Coalition Against Illicit Trade (CAIT)

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The Coalition Against Illicit Trade (CAIT), according to the press release announcing its launch in June 2015, was a group of organisations “dedicated to fighting the trade of counterfeited and contraband goods”.1

Its now-defunct website stated that CAIT aimed to “encourage collaboration and exchange best practice between industry, regulators and policymakers” and to deepen its understanding of “track & trace and anti-counterfeiting technologies and their practical application”.2

Some CAIT members were closely linked to the tobacco industry. This was not mentioned in the CAIT’s 2017 entry on the EU Transparency Register.3

Membership

The CAIT’s eight founding members are:4

Aegate

Aegate was a UK company which focussed on providing IT technology to digitally authenticate medicines. The company filed for insolvency in 2017 and, as of July 2018, was no longer featured on the CAIT’s member. 56

Arjo Solutions

Arjo Solutions is a security company, focussing on the design and creation of physical and digital identification methods for authentication and traceability of products. Arjo Solutions is part of the Impala Group and is the sister company of Inexto.7 For more information on Inexto, and its role as a tobacco industry front group, see: Codentify. In July 2018, Arjo Solutions was no longer on CAIT’s members list.6

Atos

Atos is a French IT services corporation notably involved in the tracking and tracing of tobacco products. It was involved in developing the tobacco industry’s tracking and tracing system, Codentify.8 A 2012 British American Tobacco (BAT) leaked email indicates that BAT was working “globally with two approved suppliers to represent Codentify”, naming Atos and FractureCode (also a CAIT member, see below).910 Atos has promoted Codentify in Asia and has been involved in the implementation of Codentify in Lithuania alongside the Digital Coding & Tracking Association.11 The company won contracts to generate identifiers in the UK and the Czech Republic, while its former subsidiary Worldline did so in Denmark, the UK, the Netherlands, and Lithuania before it was spun off in May 2019.12 Four Atos and subsidiaries (based in Switzerland, Germany, Denmark, and Poland) are also amongst eight companies approved by the European Commission to manage primary data repositories for the EU’s system.13 Thierry Breton, Atos Chairman and CEO between 2008 and 2019, became the European Commissioner for Internal Market in 2019.14 The Comité National Contre le Tabagisme how he would implement Article 5.3 of the Framework Convention on Tobacco Control (FCTC) and Article 8.13 of the FCTC Protocol to Eliminate Illicit Trade in Tobacco Products to guard against tobacco industry interference in policy making.15

Domino

Domino is a printing and technology company, which appears to have worked closely with the Codentify development team and the tobacco industry, including through the Digital Coding & Tracking Association, for over a decade. The company describes itself as a “global provider of Codentify”16 and the “tobacco industry’s coding technology supplier of choice”.17 In 2016, it was involved in a project to adapt Codentify to pharmaceuticals.18

Essentra

Essentra produces cigarette filters and packaging (including security solutions such as holographic products and specialist inks) and has been working with the tobacco industry for 65 years.1119 In July 2020, Essentra FZE, Essentra’s UAE subsidiary between 2013 and 2019, admitted and accepted responsibility for criminal conduct and agreed to pay a $665,112 fine for breaching US sanctions in 2017 and 2018 when it exported cigarette filters to North Korea through front companies in China and other countries.202122

  • Also see: Mike Ridgway who has lobbied against tobacco regulation on Essentra’s behalf.

FATA Logistic Systems

FATA Logistics is an Italian logistics company which has been associated with the development and promotion of Codentify in Italy.1123 According to an investigation by the Organized Crime and Corruption Reporting Project (OCCRP), published in March 2020, the company “continues to provide logistics support” for Philip Morris International (PMI).24 The report points out that FATA Logistics notably has an office inside a PMI building and distributes cigarettes from PMI’s warehouses to retailers.

FractureCode

FractureCode is a Danish company which offers tracking and tracing, digital authentication and volume verification solutions including Codentify.25 BAT used FractureCode in an attempt to influence a Kenyan tender on tracking and tracing technologies. As of July 2018, FractureCode was no longer on CAIT’s members list.6

ViDiTrust

ViDiTrust is a technology company which has patented a visual recognition technology aimed at controlling counterfeiting. Its website states that: “Tobacco, cigars and cigarettes are packaged for sales and are therefore in an excellent condition to benefit from the authentication and counterfeiting protection of ViDiTrust technologies.”26

Between June and August 2016, two additional organisations joined the CAIT: Nano4U and ScanTrust.27

Nano4U

Nano4U is a technology company which provides authentication technologies (including holographic and 3D scanning) for products and their packaging.28

ScanTrust

Scan Trust is a Swiss secure graphics provider which produces QR and bar codes designed to identify the authenticity of a product.29

Outputs: Reports on Tracking and Tracing Solutions

The CAIT have released multiple reports examining tracking and tracing solutions as a means of combatting illicit trade.30313233 The reports generally argue for more collaboration between the private sector and governments, and for industry to be responsible for the identification and operation of such technologies.

The November 2017 report states that:

“more co-operation is required between companies and authorities, between countries of origin and destination, between independent standard setting bodies, economic operators in the supply chain, and regulators and enforcement authorities… Governments, international organisations and regional blocs, like the EU, have a role to play. But the involvement of all these levels of government, makes it sometimes hard to see the wood for the trees. They all also have a natural tendency to only focus on the problem within their own borders, ignoring the cross border implications.”3233

None of the reports directly favour the tobacco industry’s tracking and tracing system Codentify. However, one report states: “12-digit codes [Codentify’s number of codes] are used by the tobacco industry to address the problems of tax avoidance, smuggling, and counterfeiting and have proven very effective in the EU and beyond.”32

Pushed for Tobacco Industry Solution To EU System for Tracking & Tracing

On behalf of the CAIT, Worldline (an Atos company) lodged a submission to the 2015 consultation on an European Union (EU) system for traceability and security features.34 The submission supported the option of “an industry-operated solution, with direct marking on the production lines carried out by tobacco manufacturers“, arguing that “the option is based on existing industry standards, which increases its cost efficiency and stimulates further developments in the field.”34 The submission did not disclose that Atos or other CAIT members had relationships with tobacco companies.

The CAIT was also listed as a participant of a European Commission stakeholder workshop on the same topic.35 Worldline released a position paper in response to the workshop, stating that any European Commission recommendations to be put forward should be “effective but also workable for all involved stakeholders: Member States and Competent Authorities, and all businesses actors involved in the supply chain”.36

Engagement with Authorities and Think Tanks

The CAIT actively engages in the debate on addressing illicit trade. In April 2017 CAIT joined the 5th OECD task force meeting on Illicit Trade and joined the Task Force on Countering Illicit Trade which meets as part of the OECD High Level Risk Forum of the Public Governance Committee. According to the CAIT’s website: “CAIT representatives attended the 5th Task Force meeting and had the opportunity to submit a paper that asked authorities to consider the use of digital verification technology among a wider range of technological and digital solutions to counter illicit trade.”373839

In May 2017, CAIT member Domino presented at an event by the Centre for European Policy Studies (CEPS) titled ‘Combating Counterfeiting and Illicit Trade. Business Practices and Policy Direction on ICT Traceability & Authentication’. The event also featured presentations from representatives of OLAF, OECD, and the World Customs Organization.40

TobaccoTactics Resources

TCRG Research

For a comprehensive list of all TCRG publications, including TCRG research that evaluates the impact of public health policy, go to the Bath TCRG’s list of publications.

References

  1. Coalition Against Illicit Trade, Launch of Coalition Against Illicit Trade (CAIT) to Fight Global Counterfeiting and Smuggling, 17 June 2015, accessed July 2018
  2. Coalition Against Illicit Trade, Our mission & objectives, 12 June 2018, accessed July 2018
  3. EUROPA Transparency Register, Coalition Against Illicit Trade, last updated 10 October 2017, accessed July 2018
  4. Coalition Against Illicit Trade, Members, 12 June 2016, accessed July 2018
  5. Securing Industry, Drug verification specialist Aegate files for insolvency, 21 June 2017, accessed July 2018
  6. abcCoalition Against Illicit Trade, Members, 9 July 2018, accessed July 2018
  7. Impala, Arjo Solutions & Inexto, 7 July 2018, accessed July 2018
  8. H. Ross, Measures to Control Illicit Tobacco Trade, 28 May 2015, accessed July 2018
  9. E. Jones, RE: FractureCode support for Kenya, 25 April 2012 e-mail, available from Truth Tobacco Documents. Bates number:PROD0000201
  10. E. Jones, RE: FractureCode support for Kenya, 23 April 2012, e-mail, available from Truth Tobacco Documents. Bates number: PROD0000103
  11. abcA. Gilmore, A.W.A. Gallagher, A. Rowell, Tobacco industry’s elaborate attempts to control a global track and trace system and fundamentally undermine the Illicit Trade Protocol, Tobacco Control, Published Online First: 13 June 2018, doi:10.1136/tobaccocontrol-2017-054191
  12. A. Down, The EU’s Track & Trace Smokescreen, 11 March 2020, accessed January 2021
  13. European Commission, EU system of traceability for tobacco products – List of approved providers of primary repositories, 24 June 2019, accessed January 2021
  14. EU-OCS, Thierry Breton: Is Macron new pick for the EU Commission a smart move?, 25 October 2019, accessed January 2021
  15. CNTC, ATOS au service des cigarettiers, le futur commissaire Européen Thierry Breton doit clarifier sa position, 6 November 2019, archived October 2020
  16. Domino, Domino Tobacco Brochure, 12 July 2018, accessed July 2018
  17. Domino, Printing on cigarette packs, 12 July 2018, accessed July 2018
  18. Domino draws on tobacco experience to help pharma serialize, Securing Industry, 22 April 2016, accessed July 2018
  19. Essentra, Industries: Tobacco, 4 July 2018, accessed July 2018
  20. S. Hsu, Cigarette-filter maker settles allegations of violating North Korea sanctions, The Washington Post, 16 July 20, accessed January 2021
  21. Paul, Weiss, DOJ and OFAC Enforcement Actions Against Essentra FZE Signal New Sanctions Risks for Non-U.S. Companies Utilizing the U.S. Financial System, 23 July 2020, accessed
  22. United States Department of Justice, Essentra Fze Admits to North Korean Sanctions and Fraud Violations, Agrees to Pay Fine, 16 July 2020, accessed January 2021
  23. 24 Ore, Ecco “Codentify”: tecnologia per tracciabilità prodotti tabacco, 16 September 2014, accessed July 2018
  24. A. Cerantola, Tobaccopoli: The Secret Battle to Control Italy’s Cigarette Market, OCCRP, 11 March 2020, accessed January 2021
  25. Fracturecode, fracturecode.com, 19 April 2018, accessed July 2018
  26. ViDiTrust,Tobacco, cigars & cigarettes, 2 September 2017, accessed July 2018
  27. Coalition Against Illicit Trade, Members, 12 August 2016, accessed July 2018
  28. nano4U, June 2016: nano4U joins Coalition Against Illicit Trade, undated, archived August 2021
  29. VentureRadar, ScanTrust SA, undated, accessed July 2018
  30. Coalition Against Illicit Trade, Governance and Data Management for Cross-border Tracking, Tracing and Authentication Systems, To Combat Illicit Trade and Counterfeiting, 6 December 2016, archived October 2018
  31. Coalition Against Illicit Trade, Business Cases on Tracking, Tracing And Authentication Systems to combat Illicit Trade and Counterfeiting, May 2017, archived October 2018
  32. abcCoalition Against Illicit Trade, Implementing digital solutions to address the issue of cross border illicit trade, November 2017, accessed July 2018
  33. abSecuring Industry, Track and trace “must consider cross-border illicit trade”, website, 9 November 2017, Archived 28 October 2020
  34. abAtos Worldline, Coalition Against Illicit Trade, Response to Targeted stakeholder consultation on the implementation of an EU system for traceability and security features pursuant to Articles 15 and 16 of the Tobacco Products Directive 2014/40/EU, 30 July 2015, archived July 2018
  35. European Commission, Stakeholder Workshop on implementation of Articles 15 & 16 of Directive, 2014/40/EU, Final Summary record,12 December 2016, archived January 2018
  36. E. Lequenne, Fight against counterfeiting, smuggling and tax fraud!, Worldline website, March 2017, accessed July 2018
  37. Coalition Against Illicit Trade, CAIT joins the 5th OECD task force meeting on Illicit Trade and submits paper on consumer empowerment, 12 April 2017, accessed July 2018
  38. OECD, 5th OECD Task Force meeting on Countering Illicit Trade, Draft Agenda, 28-29 March 2017
  39. Coalition Against Illicit Trade, Empowering Consumers to Fight Illicit Trade with Mobile Technology, March 2017, conference paper, 5th OECD Task Force meeting on Countering Illicit Trade, Paris
  40. Centre for European Policy Studies, Combating Counterfeiting and Illicit Trade: Business practices and policy direction on ICT traceability and authentication, 10 May 2017, accessed July 2018
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