New Developments in Canadian Smuggling Story (fwd)

[Robert Weissman <rob@essential.org>]

Thursday, April 29, 1999
National Post Online

 Tobacco company took
 advantage of smuggling:
 chairman
 Increased U.S. exports knowing they
 would be resold here

 William Marsden
 The Gazette 

 MONTREAL - The chief executive of Imperial Tobacco Ltd. said
 yesterday his company knew in the early 1990s that many of its
 exported cigarettes were being smuggled back into Canada, but it
 continued shipping more cigarettes to the United States to meet
 growing demand. 

 Don Brown, who is also Imperial Tobacco's chairman, said that
 since 1989, when the federal government began increasing tobacco
 taxes, the company had warned the increases would lead to
 widespread smuggling, which could jeopardize the future of
 Canada's tobacco industry. 

 After fighting against high taxes for years, he said, the company
 essentially gave up and decided that if you can't beat the smugglers
 you might as well join them. It began increasing shipments of
 Players, du Mauriers, and other brands to the United States. 

 Mr. Brown made these statements in an interview yesterday on
 Imperial Tobacco's role in exporting cigarettes that were smuggled
 back into Canada during the early 1990s. 

 He said that for nine months in 1992, Imperial Tobacco voluntarily
 restricted exports to the United States so they would not be seen to
 be supplying smugglers. 

 But flooded with demands for Canadian cigarettes from United
 States distributors and realizing it was losing market share, Imperial
 suddenly reversed that policy. 

 "At some point we said, 'Look enough's enough. We stayed out, the
 smuggling is going rampant. Obviously, whether we're in or out, it
 doesn't matter. But by that time, we were facing a loss in volume of
 five billion cigarettes a year. 

 "Five billion cigarettes a year is the capacity of that plant next door.
 And our choice was either to close that plant and send a thousand
 people home or just fill the orders that were wanted in the U.S. No
 question in our mind, we knew some of those cigarettes were going
 to come back to Canada. We didn't know how many." 

 Imperials export and duty-free figures from 1988 to 1994 indicate
 that the U.S. market for its products were no more than 800 million
 cigarettes. Yet in 1993 alone, the company exported more than 6.2
 billion. A year earlier it had exported 2.5 billion and in 1991, the
 figure was 3.7 billion. 

 Before the federal government began raising taxes in 1989, Imperial
 shipped only 800 million to the U.S. In 1994, after the government
 was forced to roll back the taxes to pre-1989 levels, Imperial's
 exports returned to the 800-million level. 

 Mr. Brown said that Imperial never sold to anyone who did not
 have a federal export licence. He said that Imperial once lost a
 lawsuit for refusing to sell to a licenced trader and feared this would
 happen again.

Calgary Herald News

 Tobacco firms eyed smuggling
 market; toyed with spiking
 cigarettes

 MONTREAL (CP) - The federal government should hold a royal
 commission into the tobacco industry, say researchers who found the
 companies were considering taking advantage of cigarette smuggling
 earlier this decade. 

 The researchers, who had access to internal tobacco company
 documents, also say the firms experimented with increasing additives and
 nicotine levels in their products. 

 A coalition of anti-smoking groups gained access to the British American
 Tobacco documents through settlement agreements between
 governments in the United States and the tobacco industry. 

 The internal tobacco company documents show the firms had
 well-orchestrated plans from the highest levels to take advantage of the
 Canadian cigarette smuggling market.n 

 The files show that show in that 1991 Imperial Tobacco officials were
 keen to take advantage of the hugely profitable smuggling across the
 U.S.-Canada border. 

 Imperial Tobacco, which controls 70 per cent of the Canadian cigarette
 market through its Players and du Maurier brands, is a subsidiary of
 Imasco of Montreal. Imasco is owned by British American Tobacco. 

 "They made a business decision to make sure their cigarettes were
 available to the smuggling market," Cynthia Callard, of Physicians for a
 Smoke Free Canada, said ---TD------. 

 Callard, who visited British American Tobacco's London archives in
 March, said the documents actually name distributors who were dealing
 through native reserves, such as Akwesasne which straddles the
 American border in Ontario. 

 "I am not trying to establish a legal case for criminal prosecutions against
 smuggling," she said at a news conference. 

 "I think there is a legal case to be made. But what I am trying to establish
 is that there is a case for the government to take this more seriously." 

 The anti-smoking groups want to see Ottawa send a team of researchers
 to view the archives in London so it could consider either criminal or civil
 litigation against the tobacco industry. 

 Other documents reveal the company was experimenting with spiking
 cigarettes with 45 per cent more nicotine and looking into making them
 safer with fewer carcinogens. 

 None of the experiments, which went on from 1985 to 1994, were
 reported to the federal government and much of their work was going on
 while the firms downplayed or denied the health risks of smoking. 

 There are also suggestions the companies experimented privately with
 reducing the amount of second-hand smoke while publicly denying the
 effects. 

 "We never spiked cigarettes," Imperial spokesman Michel Descoteaux
 said. "We have never provided a finished product that was spiked." 

 Executive memos and reports, many labelled secret or confidential, refer
 to the smuggling networks as "new channels" or "alternatives channels" in
 the "cross-border business." 

 The documents also reveal Imperial's willingness to sell to "all major local
 distributors who supply the Indian reservations." 

 Most tobacco smuggling went through aboriginal reserves on the
 Canadian-U.S. border. 

 Millions of pages of company documents were obtained by Callard and
 others who went with her to London. Some others files were released in
 Minnesota following a settlement of a lawsuit with the state. 

 Descoteaux said the company has never "sold cigarettes knowingly to
 smugglers. 

 "We have only dealt with clients with appropriate government permits to
 buy cigarettes from us." 

 © The Canadian Press, 1999