29 June 2018

West Africa: PMI's VP Corporate Affairs MEA Alessandro Poggiali On illicit Trade

Alessandro Poggiali, PMI's VP Corporate Affairs MEA
interview

Dakar — The two-day high-level meeting organized by the National Employers' Confederation of Senegal (CNES) in Dakar ended on Wednesday 27 June with strong recommendations on the level of engagement of the West African private sector. At the margins of this event, Mr. Alessandro Poggiali, VP Corporate Affairs Middle East and Africa for Philip Morris International who was one of the panelists discussed the policies of his company on this critical issue.

What is the overall situation of illicit trade worldwide and particularly in countries in sub-Saharan Africa? 

First of all thank you for inviting me and giving me your time as well. I am happy to be here because it was two interesting days in which we debated a critical issue, which is a common issue of different actors. I would say illicit trade of goods in general is pretty important all over the world. The more there is a demand of the product, the more the smugglers are interested in selling it. So you will find illicit trade in different domains, from electronics, to medicine, toys, tobacco or whatever and just to give you a few figures as you asked it, the size of illicit trade of tobacco is one thousand billion of US dollars, if we are talking about the financial volume and the missed fiscal revenue which is generated from that can be accounted to 50 billion. You can imagine things you can do with 50 billion. I am sure if those 50 billion were available in any country in the world, the government would be able to do many things with it. Illicit trade is a complex issue as we said because it includes a number of interests which are being touched. It includes the consumer interest being damaged because they have access and purchase products which are not legally compliant with the specific regulations of a market.

Some anti-tobacco organizations, particularly in Senegal, claim that the tobacco industry is involved in the organization of the illicit trade. What can you say about that allegation? 

I can say that it is an allegation! My company is doing really their best to fight illicit trade. I can give you few examples. First, we have established a department which is fully dedicated to illicit trade, with expertise coming from different countries in the world and with different type of expertise dedicated just to fight that phenomenon. Secondly, we are entering in corporation agreement with multiple countries throughout the world to fight this phenomenon specifically we have signed around 50 memorandum of understanding all over the world and the signers of those memorandum of understanding have defined and helped shutting almost 50 illicit factories last year. Third, we are putting a significant amount of resources in a fund which is an independent called PMI IMPACT which is managed by a group of independent experts, we just place the resources, we don't interact on how the resources will be used, and we have put in this fund 100 million and these funds will be accessible to public and private institutions with the project to fight criminality and illicit trade. I think illicit trade is a complex issue which needs to be fought collectively. We can do our part and we are ready to do our part but we also need to have clear views of what is a legal operator, what is not a legal operator and we need a system of sanction.

There is a lot of talk about the security aspects of illegal trade, is there really a link between illicit trade of tobacco products and terrorism for instance?

This was what came very strongly out of those two days of conference, that illegal trade is not only an issue when it comes to tobacco because the profit of those illegal trades they go to organized crime and even potentially financing terrorism and moreover the roots that those products undergo are very much similar to the roots that other illegal products undergo. For instance, weapons, drugs.... so it's definitely a risk we would say.

What are the solutions to put in place and what is Philip Morris committed to do to the fight against illicit trade? 

I think illegal trade can only be fought if we are all together, because of the magnitude of the phenomenon and as the phenomenon is very big, we need to fight it collectively So definitely, public-private partnership is a way which we support and we believe we can contribute to the solution. Being part of the solution, we can share with the authorities intelligence, experience, and also facilitate access to technology to them and as I said before, we are entering a multiple memorandum of understanding in many countries to address that specific need.

We are doing all we can! Let's summarize it. We are doing all we can because first of all, it is the right thing to do. Secondly because it is the right thing for our business. It is unfair to compete with a player that doesn't pay taxes, that applies to every player and then it is seriously undermining the governmental objectives on both tax and revenues. We are making resources available through PMI IMPACT, we are sharing the best practices coming from all over the world and we are facilitating access to technologies. We are also suggesting that there are regulatory and fiscal solutions which can definitely contain if not eradicate illicit trade and the basic principle is that everybody should pay the same taxes.

What is your company's ambition for the future?

I will share with you a recent journey my company has embarked in. It has not a lot to do with illicit trade but has a lot to do with our role as corporate citizen. We have embarked in a journey which aims to transform the tobacco industry. This might be found ambitious for the leading tobacco firm but this is actually the right thing to do. We have invested billions of dollars in developing products which are a better choice for consumers. We have launched these products which are not combustible in multiple countries in the world to make them accessible to the millions of men and women who continue to smoke. We have developed a research and development process by which we assess those products and their potential effect on health. All the data we are collecting including recent independent third party data, are pointing in the same direction that this product is potentially a better choice for smokers.

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