Tobacco: Decline to be Probed

Source from:  CNS REPORTER JOHANNESBURG 02/14/2007

Agricultural giant Afgri is currently under investigation by the Competition Commission after a complaint that it sought to take over and dominate the country's tobacco industry. Tobacco-growing used to be the biggest industry in the Nelspruit area, producing a valuable crop of 12 million kilograms annually. Farms and processing companies employed many people but in 2006. only 400 000 kilograms were processed, leaving the remaining crop-growers looking for markets and an estimated 5 000 workers seeking new employment. But SA Golden Leaf, which backed out of recent national processing restructuring, has now requested that the commission take a close look at some of the activities which led to the local decline of the industry and has left a number of people out of pocket. Commission inspector Skumbuzo Majola confirmed this week that a complaint had been received and he was expecting some documentary evidence. An employee incentive scheme was apparently started by Afgri Tobacco Pty Ltd, an operations company selling tobacco on behalf of the farmers. Shareholders were offered 45 cents per share. These were later sold to Afgri at approximately R5 per share allowing the company to take control and expand a broader business base. This led to accusations of insider dealing which were still the subject of legal action. But the matter was kept under wraps by several out-of-court settlements. A spokesman for Afgri said the company had not been contacted by the Competition Commission regarding its tobacco activities. Allegations that Afgri deliberately sidelined South African Golden Leaf in order to consolidate its hold on the tobacco industry were also strongly denied. Enditem