rogue tobacco dealers accused of an array of transgressions as the industry regulator moves towards bringing sanity to the sector, the Zimbabwe Independent has established.

The tobacco sector has of late been invaded by a group of unscrupulous traders who were involved in fleecing off farmers through inflating input prices as well as a number of allegations related to transfer pricing.

The latest revelations come after TIMB descended on two tobacco dealers whose licences have since been suspended pending investigations. The two companies are Golden Barn Tobacco and Dynamic Tobacco, who were suspended for allegedly violating stop order regulations.

Golden Barn has in the past been subject of a number of investigations from authorities on allegations of money laundering and externalisation while there are also reports of the company’s failure to pay farmers.

The latest move by TIMB comes amid a number of reports in the industry where unscrupulous tobacco dealers have been dribbling authorities while some dealers have been suspected of being involved in transfer pricing activities at the expense of the economy.

TIMB, in a statement to Golden Barn, suspended the company’s operations.

“Your operations have been suspended starting Tuesday May 17, 2022 due to the manipulation of stop over priorities and direct violation of the provisions of the Farmers Stop Order Act,” TIMB said.

Golden Barn founder, only identified as James, told the Independent that it was just a technicality issue.

“This was just a technicality issue, we did not do anything wrong,” he said.

This happened after a complaint was raised by Clarion Insurance, classified under prescribed costs in the Stop Order Act, that Golden Barn’s sale point was not honouring the priority deductions downloaded from the TIMB system.

A team of big and influential tobacco merchants have been embroiled in a transfer pricing storm with allegations of colluding on the purchase price locally but ending up amassing profits after selling to countries in Asia.

The Independent is informed that this cartel involves one of the biggest tobacco players in the country (name withheld) who has been buying tobacco locally at subdued prices and then selling the tobacco to sister companies either in South Africa or Asia at a low price. The tobacco after reaching their related companies is then sold again at massive profits much to the prejudice of Zimbabwe.

There are also strong indications that the price collusion scam has been involving top officials within the tobacco industry with some senior government officials accused of protecting certain tobacco merchants.

The Independent is further informed that some merchants are buying tobacco at around US$2 per kg and then selling to their related companies especially in South Africa at $3 per kg, but there are indications that the tobacco is then sold from the related companies to China at around US$10 per kg, meaning that the country is being prejudiced of more than double by the merchants.

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