Digital Coding & Tracking Association (DCTA)

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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, 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)”.

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 packet of cigarettes.[1] 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.[2][3][4]

According to a DCTA brochure, Codentify could “meet the expected licensing provisions of [ITP] Article 5” and deliver “Full Government control”.[5] The brochure fails to acknowledge that Codentify was developed and patented by the tobacco industry.

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’”.[2]

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,[5][2][6][7] and Mark Hill, DCTA Director and former Senior Manager for Anti-illicit trade Engagement for Imperial Tobacco[8] 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.”[9]

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.”[5]

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.[10]

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.[10] 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).”[10]

The submission also claimed that Codentify is “endorsed by authorities across the European Union, including the European Anti-Fraud Office”.[10] 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”.[11]

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”.[12]

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.[12]

ITIC, 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.[2][13][14][15] The ITIC has a long relationship with the tobacco industry but in 2017 announced that it would no longer be receiving funding from tobacco companies.[16]

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.[5] 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.”[17]

Involvement in Implementation of Codentify

In June 2014, the DCTA signed an agreement with the Lithuanian State Tax Inspectorate to verify tobacco taxes.[5][18] 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”,[19] suggesting that the system implemented in Lithuania was Codentify.

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 Frank. Inexto had been established just a few weeks previously.[5]

TobaccoTactics Resources

TCRG Research

Notes

  1. M. Hill, Digital Tax Verification (DTV) – ‘Codentify’, the Industry Standard, October 2010
  2. 2.0 2.1 2.2 2.3 L. Joossens, A.B. Gilmore, The transnational tobacco companies’ strategy to promote Codentify, their inadequate tracking and tracing standard, Tobacco Control, 2014;23:e3-e6
  3. MarketWatch, Association launched to fight illicit trade in excisable goods, 22 May 2013, accessed July 2018
  4. British American Tobacco, Fighting the black market, undated, accessed July 2018
  5. 5.0 5.1 5.2 5.3 5.4 5.5 A. 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
  6. Business Wire, Philip Morris International Provides 15 Million Euro Contribution to INTERPOL to Fight Trafficking in Illicit Goods, 21 June 2012, accessed August 2017
  7. INTERPOL, INTERPOL Global Register unveiled at Google Ideas INFO summit,17 July 2012, accessed July 2017
  8. World Customs and Trade Forum,Mr. Mark Hill, undated, accessed July 2018
  9. Interpol, Interpol World 2015, 23 October 2014, accessed July 2018
  10. 10.0 10.1 10.2 10.3 DCTA, Submission: Targeted stakeholder consultation on the implementation of an EU system for traceability and security features pursuant to Articles 15 and 16 of th Tobacco Products Directive 2014/40/EU, July 2015, accessed July 2018
  11. P. Teffer, Cigarette tracking rules risk being derailed by lobbyists, EUobserver, 7 June 2017, accessed July 2018
  12. 12.0 12.1 Q. Aries, J. Panichi, Brussels blocks Big Tobacco lobbying push, Politico.eu, 21 January 2016, accessed July 2018
  13. ITIC, WCO-ITIC Global Excise Summit 2-3 July 2012 Brussels, August 2012, accessed July 2018
  14. D. Hubert, Implementing Technologies to Fight the Illicit Trade, May 2013,
  15. All Party Parliamentary Group on Smoking and Health, Inquiry into the illicit trade in tobacco products, March 2013, accessed August 2017
  16. P. McClean, Big Tobacco lobby group quits smoking industry. Financial Times, 19 May 2017
  17. KPMG, GS1 UK, Track and Trace Approaches in Tobacco, 2014, accessed July 2018
  18. State Tax Inspectorate, Lietuva pirmoji ES pradeda naudoti skaitmeninę sistemą akcizinių prekių apskaitai, undated, accessed July 2018
  19. L. Joossens, How illicit trade benefits tobacco industry?, Association of European Cancer Leagues, Helsinki, 26 August 2014, accessed July 2018