Global South governments standing up to Big Tobacco’s rampant illicit trade interference

 

Held from 23-24 October in Quezon City, Philippines, the National Tobacco Administration’s (NTA) global anti-illicit trade summit aimed high, but like many similar efforts, fell prey to familiar pitfalls.

Launched with an address from Filipino President Ferdinand Marcos Jr, the forum brought together hundreds of stakeholders to address the country’s rising illicit tobacco trade. Yet, the event’s inclusion of local and international tobacco companies – which violates Article 5.3 of the World Health Organisation’s (WHO) Framework Convention for Tobacco Control (FCTC) –severely undermines its legitimacy, as the industry’s insincere participation at such conferences has long served to mask its illicit trade complicity.

Leveraging a network of private companies, such as Inexto, Atos and Dentsu Tracking, Big Tobacco continues to circumvent WHO rules on industry-independent tobacco control, with its playbook of manipulation on display in Europe and across the Global South. Encouragingly, governments of emerging economies are increasingly countering the industry’s attempts to derail anti-smuggling interventions – a stance from which EU policymakers should take inspiration. 

Illicit trade’s noxious global impact

According to the WHO, illicit tobacco accounts for one in every ten cigarettes smoked worldwide, with this trade’s roughly $40 billion valuation likely a major underestimation given the EU illicit market alone now exceeds $20 billion. Every year, the illicit trade deprives governments of this considerable sum in excise tax revenue, significantly hindering public health systems’ capacities to respond to the grave risk posed by tobacco products.

Moreover, with its cheaper prices and ease of access, illicit tobacco encourages higher smoking rates – particularly for young people and low-income communities – translating into an additional 164,000 premature, entirely avoidable deaths annually and a societal cost ten times greater than the tax revenue it generates, according to a White Paper produced by MEPs and tobacco control experts.

As the World Bank has rightly emphasised, “illicit trade weakens the effect of tobacco excise taxes” – the single most effective tobacco reduction tool – while providing Big Tobacco with ammunition to “misinform public opinion and unduly influence public policy,” namely by falsely attributing illicit trade growth to tax hikes.

Foundations of Big Tobacco manipulation

The roots of this harmful policy influence run deep. Indeed, leading civil society actors such as the University of Bath’s Tobacco Control Research Group (TCRG) have long cited the “overwhelming evidence of historic tobacco company involvement in the smuggling of their own cigarettes” to pad their profits amid a tightening regulatory environment, and, by extension, the industry’s “vested interest in gaining control of and undermining” anti-smuggling track and trace systems.

Consequently, the FCTC and its Protocol to Eliminate Illicit Trade in Tobacco Products, strictly prohibit Big Tobacco’s presence in track and trace, instead requiring state actors to establish and control systems supported by industry-independent technology providers.

In its efforts to swerve FCTC requirements, Big Tobacco has mobilised private companies to promote and facilitate government implementation of the Philip Morris International (PMI)-developed track and trace technology, Codentify – a system which blatantly violates FCTC and Protocol provisions.

Demasking industry’s trojan horse, Inexto 

Over the past decade, Swiss company Inexto has been a central pawn in the tobacco industry’s machinations. After Big Tobacco’s unsuccessful attempts to influence the Protocol in Codentify’s favour via the Digital Coding and Tracking Association (DCTA) – an industry front group comprised of PMI, British American Tobacco (BAT), Imperial Brands and Japan Tobacco International (JTI) designed to portray the system as industry-independent to government prospects – the DCTA sold Codentify to Inexto in 2016.

Predictably, Inexto – many of whose then-senior executives, including CEO Philippe Chatelain, helped develop Codentify while employed at PMI – has since claimed its independence from the tobacco industry and WHO compliance in order to implement the system in countries such as Lithuania, in partnership with fellow industry avatar Atos, a French IT firm. 

However, these claims have failed to convince leading tobacco control players, from the WHO to expert researchers from the University of Bath’s TCRG. Former head of the FCTC Secretariat, Dr Vera Luiza da Costa e Silva, has notably described Inexto’s track and trace system as “essentially a black box,” adding that “we don’t know what’s inside, but we do know that it’s managed and controlled by the tobacco industry” – a powerful indictment supported by minutes of meetings between Inexto and PMI.  

Global pressure mounting against front companies

In 2017, Inexto’s ties with PMI led to its exclusion from a public track and trace tender in Argentina over market corruption concerns, marking only the beginning of the company’s tender controversies. In 2020, Inexto’s contract with Pakistan’s public authorities was cancelled due to its clear tobacco industry links, a bold governance stand that Inexto has unfortunately managed to evade in countries with less stringent regulatory environments.

Anti-tobacco organisations in Côte d’Ivoire and Burkina Faso have raised similar collusion concerns believed to have facilitated the implementation of Inexto’s WHO-noncompliant system in a region of Africa where the industry-fueled illicit trade funds criminal and militant groups hindering stability and development. While authorities in the former have selected a robust track and trace system after Dentsu Tracking’s lack of independence and technical shortcomings forced its tender withdrawal, Burkina Faso is yet to root out Inexto’s presence and implement an independent system capable of cutting off a major funding source for local terrorist organisations. 

More recently, the tobacco control fight has fared better in Ethiopia, where Inexto was dismissed from a track and trace tender in October over its failure to comply with the Protocol and prove its financial independence from the tobacco industry. Indeed, Inexto greatly exceeds the WHO’s limits, with the company openly acknowledging Big Tobacco companies account for 70% of its revenue – a reality that tobacco control experts flag as a clear indication of financial, technological and governance dependence on the tobacco industry, and by extension, a questionable inclination to report illicit activity.

Despite Inexto’s fundamental weaknesses, the EU continues to look the other way. Along with Inexto, Swiss firm Dentsu Tracking, Atos and its four subsidiaries remain key players in the EU’s ineffective track and trace system, despite their deep ties to Codentify, while Inexto and Dentsu have recently solidified their partnership with a joint bid agreement for a marking tender in Lithuania. What’s more, Dentsu aims to deploy its technology across Africa, ignoring the Global Alliance for Tobacco Control’s warning that the EU system’s lack of independence and technical flaws make it unsuitable for global implementation in Protocol Party countries.

Turning the tide

While the Protocol's roll-out is showing signs of progress, only roughly half of Party countries have established track and trace systems, with inadequate financial resources and expertise continuing to hinder effective implementation. To meaningfully combat the global illicit tobacco trade as industry-linked firms manoeuvre to gain ground in the other half, countries must unite behind an unyielding commitment to industry-independent tobacco control policies.

By involving the tobacco industry against the WHO’s clear requirements, the Filipino government’s recent summit embodied the vulnerabilities of the global anti-smuggling combat and the fundamental conflict between commercial and public health objectives. Moving forward, real progress demands that governments reject this influence, implement transparent systems and rigorously uphold WHO FCTC and Protocol standards. Wavering now would undermine a cohesive, international response to a plague that transcends borders.

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