[corp-focus] A Stateless Philip Morris?
Thu, 27 Apr 2006 15:29:20 -0400
A Stateless Philip Morris?
By Russell Mokhiber and Robert Weissman
Shareholders in Altria, the parent company of Philip Morris, are meeting
today in East Hanover, New Jersey and singing "Happy Days Are Here Again."
Happy shareholders in a cigarette company is bad news for public health.
In the short term -- and never underestimate shareholders' obsession
with the short term -- the shareholders are pleased that Philip Morris
has managed to capture an increasing share of a declining market. While
U.S. cigarette sales fell more than 4 percent in 2005 and 20 percent in
the last decade -- perhaps the greatest and most unsung public health
achievement in the United States in recent decades -- Philip Morris's
U.S. market share has risen, to just over 50 percent.
In the medium term, however, what has the shareholders so excited is the
potential breakup of the company. If a handful of major lawsuits break
Philip Morris's way over the next year or so, Altria plans to split into
three independent companies: Philip Morris USA, Philip Morris
International, and Kraft. Wall Street analysts say such a move is likely
to result in a 20 percent to 33 percent premium for shareholders,
primarily because the assets of Kraft and Philip Morris International
will no longer be vulnerable to lawsuits related to the actions of
Philip Morris USA.
The liberation of Philip Morris International from Philip Morris USA has
potentially grave consequences, however.
An independent Philip Morris International might be incorporated in the
United States (though it very likely will not make sales in the United
States), or it might be located in Switzerland, where the Philip Morris
International subsidiary is now based (but to which it has no historic
connection and which it could leave quickly, if there were cause).
Either way, an independent Philip Morris International is likely to feel
almost no ties to its home country.
In other words, Philip Morris International may effectively be on the
verge of converting itself into a corporation that is, from a practical
standpoint, close to stateless.
Philip Morris has for decades been a rogue company, committing some of
the most egregious marketing abuses and flagrant exercise of
illegitimate political influence around the globe. (See
http://www.philipmorrisbreakup.org/photos/worldtour for recent marketing
But things could always be worse. Up to now, Philip Morris has felt at
least a little constrained by public opinion in its home country and
most important market, the United States, as well as by the (dormant)
possibility of U.S. domestic regulation of its overseas operations and
the possibility that it might be held liable in U.S. courts for what it
How an independent Philip Morris International chooses to conduct itself
is a matter of the utmost importance: Philip Morris is the world's
largest tobacco multinational, and 80 percent of its sales are made by
Philip Morris International. The company has been a leader in innovating
new marketing techniques to attract new smokers, with deadly effect. The
World Health Organization estimates that 10 million people will die
annually from smoking-related disease by 2030, 70 percent in developing
countries. Half the people that smoke today -- about 650 million people
-- will eventually die from cigarette-related disease, according to WHO.
In the deregulated world in which we live, no governmental authority has
much power to do anything to block or condition an Altria breakup.
Governments can take steps to mitigate the potential harms, however. The
most important is to ratify and implement the terms of the Framework
Convention on Tobacco Control, a global treaty with strong public health
Pressure on Philip Morris International could also make a difference.
More than 100 organizations in 50 countries have called on Philip Morris
International to "make commitments -- in advance of a breakup -- to
ensure that the separation of Philip Morris International and Philip
Morris USA does not worsen the tobacco epidemic." (See
http://www.philipmorrisbreakup.org.) Essential Action organized this effort.
Among the groups' demands are for Philip Morris International to commit to:
* Adhere to the provisions of the Framework Convention on Tobacco
Control, including by ending all advertising and marketing of tobacco
* Not lobby or work -- including through front groups -- against
proposals to implement the terms of the Framework Convention, or against
proposals to enact 100 percent smokefree places;
* Not invoke provisions of any trade or investment agreement to
challenge any tobacco control-related law or regulation.
* Fully disclose all political contributions, lobbying costs, and
charitable/educational donations in every country in which it operates; and
* Refrain from tobacco product placements in movies, TV or other media.
From creation of front groups to inventing "tort reform" (the effort to
deny victims' the right to sue corporate wrongdoers), the tobacco
industry has long been on the cutting-edge of developing new forms of
corporate nefariousness. The evolution of an effectively stateless
operating company threatens to be a new chapter in this terrible saga,
making efforts to confront Philip Morris International before it is set
free all the more important.
Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime
Reporter, <http://www.corporatecrimereporter.com>. Robert Weissman is
editor of the Washington, D.C.-based Multinational Monitor,
<http://www.multinationalmonitor.org> and director of Essential Action
<http://www.essentialaction.org>. Mokhiber and Weissman are co-authors
of On the Rampage: Corporate Predators and the Destruction of Democracy
(Monroe, Maine: Common Courage Press).
(c) Russell Mokhiber and Robert Weissman
This article is posted at: