SA’s legal system is under scrutiny for its handling of counterfeit goods cases, with experts warning the existing punitive measures fail to reflect the severity and societal impact of these crimes.
According to Hashiem Logday, an associate at Adams & Adams and an expert in civil and criminal litigation in anticounterfeiting, this clandestine offence is not merely an economic crime but one that endangers public safety.
He said law enforcement agencies were too lenient with perpetrators and that leniency does not deter offenders or address the broader implications of the problem.
Logday said the Counterfeit Goods Act provided penalties for dealing in counterfeit goods that include fines of up to R5,000 per item or imprisonment of up to three years for first convictions.
Repeat offenders face slightly higher fines and longer sentences. However, he said, in practice, courts often imposed lenient sentences, undermining the act’s deterrent effect.
“At first glance, the penalties provided for appear to be adequate and indicative of an aggressive approach towards offenders dealing in counterfeit goods,” he said.
“A fine of R500,000 could be imposed on a first-time offender found in possession of 100 counterfeit T-shirts. In practice however, the reality is far from this when sentences are imposed. From looking at past cases, the courts have adopted a more lenient approach when it comes to sentencing accused persons in cases dealing with contraventions of the [act].”
Logday contends many cases are settled with small admission of guilt fines, perpetuating the perception that counterfeiting is a “victimless” crime.
“If closer attention is paid to the nature of counterfeit goods being seized by the authorities — including counterfeit sanitary pads, engine oil and consumable products — it becomes more evident that the dealing in counterfeit goods could also affect our safety and wellbeing directly. We are the unsuspecting victims. Does the punishment fit the crime? Perhaps not,” he said.
Woolworths recently fell victim to counterfeiting crimes. The group confirmed it is investigating a counterfeit operation uncovered by police, involving expired canned pilchards falsely labelled in Woolworths-branded cartons.
Seven suspects were arrested at a facility in Gauteng where equipment to alter expiration dates were found, but the establishment’s owner remains at large.
Woolworths said it suspected the counterfeit products originated from a rejected international shipment and stressed that its products should only be purchased directly from its stores or online.
“In the event of a product being rejected, it becomes the immediate responsibility of the supplier to collect and dispose of the stock from our warehouse responsibly. We have launched our own investigation to determine why this process was not adhered to in this instance,” it said.
According to Michael Lamont, a partner at Spoor & Fisher and a specialist in combating counterfeiting, counterfeit trade is fuelled by demand for cheaper goods in economically strained regions.
He said this market drains tax revenue, causes job losses, damages legitimate businesses and funds criminal networks. Enforcement agencies, including the SA Revenue Service (Sars) and SA Police Service, face resource and expertise constraints, making it difficult to dismantle sophisticated operations.
Tax Justice SA’s Yusuf Abramjee shares the same sentiments with Lamont and Logday.
He said the state lost more than R100bn annually due to these practices. He said organised crime syndicates profited from this illicit wealth, using it to fund luxurious lifestyles and other criminal enterprises, including human trafficking and terrorism.
“The R100bn a year — that’s R250m every single day — is a breathtaking figure. It alone would pay for a basic income grant to lift half the population off the breadline,” he said.
“Conservative estimates show that Sars is losing more than R20bn annually from illicit cigarette sales alone. In truth, it is probably losing much more. More than one in five alcoholic drinks sold in SA is now illicit, robbing the economy of another R20bn a year.”
Abramjee said the broader impact of counterfeiting and related crimes undermined legitimate businesses and endangers public safety. He warned that these activities erode the rule of law and fuel other crimes, including cable theft, illegal mining and construction-related extortion.
“We need more inspections and better enforcement of laws to guard ourselves against the counterfeiters. When you buy a counterfeit product, you’re buying into organised crime,” he said.
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