I … er … it’s hard to say this: I smoke. Cigarettes.

I know it’s a terrible habit. I know it’s unhealthy. I know it will shorten my life. I know the risks. And yet, I puff away and, you know, I enjoy it. Having a smoke takes me out of my work life, and forces me to take a break, look around, enjoy a sense of self-possession. It’s slightly rebellious, slightly counter-culture, it connects me with my youth and I smoke so few cigarettes now, I suspect the health risks are overstated. Or at least I hope they are.

These are terrible reasons to carry on smoking. But there is, in fact, one genuinely good reason to smoke. It was elucidated by the fictional character Lady Bracknell in the Oscar Wilde play, The Importance of Being Earnest. Lady Bracknell was interviewing Jack Worthing who wanted to marry her daughter. “Do you smoke?” she asked him. Jack said, “Well, yes, I must admit, I smoke” To which Lady Bracknell replied, “I am glad to hear it. A man should always have an occupation of some kind.”

Because I smoke, I felt a sense of personal persecution when Cooperative Governance and Traditional Affairs Minister Nkosazana Dlamini Zuma banned the sale of tobacco products during Level 4 of the nationwide Covid lockdown in May 2020.

She said it was to protect people’s lives and health and to reduce the likelihood of added strain on the healthcare system. That may or may not have been true, but since Dlamini Zuma has been on a crusade against smoking for years, the justification felt a little forced. Dlamini Zuma’s campaign against smoking all these years has presumably been an important part of the government’s decision to keep increasing the excise tax on cigarettes.

But then an interesting thing happened. With excise taxes now so extreme, about 60% of the price of a packet, the government effectively opened the door to an illicit business opportunity: sell cigarettes at a price lower than the established trade, and lie to SARS about how many cigarettes you sell. Simple. Simultaneously start a campaign against the established business, claiming it to be “foreign”.

Into this loophole jumped a whole bunch of, well, actual foreigners as it happens, using tobacco from all over the world, but notably Zimbabwe, which was imploding as usual. Of course, SARS would recognise it was being stiffed, so the loopholers would have to discredit the tobacco investigation unit within SARS, which they did, and get the SARS officials who know something about the industry turfed out, which they did. 

The result was heaps of cash. I mean, really heaps. The tax paid by the legitimate cigarette industry is about R12-billion a year. This is the level of profits they are making. The established industry was up in arms because its surveys showed that the illicit industry was selling more cigarettes than it was, but paying a fraction of the tax. For a government deeply concerned about protecting lives and people’s health, there was a curious inaction on the part of the government about this huge illicit trade and all those excise taxes it could be collecting.

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Tongaat Hulett

So why is all this history important? Because the next step after making billions illegitimately is to attempt to find a way to make it all legitimate. Which leads us to Friday’s decision by the Takeover Regulation Panel (TRP), a unit of the Department of Trade, Industry and Competition, to reverse the decision concerning the Zimbabwean Rudland family’s bid for sugar producer Tongaat Hulett.

The Rudlands, one of Zimbabwe’s richest families which naturally became close to former President Robert Mugabe and his successor Emmerson Mnangagwa, undertook to underwrite a capital-raising exercise through a Mauritian company called Magister. Because Tongaat is in so much trouble, the R2-billion undertaking of the R4-billion total capital-raising exercise would probably have made the Rudlands majority shareholders.

But because this deal would result in a new effective owner, the proposers of the deal would, in normal circumstances, have had to make a general offer to all shareholders. To avoid that irritation, the proposers had to ask the TRP to waive the mandatory bid requirement.

Initially, the TRP sided with the proposers. But after re-investigating, it discovered a whole bunch of anomalies, including the buying of shares in the prohibited period by a related party. Also, the Rudlands had not been overly forthcoming about who actually owns Magister.

So now everything is up in the air. Tongaat still wants to initiate a capital raise, but this has all turned into a huge saga.

Beyond the corporate finagling at Tongaat, there is an important lesson here about liberty and unintended consequences. Governments, especially ours, happily invade our liberty, sometimes justifiably, sometimes not. It’s just a characteristic of modern governments; they love to tell people what to do, because they believe they are superior beings designated by a higher force and because, after all, they have good intentions. And this is true of both right-wing and left-wing governments, although in all honesty, it’s more intense on the left.

But there is a contrary principle. Governments shouldn’t interfere with your liberty unless what you do harms others. It’s simple, but quite profound. And this is something our government does all the time. And when governments do arbitrarily enjoin your liberty, there are always unintended consequences. Always. And they are always bad.

Lady Bracknell would understand. BM/DM