Gauteng, KwaZulu-Natal and Western Cape have become South Africa's counterfeit capitals, where even staple food items, such as rice, baked beans, maize and masala, are being peddled on street corners and at flea markets under false labels, according to government officials and the police.
Inspectors from the department of trade and industry (DTI) have caught scores of individuals while uncovering more than 250 cases of fake products since they began operating under the Counterfeit Goods Act about a year ago, according to Lana van Zyl, a director in charge of company and intellectual property investigations at the department.
She said products confiscated by inspectors ranged from clothing items, sunglasses and shoes to high-tech products such as television sets, lamps, DVD players and hi-fis.
"What is even more frightening are the food products that have been confiscated and declared counterfeit," said Van Zyl.
Counterfeit food products were of inferior quality, she said. In one raid inspectors seized 20 tons of rice and baked beans and 40 tons of fake maize.
"The maize had to be destroyed, as it was not acceptable for human consumption. Counterfeit motor spare parts have also been confiscated."
In February, police found a consignment containing 27&174 boxes of counterfeit Rajah curry powder, manufacturing and printing equipment and 50 50kg bags full of curry powder, all estimated at a value of R1,2-million, at Booysens, Johannesburg.
Van Zyl said the government was worried about the increase in people dealing in counterfeit goods and was considering several proposals aimed at streaming the regulations to allow for more effective and speedier process when dealing with alleged offenders.
"The trade in counterfeit products results annually in huge losses to several industries. The loss of income results in job losses, which, in turn, result in the loss of taxes, thus further burdening the socio-economic challenges in South Africa," she said.
The department of trade and industry, the South African Customs Authority and the South African Police Service (SAPS) are jointly responsible for the implementation of the Counterfeit Goods Act, and they act in terms of guidelines of the International Agreement on Trade Related Aspects of Intellectual Property Rights (Trips).
Gauteng, Kwazulu-Natal and the Western Cape have the highest incidence of trade in counterfeit products. Fake brands bearing the names Nike, Manchester United, Disney, Moulinex, Staedtler, Nokia, Tom and Jerry and Vodacom were among the goods found at ports in Durban and Cape Town. Counterfeit cigarettes and perfumes were also found during police raids.
Van Zyl said millions of rands worth of fake goods confiscated annually were destroyed. The traders may face criminal convictions as well as costly civil litigation.
Trading in counterfeit goods is a criminal offence and the penalties prescribed in the Act can be as high as R5 000 and/or a prison sentence of up to three years per item found in a trader's possession with a first conviction.
Van Zyl said South Africa had a high level of software piracy, estimated at as much as 34 percent, and that if software piracy were reduced by 10 percent in the next four years, the economy would benefit from a R12,8-billion boost and nearly 3 300 new high-wage jobs could be created. In addition, R748-million in tax revenues would be gained by 2006.
Superintendent Ronnie Naidoo, the SAPS spokesperson, said between October and February goods worth more than R78 million were seized at airports around the country.
Items confiscated included DVDs, CDs, films, clothing (Levi, Adidas, Nike, NBA and others), Kiwi shoe polish, Minora blades, bottle openers, perfumes, Casio calculators, Microsoft computer software, Sony PlayStation consoles, cigarettes, Weber braais, Omo washing powder, PC games, Lasher wheel barrows, Duracell batteries, sunglasses, key holders, cellphone chargers and Polo bags.
He said although the commercial branch was responsible for the policing of the Act in order to effectively combat the possession of and trade in fake products, a counterfeit goods unit was located in every branch throughout the country.
The investigating officers of these groups are specially trained to identify and seize counterfeit products. They worked closely with investigators from the South African Federation Against Copyright Theft and Customs and Excise.
"These groups are very busy and they conduct search and seizure operations frequently.
"The trade in counterfeit products has a serious negative impact on the economy, since import tax revenue and duties are lost to the government, VAT is not generated as it should be and the actual brand holders forfeit potential income by not making sales ," he said.
Naidoo said importing and trading in counterfeit products had been increasing steadily during the past five years because manufacturers of counterfeit products had found new markets for their illegal products.
He said large sections of the public supported this trade by buying these products on the streets and at informal markets (flea markets).
"Often the public is not aware that they are buying counterfeit products. The public should however be aware that products bearing a well-known brand, which are being offered at low prices, especially on the streets and at flea markets, most probably are counterfeit and thus illegal to buy or possess," he said.
Naidoo said between October and December, 47 people were arrested in 182 cases for dealing in or possession of counterfeit products. In the same period 45 people were convicted.
Recently, in Johannesburg an accused was sentenced to eight years imprisonment for contravening the Counterfeit Goods Act. Naidoo said research showed that the majority of counterfeit goods distributed in South Africa are manufactured in other countries.
"A considerable influx of counterfeit goods from eastern countries is experienced. These goods are imported into the country by well-organised syndicates and criminal networks, abusing locally registered companies and close corporations to import the goods," he said.
The Asset Forfeiture Unit is also involved in tracing the proceeds of illegal trade and to obtain restraining orders with regard to assets and bank accounts of suspects.