25 May 2021Jurisdiction reportsGodfrey Budeli

South Africa jurisdiction report: The criminals exploiting a health crisis

Despite these unprecedented restrictions on movement of people and freight, criminals have been one step ahead of law enforcement and the counterfeit goods market has continued to thrive.

Criminal enterprises or syndicates have simply devised new strategies to evade law enforcement and exploit transhipment loopholes to subvert customs duties and avoid the detection of counterfeit products moving from one continent/country to the next.

These strategies include transporting counterfeit goods through chartered aircraft that can land during the night at obscure airports where customs inspection controls and clearance are usually relaxed. Free trade zones, such as the African Continental Free Trade Area, heighten the risk of illicit trade due to less rigid tax and customs regulations.

Many of these fake goods have been COVID-19-related, such as counterfeit soaps, sanitisers, thermometers, testing kits, personal protective equipment (PPE), pharmaceuticals and now vaccines.

Traditionally, counterfeit goods originate and flow from Asia to Africa. However, demand for PPE fluctuated from one continent and country to another depending on the rise or decline in the number of COVID-19 infections. An interesting phenomenon of a large flow of PPE products from certain African states to Europe, specifically the UK, Spain and Italy, was observed.

In South Africa, customs and South African Health Products Regulatory Authority (SAHPRA) officers seized many consignments of unregistered and prohibited medicines, as well as unauthorised antiviral medication at airports and warehouses after the implementation of the national lockdown.

In one example, police seized 2,400 fake COVID-19 vaccine doses, large quantities of counterfeit N95 face masks and footwear originating from China in a warehouse in Germiston, East of Johannesburg in November 2020.

Since then, Interpol has issued a global alert to law enforcement across its 194 member countries warning them to prepare for organised crime networks targeting COVID-19 vaccines, both physically and online.

With the rise of e-commerce during lockdown, consumers are more vulnerable to counterfeit goods available online. Websites, social media and the dark web can be used by organised criminal groups to prey on fears about the pandemic, where anxious buyers do not question the origins of goods that they are offered.

Furthermore, encrypted digital platforms and communication applications have made it easier for organised crime groups to directly target businesses and consumers from remote locations anonymously, making it near-impossible for law enforcement agencies to investigate and criminally prosecute.

“The trade in COVID-19 related counterfeit goods is more than just an illicit activity—it poses a massive threat to public health and safety globally." - Godfrey Budeli

A global threat

The COVID-19 pandemic has once again shown us that criminals are quick to grab opportunities, adapt to market changes and invest in infrastructure for their own gains. But the trade in COVID-19 related counterfeit goods is more than just an illicit activity—it poses a massive threat to public health and safety globally, as well as loss of revenue to companies that own the IP, subverts government taxes, and potentially discourages innovation.

Before the pandemic, it was estimated that the value in global trade in counterfeit goods would exceed $4.2 trillion by 2022, with this figure now predicted to be even more.

Generally speaking, many countries in Africa do not have a proper legislative framework or dedicated enforcement agencies or courts to mitigate the dangers posed by the counterfeit goods trade. Strengthening collaboration and a coordinated response among relevant stakeholders at international, regional and local levels is therefore essential in the fight against the scourge and proliferation of counterfeit goods trade.

In addition, many international enforcement agencies such as Interpol and the World Customs Organisation need to be allocated resources and capabilities to combat this type of organised crime. The ‘follow the funds’ approach is a must to dismantle cross-border organised crime, including money-laundering.

Equally, brand owners must unite and collaborate in the fight against the counterfeit goods market. Sharing of information and joint intelligence-driven operations are key in dismantling criminal enterprises.

Through the services of specialist legal professionals, brand owners can benefit from the best practices to ensure the protection of their IP rights, the routine monitoring of infringing activity, intelligence-driven search and seizure operations, and civil and criminal litigation avenues.

The lack of proper legislative framework, weak border and in-market enforcement, limited resources, corruption and other challenges should not deter brand owners from enforcing their IP rights to protect their brands and consumers.

These challenges are not insurmountable and legal avenues are available to effectively address the scourge and proliferation of counterfeit goods in each country in the African continent.

Godfrey Budeli is a partner at Adams & Adams Attorneys. He can be contacted at:

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