South African authorities have dealt another significant blow to the illicit alcohol industry after a joint enforcement operation uncovered thousands of litres of imported ethanol at an unlicensed warehouse in Kempton Park.
The operation, carried out by the South African Revenue Service (SARS) together with the South African Police Service’s (SAPS) Directorate for Priority Crime Investigation (DPCI), forms part of an ongoing campaign to disrupt organised criminal networks involved in customs fraud, excise-duty evasion and illegal alcohol production.
The intelligence-led raid took place on 29 July, when investigators moved in on a warehouse that had been identified as a suspected storage facility for high-strength imported ethanol.
Officials intercepted a shipment containing 26,000 litres of ethanol with an alcohol content of approximately 96% while it was being unloaded into large storage containers.
According to SARS, the consignment had entered South Africa by sea and had been declared as goods in transit to another African country. Under customs regulations, the shipment should have proceeded directly through one of the country’s designated ports of exit instead of being diverted to a local warehouse.
Investigators estimate that the taxes and excise duties payable on the seized consignment would have totalled approximately R9.1 million.
Authorities suspect even larger operation
The ethanol seized during the raid is believed to be only one of four related consignments under investigation.
During the search, enforcement officers discovered numerous 1,000-litre flow bins and several large storage tanks inside the warehouse.
While laboratory testing is still underway, SARS suspects these containers may hold an additional 28,000 litres of ethanol, potentially expanding the scale of the investigation.
Ethanol with such a high alcohol concentration is commonly used as a base ingredient in the manufacture of alcoholic beverages and is subject to substantial excise duties when imported and distributed legally.
Government intensifies crackdown on illicit trade
SARS said criminal syndicates involved in the illicit alcohol market often exploit customs and tax loopholes by diverting products intended for export into the local market or manufacturing untaxed liquor for illegal distribution.
The revenue service warned that these activities cost the country billions of rand in lost tax revenue each year while placing legitimate businesses at a competitive disadvantage.
Authorities also cautioned that illicit alcohol may fail to meet safety standards, posing potential health risks to consumers.
SARS Commissioner Dr Johnstone Makhubu said the successful operation demonstrated the importance of coordinated enforcement between SARS, SAPS and other government agencies.
He added that intelligence-driven investigations remain central to the revenue service’s strategy of making tax and customs non-compliance increasingly difficult and costly.
Makhubu said SARS would continue strengthening its customs, intelligence and investigative capabilities to detect diversion schemes, dismantle illicit trade networks and ensure that individuals involved in customs fraud, excise-duty evasion and smuggling are held accountable.
He stressed that authorities remain committed to protecting South Africa’s economy from organised criminal activity and preventing further losses to the national fiscus.
Source: SARS.