Digital Coding & Tracking Association (DCTA)

The Digital Coding and Tracking Association (DCTA) is a front group, launched in 2013 by the four multinational tobacco companies: British American Tobacco (BAT), Imperial Tobacco (now called Imperial Brands), Japan Tobacco International (JTI), and Philip Morris International (PMI). The DCTA has promoted the industry’s tobacco tracking and tracing technology Codentify, often without disclosing its relationship to the tobacco industry.

Background

In November 2010, representatives from BAT, JTI, Imperial and PMI signed a memo announcing a global cooperation agreement on “Digital Tax Verification (DTV)”.¹² The agreement was aimed at “addressing the shortcomings of paper stamps” through technologies such as Codentify, a product serialisation/pack marker system, marketed by the tobacco industry as a way to verify the authenticity of a pack of cigarettes.³ To promote Codentify to government bodies, the four tobacco companies set up a new organisation called the DCTA, which was registered in Zurich (Switzerland) in 2011, and officially launched in May 2013.⁴⁵

According to a DCTA brochure, Codentify could “meet the expected licensing provisions of ITP Article 5” and deliver “Full Government control”. The brochure fails to acknowledge that Codentify was developed and patented by the tobacco industry.⁶ The aforementioned November 2010 memo noted: “When discussing DTV with authorities, it is important to stress that while the solution is developed and supported by the major industry players, the operation and control of the system will be handled by an independent reputable organization assigned by the respective government.”.¹

Promotion of Codentify

A key part of the agreement was that the tobacco companies would use the Codentify marking system on their cigarette packs and work collectively to promote this system to governments and law enforcement agencies on a global basis to ensure “The adoption of a single industry standard, based on Codentify’”.⁷

INTERPOL

One of the organisations targeted by the DCTA was INTERPOL. The latter accepted 15 million Euros from PMI in 2011, and announced in 2012 that it would be working with the DCTA to make Codentify accessible via its Global Register. This would enable those with a device that is connected to the internet to verify a product’s legitimacy by screening it through the multiple product verification options featured within the Register.
INTERPOL’s then Secretary General publicly promoted Codentify,²⁸⁹and Mark Hill, DCTA Director and former Senior Manager for Anti-illicit trade Engagement for Imperial Tobacco¹⁰ commented on the DCTA/INTERPOL collaboration:

“INTERPOL has demonstrated its belief that the key to combating illicit trade and ensuring the security of supply chains lies in innovative security solutions and enhanced collaborative action between governments, the law enforcement community, the private sector and consumers. This is in line with our organization’s mission.”¹¹

In a leaked email, BAT’s International Solutions Engagement Manager for Global Supply Chain Tracking and Verification, Eric Jones, outlined the importance to the industry of INTERPOL’s involvement stating:

“It will reinforce the credibility of the DCTA (and BAT) when talking to Governments as a credible provider of technology on DTV and T&T.”¹²

In August 2017, Inexto participated in the 2017 International Law Enforcement Intellectual Property Crime Conference in New York. This event was co-hosted by Interpol, the U.S. Immigration & Customs Enforcement (ICE), and the U.S. National Intellectual Property Rights Coordination Center (IPR Center), in partnership with UL (Underwriters Laboratories) and the International Anti-Counterfeiting Coalition (IACC).¹³

European Union

In 2015, the DCTA promoted Codentify in a submission to a European Union (EU) consultation on the implementation of tobacco traceability and security features.¹⁴

In its submission, the DCTA described itself as “an association which promotes technical standards and digital solutions designed to secure supply chains for excisable fast moving consumer goods such as tobacco and alcohol”, but did not disclose its relationship with tobacco companies.

The submission further argued that Codentify was in line with the EU Tobacco Products Directive, stating that:

“we believe that Codentify offers a secure option when placed under the control of either the member states or their designated third party(ies).”

The submission also claimed that Codentify is “endorsed by authorities across the European Union, including the European Anti-Fraud Office”. This claim was later refuted by the Head of the EU’s anti-fraud office (OLAF) who told a news outlet:

“I was not aware of this statement that you are just reporting to us… It is not for us to endorse, we haven’t endorsed, we don’t endorse, we will not endorse any specific way to do the tracking and tracing”.¹⁵

The DCTA has also been linked to the European Committee for Standardisation (CEN), an organisation that aims to set common European standards for consumer goods. According to a report by Politico, CEN attempted to establish a technical committee, focusing on tobacco tracking, to coincide with the EU’s consultation into this same topic:

“According to tobacco industry insiders who have spoken to POLITICO, the four companies backing Codentify, acting in a consortium called the Digital Coding and Tracking Association, were behind a push to involve CEN. The organization established a working committee to examine packaging standards under consideration in what was an attempt to influence the Commission’s own decision-making process”.¹⁶

According to Politico, CEN recommended that a range of European groups with ties to the industry, including the DCTA, be part of the proposed committee. After objections from public health organisations, including the Smoke Free Partnership, CEN decided to abandon the formation of a committee in late 2015.

International Tax and Investment Center, World Customs Organization, and KPMG

In 2012, former DCTA Director and BAT’s Global Programme Manager of Supply Chain Tracking & Verification, Daniel Hubert, gave a presentation on behalf of the DCTA to the International Tax and Investment Center’s (ITIC) and World Customs Organization’s Global Excise Summit, promoting Codentify as a suitable track and trace solution based on the Illicit Trade Protocol’s requirements.¹⁷¹⁸¹⁹The ITIC has a long relationship with the tobacco industry but in 2017 announced that it would no longer be receiving funding from tobacco companies.²⁰

In 2014, the DCTA was a major sponsor of the World Customs Organization conference on illicit tobacco in Brisbane, Australia. KPMG’s Robin Cartwright presented in DCTA’s time slot and, despite KPMG then receiving £10 million a year from PMI, failed to acknowledge this in his slides.

Simultaneously, KPMG and GS1 UK launched a new report promoting Codentify which mentioned DCTA funding but not DCTA’s tobacco industry status, simply stating that:

“We have prepared this report for the Digital Coding & Tracking Association (DCTA), but the views expressed are our own.”²¹

East Africa

In April 2012, in an internal email, Eric Jones – then Senior Global Engagement Director, Corporate and Regulatory Affairs at BAT – replied to a colleague asking why the company should be paying DCTA suppliers promoting Codentify:

“As you may know, BAT is part of the DCTA (Digital Coding and Tracking Association) with PMI, JTI and Imp [Imperial Brands]. This association works globally with 2 approved Suppliers. One is ATOS and the other one is Fracturecode (FCC) […] They are the 2 global approved suppliers to represent Codentify. […] Whilst they are the preferred suppliers, we need not forget that they are not BAT Companies and are private businesses. It is only fair that they ask for at least some of their work to be paid for.” (Jones noted FCC was contracted by BAT East Africa to work in Kenya, Mauritius, and Uganda)²²

Involvement in Implementation of Codentify

In June 2014, the DCTA signed an agreement with the Lithuanian State Tax Inspectorate to verify tobacco taxes.²³ The agreement stipulated that “DCTA remains holder of any and all intellectual property rights in the Digital System and/or other technologies proprietary to DCTA”,²⁴ suggesting that the system implemented in Lithuania was Codentify. French IT services corporation Atos, a member of the Coalition Against Illicit Trade (CAIT), was also involved in the implementation of Codentify in Lithuania.

Transfer to Inexto

In June 2016, the DCTA announced that it had sold Codentify to a company called Inexto, an affiliate of the French Group Impala, reportedly for only 1 Swiss Franc (less than UK£1) Inexto later called the reported amount “inaccurate, if not a blatant mistruth” spread by rivals, stating the deal was in fact a “multi-million euro transaction”, though refused to give further details.²⁵) A year later, on 7 June 2017, both Inexto and PMI publicly claimed Inexto was independent from the tobacco industry.²⁶

However, leaked documents from the autumn of 2017 showed that Inexto and DCTA members PMI, JTI, BAT, and Imperial met monthly under an “Operational Management Committee”. On 2 October 2017, the committee privately discussed setting up a “more arms-length services agreement”, and ways to achieve “revenue independence (…) on the Inexto/Impala side” – thus clashing with public claims that independence had already been achieved.²⁷

As of 2023, a number of tobacco industry executives previously working for or with DCTA are working for Inexto. These include:

• Daniel Hubert, former DCTA Director and BAT’s Global Programme Manager of Supply Chain Tracking & Verification, now VP of Business Development and Industrialisation at Inexto²⁸
• Eric Jones, formerly Senior Global Engagement Director, Corporate and Regulatory Affairs at BAT, now Director of Business Development at Inexto (Jones notes on his LinkedIn profile in his BAT role he had “driven the creation of the DCTA, leading the global engagement team in this cross-industry work group”, “co-ordinated sign-off by all 4 major tobacco companies”, and “helped win support for the DCTA from governments, Interpol and the WCO²⁹

Three senior Inexto officials previously worked for PMI:²³⁰

• Philippe Chatelain, CEO, was PMI’s Director of Product Tracking Intelligence & Security for 14 years, and is one of the inventors of Codentify
• Erwan Fradet, Inexto’s CTO & VP Serialization Technology, was PMI’s Product Manager for Codentify for five and a half years
• Patrick Chanez, CIO & VP Tracking Technology, worked for PMI for over ten years in anti-illicit trade technology research and development

A total of 16 Inexto staff were former PMI employees, as of May 2020.³¹

On 3 February 2023, BAT’s website noted the company was still working with DCTA:

“We were founding members of the Digital Coding and Tracking Association (DCTA), who we are working with to promote the concept of digital tax verification based on an agreed industry-wide approach.”³²

• For more information see: Codentify.

TobaccoTactics Resources

• Codentify
• INTERPOL
• International Tax and Investment Center
• KPMG
• Tobacco Smuggling
• Illicit Tobacco Trade
• Coalition Against Illicit Trade (CAIT)

TCRG Research

• Tobacco industry’s elaborate attempts to control a global track and trace system and fundamentally undermine the Illicit Trade Protocol, A. Gilmore, A.W.A. Gallagher, A. Rowell, Tobacco Control, Published Online First: 13 June 2018
• The transnational tobacco companies’ strategy to promote Codentify, their inadequate tracking and tracing standard, L. Joossens, A.B. Gilmore, Tobacco Control, 2014;23:e3-e6ublishe
• Exposing and addressing tobacco industry conduct in low-income and middle-income countries, A.B. Gilmore, G. Fooks, J. Drope, et al, The Lancet, 2015; 385(9972):1029–1043