From owner-intl-tobacco@venice.essential.org Thu Dec 30 18:35:38 1999 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id AC72621B08 for ; Thu, 30 Dec 1999 18:35:38 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id SAA20146; Thu, 30 Dec 1999 18:35:55 -0500 Date: Thu, 30 Dec 1999 18:35:55 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Federal Judge Dismisses Guatemala Case Federal Judge Dismisses Guatemala Case / Says Legal Theory Does Not Support Right to Sue (Philip Morris release) Philip Morris Says Ruling Follows Trend Source: Business Wire, Thursday, 12/30/99 WASHINGTON--(BUSINESS WIRE)--Dec. 30, 1999--A federal judge today dismissed a lawsuit filed by the Republic of Guatemala against Philip Morris U.S.A. and other major cigarette companies, ruling that the claimed injuries were too remote to allow the case to go forward. This is the first ruling from a United States court to decide the legality of claims brought by foreign governments. ``This opinion stands squarely for the proposition that these cases are based on a flawed legal theory and they have no place in our courts,'' said Steven B. Rissman, assistant general counsel for Philip Morris. Today's ruling, by U.S. District Judge Paul Friedman, is consistent with the recent decisions by four federal appeals court panels, each of which unanimously rejected similar health care cost reimbursement claims brought by labor union trust funds and Blue Cross plans against the tobacco industry. The significance of the Guatemala decision is heightened because Judge Friedman has been assigned to decide the merits of all foreign government cost recovery cases in the federal courts. Rissman said today's ruling was an important decision not only for the tobacco industry, but also for common sense and for anyone concerned that U.S. courts might become a dumping ground for foreign lawsuits of every stripe. ``This decision should send a strong message to foreign governments looking to use the U.S. court system to generate cash windfalls for their government's treasuries,'' Rissman said. The case was Republic of Guatemala vs. the Tobacco Institute Inc. et al. It was filed in U.S. District Court in Washington. Contact: Philip Morris Laurie Guzzinati 917/663-2144 From owner-intl-tobacco@venice.essential.org Thu Dec 30 19:17:00 1999 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 1DB3021B08 for ; Thu, 30 Dec 1999 19:16:59 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id TAA20573 for ; Thu, 30 Dec 1999 19:17:16 -0500 Date: Thu, 30 Dec 1999 19:17:16 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Guatemala's Suit Against Tobacco Companies Dismissed Guatemala's Suit Against Tobacco Companies Dismissed (Update2) Source: Bloomberg News, Thursday, 12/30/99 Washington, Dec. 30 (Bloomberg) -- Philip Morris Cos. and other U.S. cigarette makers won the dismissal of a U.S. lawsuit filed by Guatemala that accused them of hiding the dangers of smoking from its citizens. In a May 1998 complaint, Guatemala alleged it incurred more than $300 million in unnecessary health-care costs between 1973 and 1997 because tobacco companies concealed the health hazards of smoking. U.S. District Judge Paul Friedman in Washington today ruled that the nation can't claim damages for injuries suffered by individual Guatemalan smokers. The ruling is expected by analysts and the companies to lead Friedman to dismiss similar pending tobacco cases filed by Bolivia, Venezuela, Nicaragua, Ukraine and the Brazilian state of Goias. The Guatemala suit was the first U.S. suit filed against the tobacco industry by a foreign government. The lawsuits seek billions of dollars in damages. ``In that Guatemala was the lead case, this is a good indication of what will become of the other countries' cases,'' said analyst William Pecoriello at Sanford C. Bernstein & Co. Philip Morris, the maker of Marlboro cigarettes, agreed. ``This opinion stands squarely for the proposition that these cases are based on a flawed legal theory and they have no place in our courts,'' said Steven B. Rissman, assistant general counsel for Philip Morris. New York-based Philip Morris rose 3/8 to 23 11/16 in New York Stock Exchange trading. American depositary receipts of British American Tobacco Plc, parent of the Brown & Williamson Tobacco Corp., rose 5/8 to 11 1/8. Brooke Group rose 3/16 to 15 1/8. Guatemala Guatemala argued that the tobacco companies should pay for the government's costs of treating smoking-related injuries. The country contended that it failed to take regulatory actions to reduce smoking by its citizens because it was deceived by the industry. The court ruled that the injuries allegedly suffered by the Central American country's people were too far removed from the industry's actions to merit a trial. ``Plaintiff's claims are simply too remote, contingent, derivative and indirect to survive,'' Friedman said in his ruling dismissing the case. The dismissal helped chances that that U.S. District Court Judge Gladys Kessler will certify for appeal several other legal challenges facing the industry, Pecoriello said. ``Kessler and Friedman both report to the federal appeals court and these are all third-party payer recovery health-care cases,'' he said. Last week, Kessler chose not to dismiss claims brought against the industry by union and welfare trust funds seeking to recoup damages for smoking-related illnesses. In addition, she has been assigned to the federal government's suit against U.S. cigarette makers, in which she will rule next year on motions to dismiss three separate claims brought. From owner-intl-tobacco@venice.essential.org Fri Dec 31 11:21:33 1999 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id B085121B55 for ; Fri, 31 Dec 1999 11:21:32 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id LAA25930 for ; Fri, 31 Dec 1999 11:21:30 -0500 Date: Fri, 31 Dec 1999 11:21:27 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Goa/India: ban on cigarette logos Ban on cigarette logos * NGOs help urged Prohibition on Smoking Act from tomorrow Source: Gomantak Times , Friday, 12/31/99 PANAJI: Goa is all set to enforce the new legislation, bringing a prohibition on smoking and spitting in public places from New Year Day, 1 January 2000, with penal consequences of Rs 1000 or imprisonment for violation under the Prohibition on Smoking and Spilling Act 1999. The high power committee, on prohibition on smoking and spitting at a meeting held under the chairmanship of Ashok Nath, Chief Secretary reviewed the measured proposed, and finalised modalities to gearup its machinery to take up the implementation with all seriousners. The areas brought under the purview of the act as public auditoria, cinema, conference, seminar halls, hospital building, health institutions, coast buildings, educational institutions, libraries, places of worship, airports except designated areas, buses, waiting rooms at railway stations. The areas will be immediately notified. Signboard on no smoking, no spitting and default inviting fine of Rs 1000 or imprisonment will be displayed at specific places as part of measures to create awareness at the initial stage. Also as part of the first phase in the implementation of the act circulars have been issued to heads of departments including Goa Medical College, Goa University, KTC for rigorous implementation of the act within their jurisdiction and where public have direct access. Local self bodies, NGOs and volunteers are being asked to lend a helping hand in efforts to create awareness to stop the public nuisance threatening the lives of large number of the public affected by passive smoking. The meeting also felt that advertisement of cigarette brands in the print and displays of electronic media and use of logos on outfits of sports persons by the sponsorers of the respective game should be disallowed henceforth as provided in the act. The meeting instituted a four member committee to review the progress being achieved in the implementation of the act from time to time. MLA Manohar Parrikar also took active part in the deliberations. He observed that several smokers he came across have welcomed the prohibition and opined the act be implemented in phases to provide addicts proper rehabilitation. B S Sharma, Secretary Law, Archana Arora, Secretary Education, Dr N P S Varde, Jt Secretary, Science and Technology and member secretary of the high power committee, K V Prabhugaonkar, Director of Information, Sharad Vaidya of Goa Cancer Society, Dr Pramod Salgaonkar, chairperson of Womens Commission took part in the discussions. !# -- !# Setup: http://www.globalink.org/cgi-bin/gt/mailing_lists.pl?conf !# Support: mailto:israel@globalink.org From owner-intl-tobacco@venice.essential.org Mon Jan 3 10:52:20 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 6130A21AFF for ; Mon, 3 Jan 2000 10:52:20 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id KAA22204 for ; Mon, 3 Jan 2000 10:52:20 -0500 Date: Mon, 3 Jan 2000 10:52:20 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Pub staff wear gas masks to get around new non-smoking regulations while others refuse to enforce smoking ban (fwd) Pub staff wear gas masks to get around new non-smoking regulations while others refuse to enforce smoking ban Source: Vancouver Sun, Monday, 1/3/00 VANCOUVER (CP) - In a cavernous pub beneath Vancouver's Granville Street, bartenders are wearing paper suits and gas masks. The new staff uniforms are owner Vance Campbell's answer to the Workers' Compensation Board's tough non-smoking regulations. The regulations, created to protect workers from second-hand smoke, went into effect Jan. 1 and ban smoking from all public facilities, including pubs and restaurants. Campbell, vice-president of the B.C. Cabaret Association and a vocal opponent of the new regulations, said the uniforms are his way of complying with the regulations without banning smoking in his pub, Fred's Uptown Tavern. By wearing the paper suits and gas masks, his employees will inhale less than two cigarettes per year in a smoking environment, he said. "You get more than that coughing up exhaust at a bus stop," Campbell said Sunday. "It's clear to us the agenda isn't workers' health. The real agenda is a war between governments and the tobacco companies. We as an industry cannot get caught in the middle of that tug of war." Lighting up a cigarette, patron Brad Mitchell said the new regulations are too hard on entrepreneurs. "The government comes out smelling like a rose but it's the businesses who suffer," said Mitchell, who is considering going only to pub and bars where he can continue puffing. "The government's not losing (anything), but the businesses are losing customers." Several pub owners and staff in Kamloops said Sunday they are allowing customers to smoke despite the new regulations. "I can't subject my staff to getting into a confrontation with someone who's drinking," said Bob Gradwell, owner of Inlander Neighbourhood Pub. At the Inlander pub, bartender Joanne Merrick said she won't get into a confrontation over a cigarette. "If people continue to smoke, what can we do?" she said. But some pub owners are strictly enforcing the non-smoking rules. The manager of Rookies Sports Bar and Grill said he has told about a dozen smokers to put out their cigarettes. "So far all have been co-operative," said the man, who wanted to be identified only as Wally. "I think there will be problems. "You pick a party night and there will be more pressure." Restaurant and bar owners who allow customers to smoke risk being fined anywhere from $1,500 to $4,000. Charities Bingo Hall in North Kamloops has spent about $35,000 on separate ventilation systems for smoking and non-smoking areas in a bid to comply with the regulations. Manager Doug Perry said employees don't venture into the large smoking area and sales of extra bingo cards, pull tabs, snacks and coffee are way down. Nine employees have been laid off as a result. Clint Cross, owner of Duffy's, said his regular customers understand the new rules and have been smoking outside or leaving early. He said a confrontation with a belligerent drinker who wants to smoke is inevitable. "I'll deal with it when it happens. . . . I'm not going to let a guy light up, throw the smoke on the floor and burn the carpet." Enforcement of the regulations will be driven by complaints from the public, who can call a toll-free "second-hand-smoke" line to report violations. (Vancouver Province, Kamloops News) From owner-intl-tobacco@venice.essential.org Mon Jan 3 13:51:59 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 5A3A121B09 for ; Mon, 3 Jan 2000 13:51:59 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id NAA27075 for ; Mon, 3 Jan 2000 13:51:57 -0500 Date: Mon, 3 Jan 2000 13:51:56 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] Fin Post: BAT Batting for the top rung Saturday, January 01, 2000 Batting for the top rung BAT has swallowed Rothmans, will soon have Imperial Tobacco, and has its sights on an even larger share of the world tobacco market Kathryn Leger in London Financial Post Billion-dollar lawsuits continue to pile up but nowhere does the big tobacco business look less under attack than inside the corporate dining room of British American Tobacco PLC. Top officers of the world cigarette giant set to assume control of almost 70% of Canada's tobacco market dine at a round table replete with crisp white linen, crystal and fine china plates emblazoned with BAT's gold tobacco leaf logo on a royal blue background. Full-length windows lining one wall of the top-floor suite afford a sweeping view of the Thames River and many of the city's most famous landmarks. Indeed, there are few reasons why Martin Broughton, BAT's chairman and chief executive, and his team at London headquarters should not feel on top of the world these days. So what if tobacco stocks have plummeted 30% in recent months because of litigation chill and BAT is spending close to $200-million (US) on legal fees, almost double that of five years ago. "BAT is in a stronger position than ever," says Mr. Broughton, a 28-year company veteran who has overseen a massive shuffling of BAT's assets in the past three years. "We've narrowed the focus [out of financial services to concentrate on tobacco] and seen the business as a growth opportunity. "One of the advantages of all this hassle we get [the lawsuits and government regulation] is that there is a bigger barrier to entry for other businesses." In the past year alone, BAT has orchestrated a blockbuster $11.5-billion merger with Rothmans International PLC and successfully negotiated a $10.6-billion bid to privatize Canada's Imasco Ltd. The Rothmans deal gives BAT capacity to manufacture 900 billion cigarettes a year and 16% of global market share. That puts it almost neck and neck with the 17% controlled by arch-rival Philip Morris Cos. Inc., the world's largest cigarette maker if Chinese National Tobacco Corp., which only serves the domestic market, is excluded. Annual cost savings will be at least $410-million (US). The Imasco transaction, the largest takeover in Canadian corporate history, will also be highly lucrative. It calls for BAT to buy the 58% of Imasco it does not already own and assume full control of Imperial Tobacco Ltd. after selling off the Montreal conglomerate's other businesses, including the Shoppers Drug Mart Ltd. chain, CT Financial Services Inc., owner of Canada Trust, and real estate unit Genstar Development Co. "Imperial fits perfectly, dominates the market [with 69%] and is a wonderful cash-generating business," says Mr. Broughton, calling the deal "largely a tidying up exercise." Instead of an annual dividend as a 42% shareholder of Imasco, BAT, as full owner of Imperial, has access to annual free cash flow of at least $500-million, he says. That represents between 20% and 25% of BAT's current total annual cash flow of about $2.5-billion. What to do with Imasco's cash was bound to lead to a "falling out" over "strategic differences of opinion," adds Mr. Broughton, noting that BAT's current stake in Imasco accounts for roughly 38% of BAT's market capitalization of =A38-billion but gives it no real control over decisions. For some time Imasco had sat on a $1-billion-plus pile of cash and was seriously looking at expanding its presence in financial services, a sector BAT left two years ago. Now, after a full year of complex negotiations over the pricing and sale of the various parts of Imasco's near $19-billion in assets -- including a controversial price tag of $9-billion for Imperial -- shareholders are expected to accept the deal recommended by Imasco's board at a vote scheduled for Jan. 28 in Montreal. Already saved from releasing information about BAT's plans for Imperial or detailed financial information because BAT's proposal is legally classified as a capital reorganization instead of a takeover, Mr. Broughton remains equally tight-lipped about the multinational's next big move. "Our ambitions don't stop there," he says simply. "We've still 84% [of global market share] left to go." From owner-intl-tobacco@venice.essential.org Sat Jan 8 12:53:21 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 9840A21B05 for ; Sat, 8 Jan 2000 12:53:21 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id MAA24494 for ; Sat, 8 Jan 2000 12:53:21 -0500 Date: Sat, 8 Jan 2000 12:53:21 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] Going Public: Korea KT&G gets ready for privatization. (fwd) Going Public: Korea KT&G gets ready for privatization. by Clive Turner =20 Source: Tobacco Reporter, Saturday, 1/8/00 Korea, =93Land of the Morning Calm.=94 Well, it might be peaceful atop the mountains and out in the beautiful countryside, but in Seoul? Flashing cinematic posters astride tall buildings; salarymen sloshing and scurrying through the pavement puddles from five in the morning; a ceaseless flow of speeding traffic and hotel lobbies full of businesspeople glued to their mobile phones, even at the breakfast table. Morning Calm? I don=92t think so! But calm and order was certainly the environment I experienced when talking with Ahn Chung-Ho, executive vice president of Korea Tobacco and Ginseng Corporation (KT&G). Precisely on time he welcomed me, with an interpreter and an aide in a spacious office befitting a man whose responsibility is overseeing the KT&G=92s emerging privatization. Much speculation has surrounded this highly significant move, but within minutes it was obvious that for KT&G, the issue is considered clear-cut and eminently sensible. KT&G is confident it will succeed. The privatization is now completed in legal terms. It=92s been planned over the past two years with the intention of selling 35 percent of the government=92s ownership to private investors, including large institutiona= l buyers. The sale is expected to take place before the end of the year, but, by the end of June, no price had been determined, and the lead investment bank management had not yet been announced. The listing will appear in September. Ahn explained that between 15 and 20 percent of the shares are expected to be sold domestically, with the balance later going internationally, raising between us$500 million and $600 million in depository receipts. =93The take up,=94 he said, =93will be quick and widely welcomed given the = price is acceptable.=94 A SOLID FUNDAMENT. KT&G, founded in 1899 as a small ginseng management division under the control of King Kojong, has a remarkably healthy, if not enviable, financial status. Cigarette production actually began in 1921, and today the company enjoys a very low debt-to-equity ratio and ample cash flow. This has seen to it that the state-owned KT&G was a top candidate for foreign investment and privatization among state companies. KT&G=92s track record speaks for itself. In 1998 the company posted more than $255 million in net income, a 35 percent increase over 1997. This was on sales of $4 billion. Even with the difficult economic times, tobacco sales, which represent by far the majority of the corporation=92s income, rose to $3.9 billion in 1998 from $3.42 billion in 1997. At the end of last year KT&G=92s debt-to-equity ratio stood at 24.8 percent= , a fraction of what is common among other major Korean companies. The company had a liquidity ratio of more than 500 percent, or four and a half times more cash flow than Korea=92s largest electronics company. The Korean cigarette market has been open to foreign competition for a decade, but KT&G has retained 95.1 percent of the market through 1998. Philip Morris came in second last year with a market share of 2.3 percent compared with 6.9 percent in 1997 when KT&G slipped to 88.8 percent. Consumer preferences for foreign brands had been steadily growing at the expense of domestic brands. But then during the economic downturn, consumers shifted to domestic products because the foreign brand retail prices leaped due to the weak currency. However, many observers predict that foreign brands will gain ground once more when Korea=92s economy strengthens. =93Well, we shall see,=94 says Ahn= =2E STREAMLINING OPERATIONS. KT&G=92s 1998 performance was due not only to economic factors. It saw to i= t that the company maintained relatively low cigarette manufacturing costs through reducing the size of its production and management structure. During the economic crisis, KT&G trimmed its work force from almost 8,000 to 6,000 and plans to have only 4,500 workers by the year 2000. Also, some new machines will cut back the number of factories from eight to four or five. If new production is needed, then the present one-shift arrangement would be increased to two shifts. Depending on what happens ahead, a new factory might be in the cards, but the decision about when and where will not be made until next year. Meanwhile, any cutbacks and redundancies required which are not met by natural attrition will be largely paid for by financial resources becoming available through in- creased production. And, said Ahn, =93I can assure yo= u that proper and reasonable compensation will be paid to those who have to go because of company requirements.=94 He mentioned that one advantage of such a situation will be to bring through and give more responsibility to younger people. An abiding KT&G strength has been its well-established distribution network. As of 1998, it operates 159 regional offices and more than 165,000 retail outlets around the country. This means that personal relationships be- tween distributors and store owners have been formed over many years and are virtually impossible to compete with on any kind of level playing field by even the best organized international operation. NATIONAL PRIDE. This situation is compounded by the fact that the industry in Korea has always been advantaged by the unusually strong nationalistic character of Korean people. It has been seen as unpatriotic to buy foreign brands (of any product category) when the economy demanded sacrifice and support of domestic brands and products. In the early 1990s there were instances of international tobacco company points-of-sale and advertising material being torn down by nationalistic activists=97by patriotic smokers who demonstrated a very marked dislike for products they felt were hurting the domestic economy. Ahn recalled those outbursts with displeasure and said that KT&G did what it could at the time to discourage such behavior. =93It should be explained,=94 said Ahn, =93that our farmers, particularly tobacco farmers, are highly thought of by the community at large. It is felt they do a hard job well in difficult circumstances, and enjoy meager rewards. People feel they deserve support against what is perceived as wealthy and intrusive foreign interests.=94 KT&G has contracts with no less than 34,000 tobacco farmers, and the size of landholding is not a discriminatory issue. All tobacco production is purchased and farmers are partially paid in advance. Technical help is also available and freely given to improve quality. Some 9,000 to 10,000 farmers are wholly dependent on tobacco with the larger balance growing other crops or working on a part-time basis. They provide 15 percent of the country=92s GDP. STRENGTHENING ITS PORTFOLIO. Ahn said many changes had taken place over the years, with a rather dramatic rationalization of brands in particular. =93At one time,=94 he sai= d, =93we marketed 123 brands, but today the figure is 30. In 1946 we produced 103 million packs. Last year it was 5.1 billion packs, with the leading brand name being =91THIS=92.=94 Asked about the significance of such an unu= sual brand name, Ahn replied that it simply reflected a trend, like =9388=94 whi= ch came out at the time of the Olympics in Seoul and which proved a great success. =93THIS=94 means just what it says. =93Everyone knows the word and it took = off. It became a best seller in record time.=94 Other brand names reflect traditional Korean names like =93Arirang.=94 One brand was named =93Seung R= i=94 which means victory, and was launched immediately after independence in 1945. Another was =93Saemaeul=94 or =93new village,=94 which was a catch ph= rase for the government=92s modernization program in the 1960s. I asked about North Korea and whether there was any industry cooperation between North and South. =93Not really,=94 said Ahn. =93They have their own operation and although the respective governments talk to each other when appropriate, tobacco contacts North and South are inactive.=94 So what about the future after privatization? Ahn would not be drawn to speculate other than to agree that one or more of the major international companies would likely buy some shareholding because they would regard it as the best way now to get some leverage within the market. But since no shareholding can exceed 7 percent, we are not going to see a phalanx of Philip Morris battalions moving in. JT, BAT or anyone else, won=92t exactly send in the cavalry, either. THE OUTLOOK. This privatization has been very carefully planned and orchestrated. Korea is not about to give up its domestic market to foreign competition even if that foreign competition offers the earth, the moon and the stars in terms of brand status, quality and desirability. But as the economy lifts, the foreigners will make further incursion one way or another and privatization may well be a spur, an opportunity, and a means to gain the crucial distribution that makes the difference between success=97and a long= , painful, expensive and ultimately wasteful haul. Ahn=92s fingers are not crossed=97they don=92t need to be. His elegant, gen= tle style, his company=92s obviously immaculate planning, and his air of quiet confidence exhibit no concern that privatization will unduly damage the domestic operation. He sees the move as entirely sensible, profitable, probably offering the consumer increased choice, and attracting widespread positive nodding of heads throughout the industry worldwide. -TR From owner-intl-tobacco@venice.essential.org Sat Jan 8 12:54:25 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 1108921B05 for ; Sat, 8 Jan 2000 12:54:25 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id MAA24524 for ; Sat, 8 Jan 2000 12:54:24 -0500 Date: Sat, 8 Jan 2000 12:54:24 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] COPYCATS / Around the world, anti-tobacco activists are mimicking U.S.-style litigation. However, the risks appear limited. (fwd) COPYCATS / Around the world, anti-tobacco activists are mimicking U.S.-style litigation. However, the risks appear limited. by Brandy Fisher ; Source: Tobacco Reporter, Wednesday, 12/1/99 The tobacco industry is facing more and more gold diggers. Following the U.S. settlement and recent verdicts against the industry, the number of anti-tobacco lawsuits has spiraled out of control, clogging up the courts. Recently there has been an increase of cases outside the U.S. as well. =93It=92s not a significant increase,=94 says Timothy Lindon, associate gen= eral counsel for Philip Morris, about the number of cases outside the U.S. =93Bu= t certainly there has been an increase. The concept is not new; there have been a handful of suits for many years.=94 The industry has consistently won such cases throughout the world, and many tobacco litigation experts say there is no indication that the status quo will change any time soon. =93All of the significant litigation outside the U.S. has been unsuccessful,=94 says Lindon. =93The industry has prevailed largely on the concept of personal responsibility.=94 There is a long and growing list of recent decisions in which the industry has prevailed, he says, adding that many claims against the industry have been dismissed at a very early stage. =93Judges recognize that people know the risks that smoking may cause disease and may be hard to quit.=94 U.S. MADNESS. Emanuel Goldman, managing director and global coordinator of Beverage & Tobacco Research for Merrill Lynch, says that the major changes to the global tobacco industry have resulted from mergers, with the exception of the U.S. He says the most important changes in the U.S. have resulted from litigation. Outside the U.S., litigation is not a major issue, he says. According to Goldman, =93The U.S. has a unique combination of factors that makes for a tremendous incentive to sue.=94 He singles out four major factors that have encouraged the proliferation of lawsuits in the U.S. First, it=92s cheap to sue. Anyone can file a lawsuit in the U.S. for a nominal fee. Furthermore, many U.S. plaintiffs=92 lawyers work on contingency fees, which means they will work on cases for free, with the agreement that if they win, they will take a portion of the winnings. This often amounts to 30 percent or more. If the lawyers don=92t win, they don= =92t get paid. Secondly, it=92s expensive to defend. The cost of hiring a defense lawyer= =97or multiple lawyers, which is usually necessary nowadays=97can be mind-boggling. Plus, defendants frequently have to go to great lengths to gather evidence and hire experts to build a strong defense. Lost productivity and bad publicity are costly factors as well. Often, a defendant determines that it is cheaper to offer the plaintiff a monetary out-of-court settlement rather than endure the costs of a lengthy trial, even if his case is strong. Third, the loser doesn=92t have to pay legal costs. The U.S. is one of the few countries in the world that has this policy. There is generally no penalty for filing a case=97even if the claims are unwarranted. Because there is little or no cost to the plaintiff, and little chance of a penalty if the case is lost, plaintiffs have nothing to lose by filing a suit. And the potential gain is huge. This is due to Goldman=92s fourth point that amateur jurors award punitive damages. Punitive damages refers to a monetary award paid to the plaintiff by the defendant that is meant to punish the defendant for supposed wrongdoing. Punitive damages are completely arbitrary, decided by a jury, which is a group of citizens who usually have no legal expertise. Plaintiffs=92 lawyers often appeal to the emotions of the average citizens, encouraging them to award outlandish punitive damages to discourage future wrongdoing. The higher the damages, the more the lawyer makes. =93No other country in the world has this crazy combination of factors,=94 says Goldman. =93Therefore, don=92t look for any litigation outside the U.S= =2E to mean very much.=94 Plenty of other factors explain why the tobacco industry has started losing cases in the U.S. while it continues to prevail throughout the rest of the world. Goldman says there has probably been an increase in =93activist=94 judges i= n the U.S., or judges who want to make political statements with lawsuits. Plenty of U.S. legal experts are suggesting that the judicial system is now acting as a fourth branch of government rather than its intended role as a check on the U.S. three-tiered system. Furthermore, many governments throughout the world have played a more active role and profited more from the tobacco industry than the U.S. government. A country with a former state-owned tobacco monopo- ly that directly profited from tobacco would not have grounds to sue the industry to reclaim healthcare costs. Also, many countries don=92t have product liability laws as permissive as those in the U.S. And few countries have the equivalent of class-action lawsuits. HUNTING ABROAD. The global increase in case loads is in part due to solicitation by U.S. lawyers, who are dashing into other countries to win more tobacco money. Confident from the settlement and recent wins in the U.S., and hoping to further pad their pockets, the lawyers are raising hopes of large rewards. Many industry people suspect that the lawyers are misleading people about the successes in the U.S. as well as exaggerating the potential to win money. =93It=92s an extraordinary situation,=94 says Goldman. =93The plaintiffs=92= firms are flush with money, and they have little to lose by attempting to sue [in other countries].=94 Lindon calls this =93U.S. export of litigation.=94 He adds, =93It appears t= hat U.S. litigation is not a welcome export.=94 In many countries where plaintiffs=92 lawyers have determined that there is little chance for success under their own legal system, they have encouraged their governments to sue to recover healthcare costs through the U.S. court system instead. =93That=92s sheer insanity,=94 says Goldman. =93They have their own legal s= ystems. But they haven=92t gotten plaintiff-friendly like here.=94 So far, two states in Brazil=97Rio and Goias=97have filed cases in Texas an= d Florida state courts. The manufacturers requested to transfer the cases to federal court=97which is perceived as being less friendly to anti-tobacco plaintiffs=97and are awaiting the decision. Also, governmental bodies from Guatemala, Nicaragua, Venezuela, Bolivia and Panama have filed suits against U.S. cigarette manufacturers. The cases were filed in different locations, but a federal judicial panel ruled that the federal cases should be consolidated and heard before one judge for pretrial purposes. The group of cases is now before a federal court in Washington, D.C. If the cases proceed through the pre-trial phase, they will be returned to the original locations for trial. A suit had also been filed on behalf of Thailand, but it was recently voluntarily dismissed after it became evident that no one in the Thai government had authorized the suit. Many believe that these cases will not be successful. =93The cases filed by foreign governments are legally and factually very different than those filed by states=92 attorneys general,=94 says Lindon. They are actually closer to those filed by unions seeking to recover healthcare costs, he says, virtually all of which have been dismissed by federal courts. The courts have consistently ruled that unions and other third-party payors are too remote from any alleged damages to recover in these types of suits and should not proceed on an aggregate basis. The manufacturers have filed a motion to dismiss the Guatemala case based on remoteness. At press time, a decision was expected soon. Meanwhile, the government of the Canadian province Ontario an- nounced in early 1999 it is planning a us$40 billion lawsuit against U.S. tobacco manufacturers selling cigarettes in Canada to recover healthcare costs for the treatment of diseased cigarette smokers. The government has been considering filing the case through the U.S. court system. Analysts doubt that the U.S. judicial system will let such cases proceed. =93These cases involve policy choices on smoking made by foreign governments,=94 says Lindon. =93I doubt U.S. courts are going to want to ge= t involved in other governments=92 policy choices.=94 TWISTING THE LAW. Although the chance for success of these cases is slim, the industry has no choice but to continue shelling out money to defend itself. The stakes are high. While current legal and judicial systems do not allow the madness as in the U.S., the systems themselves could change. In fact, as far-fetched as it seems, a Canadian province recently passed a law that makes it easier for anti-tobacco cases to succeed. British Columbia enacted the Tobacco Damages and Health Care Costs Recovery Act in November 1998, which allows lawsuits against tobacco companies to recover costs of treating diseased smokers. Then the government filed a suit against the industry seeking to recover several hundred million dollars per year in healthcare costs. =93The statute changed the rules of evidence dramatically,=94 says Simon Potter, an attorney with Ogilvy Renault in Montreal, which represents Imperial Tobacco, though not in the British Columbia matter. The statute requires the judge to find that if any tort has been committed by any tobacco company, then all companies are jointly responsible for that tort, and assumes that tort be applied to all smokers. It also allows proof of healthcare costs on a purely statistical basis. The industry filed a motion claiming the law constitutes legislative interference with the independence of the judiciary. A decision is expected in December. Essentially, says Potter, tobacco manufacturers claim that the statute unconstitutionally removes the power of assessment from the courts. He says it=92s one thing to attempt to streamline cases, but another to tell a judge how to rule. The government=92s case against the industry was put on hold until the statute is reviewed. Potter says that no cases have succeeded in Canada thus far. Furthermore, he says, Canada has had the largest warning on cigarette packs in the world for quite some time. The government has also been involved in the growing of tobacco and has encouraged the export of tobacco. =93They=92ve been collecting enormous amounts of money from tobacco,=94 say= s Potter. =93They=92ve essentially licensed the sale of tobacco and endorsed it.=94 Whether other governments will change their laws to facilitate anti-tobacco suits remains to be seen. It seems outrageous that a government would compromise its legal integrity for money. But greed is infectious, and everyone seems to think that =93Big Tobacco=94 is a gold mi= ne with plenty of gold for the taking. -TR From owner-intl-tobacco@venice.essential.org Sat Jan 8 12:56:39 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id A8A0421B67 for ; Sat, 8 Jan 2000 12:56:39 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id MAA24587 for ; Sat, 8 Jan 2000 12:56:39 -0500 Date: Sat, 8 Jan 2000 12:56:39 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] Russia Getting Back on its Feet (fwd) Russia Getting Back on its Feet Source: Tobacco Journal International, Saturday, 1/8/00 [This item is undated.--gene borio] The Russian cigarette market was negatively affected by the country=92s financial crisis that started in mid 1998. A trend towards more expensive and quality brands slowed down, and many smokers turned back to cheaper cigarettes and filterless =93papirossy=94. However, there are signs now indicating that the worst may be over. =20 The situation in Russia is getting better, simply because it can't get any worse=94 =96 this rather sarcastic view, expressed by a Russian tobacco executive is shared by many of his compatriots regarding the state of the country's economy. Russia went through a painful financial crisis that started in August 1998 and has strongly devaluated the rouble; it prompted international investors to quickly take their money out of the country. The effects of the crisis were soon felt in the tobacco market as the purchasing power of the population went down dramatically. Smokers started to buy cheaper products, and more expensive quality cigarettes remained on the shelf. Impact on the industry was significant as the crisis also affected business in other CIS and eastern European countries. After the crisis cigarette prices in Russia had gone up 2.5 times, while the dollar rate went up 3.5 times. This clearly shows that margins were squeezed and the consumer became even more price sensitive. Still, tobacco was one of the only sectors able to increase production volumes in the immediate post-crisis era. The demand is still there; it's just the question of how it's being fulfilled. According to statistics by Tabakprom, the Russian Tobacco Industry Association, Russian cigarette production will achieve around 235 billion pieces in 1999 =96 a considerable increase against 1998, when 200 billion cigarettes were produced, and almost the double of the 1994 figure (136 million). This is mostly due to the involvement of multi-nationals in Russia, but also due to the appearance of several small businesses throughout the country. There are no less than 86 cigarette factories registered at the Russian finance ministry; of those, around 60 are sizeable plants, and 30 are major factories where the best-selling brands are manufactured. 20 factories are associated to Tabakprom, and ten factories are joint-ventures with foreign companies. According to Mr Terevtsov, the head of the Russian association, around 95 per cent of all legal cigarettes sold in Russia will be made locally by the year 2000. Imports have gone down from 65 billion pieces in 1997 to 51 billion in 1998 and should fall further, being gradually replaced by domestic production. A lot has changed since foreign companies started to get into the Russian market. Modernisation was carried out in several factories =96 many of them now have state-of-the-art equipment =96 and production capacity went up fast. So far, a total of US$ 2 billion was invested in the Russian tobacco industry since 1990; 75 per cent of the money came from foreign companies. Smuggling is also better under control now, in comparison to the days immediately after the breakdown of communism. Contraband and counterfeit goods make up around 4 to 5 per cent of the total market, according to Tabakprom estimates. The percentage of smokers in Russia stands at around 30 to 40 per cent of the population, and this number is increasing, says Tabakprom. Filter cigarettes are rapidly gaining importance at the Russian marketplace; the growth rate for this segment in the coming years is estimated to reach up to 10 per cent a year =96 but only if the fragile stability of Russian economy holds up. The lack of planning is a problem for foreign companies operating in the country, who often complain about unnecessary bureaucracy and a changing legislative environment. However, over time these companies have learnt to expect the unexpected in Russia, and to cope with the sudden changes in economy and politics. Visitors to the capital Moscow, now a bright city with an increasing amount of billboards carrying advertising for western goods, have to make a true effort to remember the fact that not long ago socialists had the power in the country. Even less time has passed by since rebel tanks fired at the Duma, the Soviet parliament, and tried to destabilise the government. Russia still has to adapt to the enormous changes it has been through in the past years. Changes have also taken place on the leaf tobacco side. During an event in Moscow Mr Petry Garlick, sales manager for the CIS at leaf dealer Standard Commercial, remembered what he called the =93enormous hunger for tobacco=94= in the time right after the fall of the iron curtain, between 1993 and 1995. =93Factories bought cheap tobaccos from all possible sources,=94 he remembered. Deliveries came mainly from India, China and the CIS, Russia's most traditional leaf sources, but also from Greece, Italy and Indonesia. After that period, multi-national investment started to pick up and in 1996 a new category of mid-priced cigarettes was introduced; better tobaccos from India and China as well as, to some extent, tobacco from Brazil and Zimbabwe started to be used. Light air-cured leaf from Indonesia became popular and was included in blends of filterless cigarettes. This development was jeopardised by the August 1998 financial crisis, which prompted manufacturers to go back to cheap tobacco and to buy more leaf from CIS countries as well as scrap tobacco. =93Price remains the key issue in this country as far as leaf tobacco is concerned, and this is unlikely to change in the short term,=94 said Mr Garlick. Standard Commercial has introduced CRES, cut rolled expanded stems, to the Russian market as a way of improving the filling value of cigarettes and make them cheaper while lowering tar and nicotine content. The company started up a new CRES factory in St. Petersburg in September 1999 with a capacity of 24000 tonnes. Tar and nicotine delivery is a hot topic in Russia as the government plans to lower maximum levels from 2002 onwards. If approved, the new law would lower the maximum tar delivery from 15 to 12 mg, and the maximum nicotine level would go down to 1.1 mg per cigarette. Nowadays, imported cigarettes can have a maximum of 15mg tar/1.3 mg nicotine, and the content of tar in local, filterless cigarettes can go up to 24mg. There is another proposal by the government to introduce regional tax banderoles for cigarette packs in addition to the existing ones. This is being fought by Tabakprom as a unnecessary measure, just as they are fighting another proposal to completely ban cigarette advertising in the country. So far, the anti-smoking campaign has failed to pick up in the country. Tobacco is a major source of revenue for the Russian government. A representative of the finance ministry mentioned to TJI that cigarette tax revenue is equivalent to 8 per cent of the government budget. The tobacco industry gives direct employment to thousands of workers. The future perspectives for the tobacco industry in Russia are not bleak, although the consequences of the financial crisis are still being felt. Demand will continue to be strong, and manufacturers and suppliers seem to believe that, at some point, the consumers will turn back to quality products. The fact that House of Prince is soon going to start building a new factory 400 km South of Moscow is proof of that confidence, as is the recent announcement by Rhodia Acetow that it will expand its Russian plant in Serphukov. The question that remains is as to when this positive development will finally take place, something nobody dares to predict. At least for the moment, Russian companies are happy if they're able to plan what they'll do the next day or next week. From owner-intl-tobacco@venice.essential.org Sun Jan 9 13:25:09 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id A1E2B21B05 for ; Sun, 9 Jan 2000 13:25:09 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id NAA31130 for ; Sun, 9 Jan 2000 13:25:09 -0500 Date: Sun, 9 Jan 2000 13:25:09 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Philip Morris unit to shut Argentine plant (fwd) Source: Reuters, Wednesday, 1/5/00 Wednesday January 5, 3:56 pm Eastern Time BUENOS AIRES, Jan 5 (Reuters) - The Argentine subsidiary of tobacco giant Philip Morris Cos Inc. (NYSE:MO - news) said Wednesday it would shut down a plant employing 500 workers because a tax increase on cigarettes. Massalin Particulares , the country's largest cigarette producer, said an increase in a special tax to 21 percent from 7 percent would hurt margins, reduce consumption and increase the black market sale of tobacco products. As a result, the company said it was being forced to close its plant in Goya in the impoverished province of Corrientes. ``The company must adjust its productive capacity to the new market created by these new circumstances and more efficiently use its productive resources,'' Massalin said in a letter to the Buenos Aires Stock Exchange. The increase is part of a $2.6 billion tax plan pushed through last month by President Fernando de la Rua, who hopes to use the funds to rein in Argentina's yawning budget deficit. Tobacco accounted for $2.0 billion in fiscal revenue a year before the tax increase. Massalin Executive Vice President Jorge Vives told Reuters last month the increase would raise the total taxation on cigarettes to 72.5 percent of the total price from 68 percent. Massalin, which employs nearly 3,000 of Argentina's 4,000 cigarette workers, operates two other plants in the country. In 1991, it closed a plant that employed nearly 1,000 workers. Other companies have also said they may have to lay off workers and close plants as a result of the tax scheme, which affected levies on alcoholic drinks, jewelry, mobile phone use and transportation vehicles, among others. Massalin earned $48.8 million in the first half of 1999 while Argentina's only other cigarette maker, Nobleza Piccardo , a unit of British American Tobacco Industries Plc (quote from Yahoo! UK & Ireland: BATS.L), earned $12.5 million in the first nine months of 1999. From owner-intl-tobacco@venice.essential.org Mon Jan 10 10:53:17 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id B693221B5A for ; Mon, 10 Jan 2000 10:53:17 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id KAA07640 for ; Mon, 10 Jan 2000 10:53:16 -0500 Date: Mon, 10 Jan 2000 10:53:15 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] European News Bulletin 2001 - 10 January 2000 (fwd) EUROPEAN BULLETIN EU20 01 =96 10 January 2000 Headlines GERMANY: BAT increases market share in Germany NETHERLANDS: Government says it might sue tobacco industry=20 TURKMENISTAN: President Bans Public Smoking UK: Court rejects challenge against smoking report UK: Campaign urges smokers to quit for Millennium INTERNATIONAL AUSTRALIA: Children may sue smoking parents GUATEMALA: Court dismisses Guatemala=92s tobacco lawsuit but State will app= eal Full Text GERMANY: BAT increases market share in Germany The German cigarette market is still slowly expanding, according to figures released by British-American Tobacco (Germany) GmbH. In 1999, 173 billion cigarettes were smoked in Germany, an increase of 1% on 1998. The market volume at the end of the 1990s thus corresponds roughly to that from the beginning if the decade. Sales in Germany of factory-finished cigarettes rose to 141.2 billion, a total increase of 1.9% in 1999. BAT=92s leading brand was Lucky Strike, which increased its market share from 3.1% to 3.8% and now is ranked fifth. Gauloises, also a BAT brand, jumped two places to seventh place on the market. It now has a 3.2% share. BAT=92s overall market share in Germany for 1999 rose 5.5% to 18.6%, or by 1.4 billion cigarettes to 26.3 billion. In addition, BAT (Germany) produced 15.9 billion cigarettes under licence abroad, which count as exports. Thus worldwide sales for the firm totalled 42.2 billion cigarettes. Total revenue, including tobacco taxes but excluding indirect taxes, was DM6.1bn. BAT forecasts that this figure will reach DM8bn in 2000. The merger of Rothmans and parent group BAT, effective from January 1, will add the Dunhill, Winfield and Lord brands to BAT=92s portfolio. The adjusted German market share thus stands at 24%, with sales increasing to 33.9 billion cigarettes. But as a consequence of its merger with Rothmans, BAT must give up its Benson & Hedges brand to Reemtsma and therefore remains in third place behind Philip Morris (40.4% market share in 1999) and Reemtsma (23.6% share including Benson & Hedges). Source: Handelsblatt Interaktiv, Friday, 7/1/00 NETHERLANDS: Government says it might sue tobacco industry The Netherlands is considering suing for damages from the country=92s tobacco industry for smoking-related health costs, the Health Ministry has announced. "We have asked the government prosecutor to look into the matter and see if there=92s any real chance of being successful," spokesman Benno Bruggink told Reuters. The government spends an estimated 6.5 billion guilders ($2.99 billion) per year on health costs linked to smoking, but it was unclear what the size of any government claim would be, he added. The review by the prosecutor would be completed sometime next year. About a third of the Dutch adult population smokes, a proportion that has remained stable in recent years. Dutch Health Minister Els Borst told the daily newspaper Trouw that in environmental matters it had been established that polluters pay for damages they caused. "In health, we should also be able to do that," she said. The Netherlands currently spends about seven million guilders per year on anti-smoking campaigns, which Borst termed "a pittance". To make a serious impact in that area, much more money was needed, a major portion of which should come from the industry, she said. Earlier in 1999 a Dutch smoker sued the tobacco industry for damages after contracting lung disease and then extended his claim to include the Dutch state for not taking sufficient steps to inform the public about the health hazards of smoking. Source: Reuters, Saturday, 18/12/99 TURKMENISTAN: President Bans Public Smoking Smoking will be banned in public places of Turkmenistan, said President Saparmurad Niyazov at a government session on December 27. Niyazov, who wants to raise the life expectancy in his country, signed the decree "in the name of the health of the nation", the Interfax news agency reported. Violators will be fined the equivalent of a month=92s salary. Source: Associated Press, 27/12/99 UK: Court rejects challenge against smoking report Britain=92s High Court has dismissed a challenge by the tobacco industry against a government report on the dangers of passive smoking. The Tobacco Manufacturers Association (TMA) said they were not consulted by the report=92s authors as promised and argued that it should not be used by the government when framing anti-smoking legislation. But judge Anthony Hidden rejected the groups=92 claims that the report=92s findings were unlawful. He said the report, by the Scientific Committee on Tobacco and Health (SCOTH), had been part of an on-going consultative process and contained a number of recommendations already in the public domain. "The report should not be...susceptible to judicial review," Hidden said. The report By SCOTH, which was set up as an advisory group in 1994, found that passive smoking caused numerous medical problems including childhood respiratory disease, mouth and pharynx cancer and heart problems. The TMA, which represents all the major tobacco manufacturers operating in the UK, argued that in light of such claims they should have been consulted before its conclusions were accepted by the Health Secretary. In dismissing the charge, Justice Hidden said he considered the function of the SCOTH had been to advise, not to decide, and its report was only a stage in an ongoing decision-making process. Responding to the Court ruling, Yvette Cooper, Public Health Minister, said: "We are delighted with the outcome of this judgement. The role of bodies such as SCOTH is to provide scientific advice on tobacco and health issues. The tobacco companies were suggesting that SCOTH should have consulted the industry before presenting the Government with advice. This assertion, which the High Court has now dismissed, is both inappropriate and inconsistent with the nature of the function of this advisory body. The Government will not allow this type of action to deflect us from our goal of saving lives by reducing tobacco use." Source: Reuters, Tuesday, 12/21/99; NewsEdge, Thursday, 12/23/99 UK: Campaign urges smokers to quit for Millennium Government Ministers are hoping record numbers of smokers will mark the Millennium by stubbing out their last cigarette, prompted by a major advertising campaign. A series of television adverts, running under the slogan "Don't Give Up Giving Up" will feature video diaries by smokers and tips on kicking the habit. Support messages will also be screened between programmes showing a regularly updated ticker tape of viewers names who are pledging to give up and also offering details of the anti-smoking campaign=92s telephone helpline and website. The package, which began earlier this month with a poster campaign, has been designed to get the message across that the start of the millennium is the ideal opportunity to give up tobacco. Launching the initiative earlier this month, health minister Yvette Cooper said more than a million smokers already planned to try stopping in the New Year, and that the campaign was intended to get the message across to everyone. Some estimates claim that up to one quarter of the nation=92s 11 million smokers could give up, and pharmacies reportedly have been stocking up on nicotine patches and gum in anticipation of a New Year=92s rush. The adverts are part of the three year Government campaign to tackle the causes of cancer, heart disease and stroke, the nation=92s major killer diseases. Billed as part of "the biggest ever tobacco education campaign run in England", it includes a telephone helpline - 0800 169 0169 - to provide information and support for people wanting to quit. Source: ITN, Sunday, 12/26/99 INTERNATIONAL AUSTRALIA: Children may sue smoking parents Children exposed to their parents=92 smoking may soon begin suing them, a prominent public-liability lawyer has predicted. Parents who smoke could also find that it counts against them in custody battles. In a report released this month, Mr Eugene Arocca, a partner at Maurice Blackburn Cashman, says the Australian focus in tobacco litigation is about to shift from exposure in the workplace to family law and the hospitality industry. He argues that children whose parents smoke, regular patrons of hotels, restaurants and nightclubs, and prisoners exposed to smoke in the prison system could all make future legal claims. "The medical and legal issues raised by such cases will expand to the extent that ultimately actions will be contemplated against relatives who smoke, occupiers of residential premises and even expectant mothers," Mr Arocca says. In his report, Mr Arocca says cases in the United States show that parents who refuse to stop smoking while in the company of their children may lose custody rights. "If parents contesting the custody of a child have equal attributes other than one being a smoker, then one would presume that this would be a most persuasive factor in determining the issue of custody." Mr Arocca said children, young or grown-up, who contracted cancer, asthma or related diseases could sue their parents, relatives or other caregivers for passive smoking. Children would be reluctant to bring such claims, he conceded, but not if the parents=92 home and contents insurers were the opponents. Source: The Age, Monday, 12/27/99 GUATEMALA: Court dismisses Guatemala=92s tobacco lawsuit but State will appeal Guatemala plans to appeal a US federal judge=92s decision to throw out its $800 million lawsuit against US tobacco companies, Attorney General Carlos Garcia announced. "Our arguments are similar to those in complaints filed by other (US) states, and they were allowed to proceed," he said. If the appeals court upholds the dismissal, Garcia said he was prepared to take the case to the US Supreme Court. The US federal judge=92s decision on Dec 30 to dismiss Guatemala=92s lawsuit was the first to rule on the legality of tobacco lawsuits introduced by foreign governments, according to tobacco lawyers. Guatemala filed suit against Philip Morris, the Liggett Group and other tobacco firms, claiming it incurred more than $800 million in unnecessary health care costs between 1973 and 1997 from smokers. The opinion by Judge Paul Friedman said Guatemala=92s claimed "injury is too remote" to allow the case to continue. Bolivia, Nicaragua, Panama, Venezuela and the Brazilian states of Rio de Janeiro and Goias have filed similar suits against tobacco companies in US courts. Similar lawsuits filed by 46 US states resulted in a $246 billion settlement with the tobacco industry, to be paid over a period of years. Tobacco companies still face a suit by the US federal government and smuggling charges brought by Canada. =20 =20 Source: Agence France-Presse, January 6, 2000 Amanda Sandford Research Manager ASH 102 Clifton Street LONDON EC2A 4HW tel: 0171 739 5902 fax: 0171 613 0531 =20 From owner-intl-tobacco@venice.essential.org Mon Jan 10 10:56:33 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 8FF7221BCE for ; Mon, 10 Jan 2000 10:56:33 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id KAA07757 for ; Mon, 10 Jan 2000 10:56:33 -0500 Date: Mon, 10 Jan 2000 10:56:33 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Monks Win Lawsuit Against Cigarette Factory (fwd) Monks Win Lawsuit Against Cigarette Factory by XINHUA via NewsEdge Source: NewsEdge, Monday, 1/10/00 NANJING (Jan. 7) XINHUA via NewsEdge Corporation - Monks of the Daming Temple in Yangzhou City of east China's Jiangsu Province recently won a lawsuit against a factory making "Daming Temple" brand cigarettes, and the factory must pay 20,000 yuan in compensation for infringement of the temple name, according to a court ruling. The use of the temple name as trade mark for cigarettes is regarded as an offense against Buddhist practices, which forbids smoking. The temple's monks were unable to negotiate with the Laifeng Cigarette Factory privately and were forced to resort to the court. The cigarette factory, based in Hubei Province, central China, began to produce "Daming Temple" cigarettes last year. The 1,000-year-old Daming Temple is considered one of China's most important Buddhist sites, enjoying high prestige among Buddhists in China and abroad. From owner-intl-tobacco@venice.essential.org Mon Jan 10 11:00:19 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id CA82021B5A for ; Mon, 10 Jan 2000 11:00:19 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id LAA07887; Mon, 10 Jan 2000 11:00:19 -0500 Date: Mon, 10 Jan 2000 11:00:19 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Tobacco firms eye Afta avenue / Tax exemption may boost availability Tobacco firms eye Afta avenue / Tax exemption may boost availability by Aphaluck Bhatiasevi Source: Bangkok Post, Monday, 1/10/00 Concern has been raised over the effect Asean Free Trade Area (Afta) will have on increasing availability of foreign tobacco products in a number of countries, particularly Thailand. Speaking at the World Health Organisation's International Conference on Global Tobacco Control Law which ended in the Indian capital yesterday, Hathai Chitanond, president of the Thailand Health Promotion Institute said cigarettes should not be on the list of products exempted from taxation. According to the 1998 Asean Summit in Vietnam, member countries agreed to implement Afta by the year 2002, and tariffs of 0-5% would be effective on 90% of taxable items. Dr Hathai said the Thai government's policies in supporting a continuous increase in taxation would be obstructed by Afta, for it would make foreign brands of cigarettes cheaper and more easily available in the country. "The recent establishment of a manufacturing plant in Malaysia by tobacco giant Philip Morris is obvious that they want to increase their sales market in the region, particularly in Thailand," he said. Bungon Rithipakdee, director of Action on Smoking and Health, said Afta will impose its tariff reduction scheme on tobacco products as well. Accordng to her, the Asean pact makes it more advantageous for multinational cigarette companies to set up production in one of the member countries. "Malaysia is therefore replacing Hong Kong as the Asian hub for cigarette manufacturing due to its cheaper labour and more favourable trading arrangements," Ms Bungon said. Dr Hathai urged the World Health Organisation to intervene by raising the issue of exempting tobacco products from the list of items that would enjoy free trade. Derek Yach of the WHO's Tobacco Free Initiative, said though the role of the WHO has not been outlined on the issue, continuous increase in the price of cigarettes was the most effective tool in reducing cigarette consumption. He pointed out that WHO has an "open channel of communication" with the International Monetary Fund and the World Bank, where discussions about trade policies can be made to diversify policies at the local level. Ms Bungon said if foreign brands of cigarettes became cheaper in the country, it could lead to faster privatisation of the government-owned Thailand Tobacco Monopoly (TTM). According to her, the TTM would find it difficult to survive and would eventually be taken over by a multinational tobacco firm. Similar scenarios have occurred in a number of countries, said Dr Hathai. He said transnational tobacco companies have been expanding their production bases and businesses in Eastern Europe and the Asia-Pacific region. "Philip Morris, British-American Tobacco and R.J.Reynolds each own or lease cigarette plants in at least 50 different countries around the world," said Dr Hathai. Faced with a difficult business environment in the US, the transnational tobacco companies have now shifted their base to developing countries in Asia, Africa, Latin America and Eastern Europe, said Luk Jossens of Belgium's International Union Against Cancer. At the same time, mergers and acquisitions made a few tobacco companies even more dominant, and the top four cigarette manufacturers now enjoy over 70% of the global market, Dr Luk said. Major firms which recently merged include British-American Tobacco and Rothmans, Japan Tobacco and R.J.Reynolds, and the French Seita and Spanish Tabacalera. Mongkhol Na Songkhla, director-general of the Medical Sciences Department, said the only tool to keep the youth away from cigarettes was to increase awareness of the health consequences of smoking. From owner-intl-tobacco@venice.essential.org Mon Jan 10 11:01:39 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 3BAA721B05 for ; Mon, 10 Jan 2000 11:01:39 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id LAA08009 for ; Mon, 10 Jan 2000 11:01:38 -0500 Date: Mon, 10 Jan 2000 11:01:36 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] correction to European Bulletin 2001 10 January 2000 (fwd) Dear Friends It has been pointed out to me that there was an error in the reporting of the UK Court victory on the SCOTH report. The SCOTH report did not conclude that passive smoking caused mouth and pharnyx cancer as stated in the Reuters news report. The cancer which was the subject of the legal wrangling was lung cancer. Apologies. Amanda Sandford Research Manager ASH 102 Clifton Street LONDON EC2A 4HW tel: 0171 739 5902 fax: 0171 613 0531 From owner-intl-tobacco@venice.essential.org Thu Jan 13 12:21:29 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 661D621BF9 for ; Thu, 13 Jan 2000 12:21:29 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id MAA13702 for ; Thu, 13 Jan 2000 12:21:29 -0500 Date: Thu, 13 Jan 2000 12:21:28 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] Canada: Big, shocking images eyed for cigarette packages (fwd) Big, shocking images eyed for cigarette packages Graphic designs to discourage young smokers by Tim Harper / Toronto Star Ottawa Bureau=20 Source: Toronto Star, Thursday, 1/13/00 OTTAWA - Health Minister Allan Rock is set to up the ante on tobacco control by unveiling a range of cigarette package designs, which could include images of a cancerous mouth, a dead lung or a fragment of the human brain. Another new, bold message under consideration features a smiling, attractive girl holding a cigarette, under the heading ``Children See, Children Do.'' A warning to pregnant women depicts an empty crib while others show pictures of dead infants, including one linking smoking with Sudden Infant Death Syndrome (SIDS). They were among 13 designs tested during 13 focus group sessions conducted in Montreal, Toronto and Ottawa. The results were released by Health Canada yesterday. If Rock proceeds with the images, Canada may have the largest, most graphic health warnings on cigarette packages in the world. The images are expected to take up 60 per cent of the packaging, about double the size of current anti-smoking warnings. A source close to Rock confirmed yesterday the minister would move soon on the ``size and content'' of warnings on cigarette packages. Rock is expected to unveil the new regulations next week, most likely on the national anti-smoking day dubbed ``Weedless Wednesday.'' An anti-smoking advocate said she is pleased with Rock's response to the health community's call for shocking, graphic images that could jolt adolescents who are just taking up smoking. ``We have recommended that they move to the photos and we're expecting to be pleased,'' said Cynthia Callard of Physicians for a Smoke Free Canada. The revised images could be included in so-called slides of the package, the portion that smokers flip up when they reach for a cigarette. It is often blank, or, in the case of the popular Player's brand, it provides a calendar. Marie-Jose=E9 Lapointe of the Canadian Tobacco Manufacturers Council, the organization that acts for the country's three big cigarette makers, said Rock could face difficulties on two fronts. She said the technology might not be available to print such images. She also repeated an earlier warning that the tobacco companies could challenge in court any move to use up to 60 per cent of the package because it infringes on the companies' trademarks. ``We don't think legislation should be made based on focus groups,'' she said. Young smokers told Environics Research, which did the study in late May and early June, that they were most affected by the images of mouth cancer, the diseased lung, the young child holding the cigarette, the brain fragment accompanied by a warning about strokes and a dead baby to illustrate the link to SIDS. But the response wasn't universal. Some young smokers told researchers they didn't believe smoking could cause mouth cancer. They also laughed off another image, under the heading ``Kiss Me,'' of a woman kissing an ash tray. The image was chosen to illustrate that smoking diminishes sex appeal. ``Clear visuals,'' Environics says, ``where the picture actually does say a thousand words, will have greatest across-the-board impact on the smoking population.'' It supports Health Canada's view that black-and-white text messages may no longer have the impact they had when they were introduced in 1994. Meanwhile yesterday, Manitoba doctors called for smoking bans in bars and restaurants, citing efforts in British Columbia to protect workers from second-hand smoke. The Manitoba Medical Association is urging the Winnipeg city council to pass a bylaw that would ban of smoking in public places. They say a survey of more than 900 Manitobans last month showed that about 70 per cent supported a total ban on smoking in restaurants. In B.C., the Workers Compensation Board is forcing smokers to butt out in bars and restaurants, saying employees deserve the right to work in a smoke-free environment. From owner-intl-tobacco@venice.essential.org Thu Jan 13 15:11:07 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id A522621AFF for ; Thu, 13 Jan 2000 15:11:07 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id PAA18552 for ; Thu, 13 Jan 2000 15:11:07 -0500 Date: Thu, 13 Jan 2000 15:11:07 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] U.K. Tobacco Executives Acknowledge Smoking, Cancer Connection (fwd) U.K. Tobacco Executives Acknowledge Smoking, Cancer Connection Source: Bloomberg News, Thursday, 1/13/00 London, Jan. 13 (Bloomberg) -- British American Tobacco Plc and other tobacco executives acknowledged there is a link between smoking and disease during testimony before the U.K.'s House of Commons Health Select Committee. Executives from BAT, the world's second-largest cigarette maker, Imperial Tobacco Plc, Gallaher Plc, Philip Morris Co. and R.J. Reynolds Tobacco Holdings Corp. presented evidence to the committee as part of a British government's inquiry into the health risks of smoking, which began last year. ``British American Tobacco believes and has for decades recognized that along with the pleasures of smoking come real risks of serious diseases such as lung cancer,'' BAT Chairman Martin Broughton said in a statement. Gallaher said on its Web site it ``has proceeded on the assumption that cigarette smokers are more likely to contract lung cancer and other diseases.'' The company makes Benson & Hedges cigarettes in Britain. Executive were questioned today about addiction, the risks of passive smoking and other issues. Tobacco companies face less pressure from the U.K. government than in the U.S., where the Justice Department is suing them to recoup the cost of treating sick smokers. The inquiry isn't likely to have much impact on the companies' British business, analysts said. ``The implications are relatively modest,'' said Nick Bunker, an analyst at HSBC. ``The real thrust of government policy is through the fiscal system and taxes, and these committees don't normally have influence over tax matters.'' In the U.S., Philip Morris shares rose 5/16 to 24 9/16. RJR rose 5/16 to 19 7/8. Philip Morris, the world's largest tobacco company, started a marketing campaign in October aimed at improving its image that includes an acknowledgment that there is scientific evidence smoking can cause cancer. Industry executives will appear before the committee a second time Jan. 27. BAT shares rose 11.25 pence, or 3.6 percent, to 323.25p ($5.33). Shares in Imperial, maker of Embassy and John Player cigarettes, rose 13.5p, or 2.4 percent, to 566.5p. Gallaher shares fell 2.25p, or 0.8 percent, to 283p. From owner-intl-tobacco@venice.essential.org Fri Jan 14 11:06:11 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 8B21C21B49 for ; Fri, 14 Jan 2000 11:06:11 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id LAA00850 for ; Fri, 14 Jan 2000 11:06:11 -0500 Date: Fri, 14 Jan 2000 11:06:10 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] India: Plea to stop MNCs from entering tobacco market (fwd) Plea to stop MNCs from entering tobacco market Source: The Times of India, Friday, 1/14/00 HUBLI: The Karnataka State Beedi Workers Federation has urged the Union government to restrict the multi-national companies (MNCs) from manufacturing cigarettes in India to safeguard the interests of the domestic beedi and cigarette industry. In a statement issued here on Thursday, the Federation president A.J. Mudhol said the USA had already imposed a ban on an Indian beedi company citing the reason that the company was employing child labourers. He said, large number of MNCs were entering the cigarette manufacturing industry in India which would badly affect around 75 lakh beedi workers in the country as the manufacture of mini-cigarettes was much cheaper than manufacturing beedi. He alleged the Union government was offering a red carpet welcome to the MNCs at the cost of the domestic industries. The state government, political parties and labour organisations should bring pressure on the Union government to take immediate measures to restrict the MNCs from manufacturing cigarettes. --UNI From owner-intl-tobacco@venice.essential.org Wed Feb 2 11:25:28 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 3F74421AFF for ; Wed, 2 Feb 2000 11:25:28 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id LAA13711 for ; Wed, 2 Feb 2000 11:25:27 -0500 Date: Wed, 2 Feb 2000 11:25:27 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] intl-tobacco list update Friends: I have been off line for the last couple weeks, which explains why the list has been dormant. In the last couple days, our friends at ASH UK and the Center for Public Integrity in the United States have broken a major story on tobacco smuggling. In a series of messages to follow this one, are clips and updates related to this breaking news. Tomorrow, I will send a selection of international tobacco stories from the previous couple weeks, and then the list will return to its normal volume. Best, Robert Weissman Essential Information | Internet: rob@essential.org From owner-intl-tobacco@venice.essential.org Wed Feb 2 11:32:25 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id CF28321AFF for ; Wed, 2 Feb 2000 11:32:24 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id LAA13938 for ; Wed, 2 Feb 2000 11:32:24 -0500 Date: Wed, 2 Feb 2000 11:32:24 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] Investigative Report: Major Tobacco Multinational Organized CigaretteSmuggling, Evaded Taxes, Documents Show (fwd) Investigative Report: Major Tobacco Multinational Organized CigaretteSmuggling, Evaded Taxes, Documents Show by Maud S. Beelman, Maria Teresa Ronderos, and Erik J. Schelzig ; Source: Center for Public Integrity, Monday, 1/31/00 International Consortium of Investigative Journalists, the Center for Public Integrity British American Tobacco, the world=92s second-largest multinational tobacc= o company, for decades secretly encouraged tax evasion and cigarette smuggling in a global effort to secure market share and lure generations of new smokers, internal corporate documents reveal. Contrary to tobacco companies=92 long-standing claims that cigarette smuggling is the work of organized crime or rogue employees beyond their control, the files show that senior personnel of the parent company and its subsidiaries sought to control and exploit smuggling as part of a worldwide marketing strategy to increase revenue. Note: Links will open in a new browser window. : Link to Adobe PDF file : Link to footnotes More than 11,000 pages of documents from BAT and its subsidiaries, including the U.S. company Brown & Williamson, were analyzed over a six-month period by the International Consortium of Investigative Journalists (ICIJ), a project of the Center for Public Integrity in Washington, D.C. Part of a depository of about 8 million pages, the documents were selected based on region and subject matter. In some cases, the complete files on a specific country or individual were reviewed. The selected documents, covering mostly 1990-1995, do not suggest that BAT employees themselves transported contraband cigarettes across customs borders, where taxes would be due. Instead, they show that corporate executives in Britain, the United States, and other locales controlled the volumes, brands, marketing campaigns, timing, and price levels throughout the smuggling distribution networks they exploited. Company officials worked closely with their local agents =96 giving them perks such as ticket= s to Wimbledon =96 and provided incentives to local black-market distributors= =2E In response [http://www.public-i.org/BAT.pdf] to a series of detailed questions prompted by a review of its corporate documents, BAT said: "We do not intend to answer questions or address allegations apparently based on highly selective and out-of-context documents, about matters which are more properly addressed - and in many instances are being addressed with our full co-operation - by governments and customs authorities around the world." The company said it knew that some of its products "are handled other than through official channels," but added that "we cannot control the distribution chain all the way to the final customer." But the documents clearly show that BAT and its subsidiaries did attempt to control the distribution chain all the way to the final customer and employed a carefully coded language to discuss and plan those operations. Only occasionally did they use such terms as "smuggled" or "contraband." The preferred euphemisms of company correspondence were "DNP" (Duty Not Paid), "transit," or "GT" (general trade), as well as "parallel market," "second channel," and "border trade." The euphemisms were used interchangeably and contrasted repeatedly with references to imports that were legal and "Duty Paid" (DP). Since 1997, three BAT managers have either pled guilty to or been convicted of charges related to tobacco smuggling. Two pled guilty in a scheme that shipped cigarettes marked "Duty Not Paid" and "Not for Sale in Canada" back into Canada from Louisiana, where they had been sent allegedly bound for offshore fishing boats. One of the men left the company before pleading guilty to the charges; the other retired in December 1997, six months after pleading guilty. The next year, a BAT executive in Hong Kong was convicted of taking bribes in connection with a cigarette smuggling syndicate. The judge in that case, Justice Wally Yeung Chun-kuen, said in sentencing export manager Jerry Lui, "that management of BAT (HK) was aware duty-not-paid cigarettes =85 would ultimately be smuggled in China and other countries. There could be no other explanation for this enormous quantity of duty-not-paid cigarettes worth billions and billions [Hong Kong] of dollars." The judge, according to Hong Kong press reports in June 1998, commented that BAT=92s "irresponsible behaviour amounted to assisting criminals in transnational crime." Suspicions about industry involvement in cigarette smuggling have grown since 1997 when researchers demonstrated, by comparing annual global exports with global imports, that about one-third of all cigarettes entering international commerce each year could not be accounted for. The industry=92s sanguine reaction to apparently losing a third of its inventor= y annually only fueled those suspicions. But proof remained elusive until last year, when millions of pages of corporate documents, unearthed during numerous health-related lawsuits, became publicly available as part of the tobacco industry=92s November 1998 settlement with the U.S. states. The information contained in those documents could prove far more costly to the companies than the $246 billion U.S. settlement because BAT, as well as its multinational rival Philip Morris, has focused on expanding business into international and newly emerging markets =96 precisely the areas where smuggling seems to have flourished. BAT reported 1.01 billion pounds ($1.8 billion) in profits in 1998 on its worldwide cigarette business, according to its latest available annual report. Of BAT=92s six regional operating groups, its Latin American sales volumes were the highest. Philip Morris, the world=92s largest internationa= l cigarette company, reported tobacco profits of $6.5 billion (3.9 billion pounds) in 1998 -- $5 billion of that in non-U.S. sales, which represented a 10% increase over the previous year. Both companies=92 bottom lines were reduced in 1998 for payouts to the U.S. national tobacco settlement, and profit margins were expected to be higher for 1999. Although tobacco companies now face health-related lawsuits involving about 20 countries, proof of involvement in tax evasion or smuggling schemes could trigger a host of new prosecution, civil and criminal. There are already signs that may be happening. A majority of Colombia=92s state governors and the mayor of Bogota have retained U.S. lawyers to prepare lawsuits in the United States against British American Tobacco and Philip Morris, said Jose Manuel Arias Carrizosa, executive director of the Federation of Colombian Governors. He added that the 21 governors and the mayor of Bogota were seeking "an indemnification for damages caused through contraband of cigarettes into the country." He would not say exactly how much would be demanded of the two companies. "We think there are two markets, one legitimate that pays its duties and taxes, and the other much bigger, illegal," Arias said in an interview. "That cannot be happening without the knowledge of the producing companies." A lawyer hired by the Colombians, who spoke only on condition that neither he nor his firm be identified, said the governors had "a viable cause of action" under civil provisions of the Racketeer Influenced and Corrupt Organizations Act, or RICO. Canada filed a civil RICO lawsuit against R.J. Reynolds and its related tobacco companies in New York state in December 1999 for smuggling across the U.S.-Canadian border. Several people, including a former RJR senior sales manager, have already been convicted on U.S. criminal charges stemming from that same smuggling operation. Speaking of Smuggling Glossary of acronyms: DNP: Duty Not Paid DP: Duty Paid GT: General Trade DF: Duty Free The BAT documents make two points clear =96 ranking executives of BAT and its subsidiaries exploited smuggling as part of their overall strategy to increase market share, and they employed a series of euphemisms to plan and mask their activities. In order to understand the company=92s involvement, its corporate dialect must first be decoded. The documents, especially as they relate to company operations in Latin America, repeatedly identify legal imports as either "Duty Paid" (DP) or "Duty Free" (DF), for traditional duty-free stores. Those phrases are consistently used in opposition to terms such as "DNP," "transit," or "GT," and those contrasting terms appear regularly throughout the memos, letters, charts, and graphs of import/export data and sales figures. For example, a memo from the early 1990s, entitled "Venezuelan Market Definitions and Assumptions," explained that "Duty Paid" goods owed the government legal excise taxes of 50%. No such requirement was noted for the "Duty Not Paid" goods, which were identified as cigarettes produced in Venezuela, exported mainly to the free-trade zone on the nearby island of Aruba, and then re-entered into the Venezuelan market as "transit." The memo came from the file of Keith S. Dunt, then BAT=92s regional director fo= r Latin America who is now the company=92s chief finance officer. In another memo, a Feb. 16, 1993 fax to BAT headquarters in Britain, its Venezuelan subsidiary explained: "The fact is that since November 1992 the transit (DNP) products into Venezuela have been very low due to tighter border controls." During a fierce trademark dispute with Philip Morris over which company had the right to use the Belmont brand name in Colombia, a Feb. 22, 1995 memo outlined contingency options should BAT lose. One was to "launch new brand in DP and maintain Belmont in GT channel." However, a noted drawback of keeping Belmont in the GT channel was that the company "cannot support Belmont in GT via advertising." Advertising for a product that had no government-registered imports apparently would raise questions. A January 1993 status report on Peru stated that BAT=92s "basic strategy ha= s been to set up a local importer/distributor to handle legal exports rather than rely on transit sales." Jon Ferguson, former senior counsel for the Washington state attorney general=92s office and head of its antitrust division, used BAT corporate documents in his 1998 prosecution of tobacco companies to recoup state costs of treating smokers. He said the term "Duty Not Paid," or DNP, obviously referred to smuggled cigarettes. "That=92s clearly my understanding of what =91Duty Not Paid=92 means," Ferguson, now in private practice, said in an interview. Les Thompson, the RJR senior sales manager who pleaded guilty in 1999 to money-laundering charges stemming from the U.S.-Canadian smuggling operation, said that DNP was also a euphemism his company used to talk about smuggling. "It=92s an industry-wide term," Thompson told the Center. "It=92s essentially a long-winded term used by senior folks when they=92re talking around the topic of smuggling." Other euphemisms for smuggled cigarettes, Thompson said, were "re-entry" goods, the "parallel market," and "transit." Thompson, who is to begin serving a 70-month sentence in mid-February, said he knew of other tobacco companies involved in smuggling and that he was cooperating with federal investigations in the United States and Canada. In response [http://www.public-i.org/RJR.pdf] to a request for comment on both the civil and criminal cases, an RJ Reynolds Tobacco Company spokeswoman said the company was not involved in the "day-to-day business operations of any international operations," and that the company had not been implicated in the criminal investigations. But she did not comment on the allegations in the civil RICO suit. Ironically, the most glaring exception in the records to BAT=92s carefully coded language involved its Canadian subsidiary, which was not named in Canada=92s recently filed smuggling lawsuit. In a June 3, 1993 letter [http://www.public-i.org/ITL_to_Herter.pdf] to Ulrich Herter, BAT=92s managing director, Don Brown, the president of Imperial Tobacco Limited, wrote: "As you are aware, smuggled cigarettes (due to exorbitant tax levels) represent nearly 30% percent of total sales in Canada, and the level is growing. Although we agreed to support the Federal government=92s effort to reduce smuggling by limiting our exports to the U.S.A., our competitors did not. Subsequently, we have decided to remove the limits on our exports to regain our share of Canadian smokers. To do otherwise would place the long-term welfare of our trademarks in the home market at great risk. Until the smuggling issue is resolved, an increasing volume of our domestic sales in Canada will be exported, then smuggled back for sale here." In reply [http://www.public-i.org/ITL.pdf] to questions about that letter, Brown said, "My comments in my letter to Mr. Herter were simply of the nature of a factual observation. =85 Our company never knowingly sold cigarettes to smugglers. We only dealt with legitimate buyers, who had all of the appropriate government permits to purchase cigarettes from us." The documents show that BAT executives were aware of the "sensitivity" of the issue. One of them, Delcio Laux who was then president of C.A. Cigarrera Bigott, Sucs., BAT=92s Venezuelan subsidiary, wrote in an April 21, 1992, faxed memo to Dunt that "it is clear that Bigott can=92t be seen as a clean and ethical Company by continuing with DP and DNP in parallel." Dunt later recommended Laux=92s replacement, noting among other things that his "exceptional" ethical norms had been exploited by the Philip Morris competition. In June 1992, Dunt wrote Eduardo Grant, president of BAT=92s Argentine subsidiary, Nobleza-Piccardo, about the "DNP market" there. "We will be consulting here on the ethical side of whether we should encourage or ignore the DNP segment. You know my view is that it is part of your market and to have it exploited by others is just not acceptable," Dunt said. Notes on the conclusions of a meeting in Colombia in late February, which Dunt attended, said it had been agreed that "the Bogota office will be clean by Q3/94 in reference to DNP information. Management of DNP will be in Caracas." Another memo in Dunt=92s files said "documents dealing with DN= P have been separated and should now be forwarded to Caracas. A good quality safe and shredder are required." Setting the Pace Aside from the euphemisms, what stands out most in the documents is how senior management of BAT and its subsidiaries factored smuggling into their overall market strategy and sought to control where and to what extent it occurred. As far back as 1971, BAT was positioning itself in the "transit" market. A 1983 memo described the creation of a new office in Hamburg, Germany, after a BAT study on "transit in Europe" showed that the company "was years behind the competition in transit." Although BAT already had a headquarters in Hamburg, a separate office was opened in 1972 in the same city. "One of the main reasons for establishing this office independent from a B.A.T. company was, that due to the delicate business the customers could visit Hamburg-Office without involving a B.A.T. Company directly," the memo explained. The full extent of BAT's involvement in Latin America was made clear in a stern note [http://www.public-i.org/BAT_to_Herter.pdf] from Dunt to his fellow directors questioning the wisdom of allowing BAT=92s wholly owned Brazilian subsidiary, Souza Cruz, to smuggle cigarettes into Argentina, where they would cannibalize the sales of BAT=92s majority-owned Argentine subsidiary, Nobleza-Piccardo. "I am advised by Souza Cruz that the BAT Industries Chairman has endorsed the approach that the Brazilian Operating Group increase its share of the Argentinean market via DNP," Dunt wrote in the May 18, 1993 memo. "As the Director entrusted with responsibility for the management of Nobleza-Piccardo I need to advise you of the likely volume effect on N-P of this decision and of course the financial impact." At the time, Sir Patrick Sheehy was the chairman of BAT Industries, Plc, then the name of the cigarette group=92s parent company and one of Britain= =92s largest multinational concerns, a position he held until 1995. Another memo found in Dunt=92s file, summarizing a Feb. 23-24, 1994 visit to Colombia, indicated that BAT wanted to control the timing and products it entered into the DNP market. Regarding BAT=92s Kent Super Lights brand, the memo noted that "DNP product should be launched two weeks after the DP product has been launched." As for the Lucky Strike brand, it was planned "to withdraw from the DNP market the 20=92s and 10=92s versions." Tobacco companies contend they have little control over the end use of their product once it=92s legally sold to distributors. But on June 25, 1992, Dunt wrote to the director of BAT=92s Venezuelan subsidiary, saying h= e disagreed with plans to limit the number of cigarettes bound for BAT=92s Aruban distributor and for the Colombian end market. "I notice =85 the intention to limit Romar=92s sales to Maicao to 18,000 cases per month. I would not wish for any reason for sales to be limited =85 unless it is a proven strategic necessity." Further examples include a "restricted" note of a Chief Executive=92s Committee meeting on Feb. 7, 1994, which said that a new marketing unit for Latin American countries aimed to achieve annual cigarette sales of 50 billion, "including duty not paid." The meeting was chaired by Barry D. Bramley, then chairman of BAT=92s tobacco operations. And BAT=92s Latin American "Marketing Guidelines for Company Plan 1995-1999" instructed local managers in Colombia that "your plan should cover the launch of variants on the DP and DNP markets." The documents also show that BAT sought to use the presence of legal imports, however small, as an "umbrella," or cover, to advertise its brand of cigarettes, which would reach the market in far larger quantities via DNP. "It is recommended that BAT operate under =91Umbrella=92 operations," Dunt wrote in August 1992 to Bramley. "A small volume of Duty Paid exports would permit advertising and merchandising support in order to establish the brands for the medium/long term, with the market being supplied initially primarily through the DNP channel." One year later, in a Sept. 1, 1993, memo to Nick Brookes, then a director of New Business Development at B.A.T. Industries, Dunt said in an industry analysis of the Colombian market, "DNP now represents =B150% of the local cigarette industry (vs. =B135% in 1989). DP imported product now possible due to freeing up of import restrictions, however although tariffs reduced from 63% to 5% this only constitutes 1.5% of market share, it being apparent that multinationals are using the DP route for imports as an umbrella operation to facilitate publicity campaigns etc." Brookes, now chairman and CEO of Brown & Williamson, told reporters in Washington, D.C., on Jan. 11, that B&W wanted to host a forum on "the growing risk of black market cigarettes and illegal sales across state lines. We don=92t believe government officials, legislators and others have focused enough attention on this critical issue, and we hope to change that." Brookes did not respond to a request for comment. Smuggled cigarettes, by evading import, sales, and other forms of taxes, usually are sold more cheaply than legally imported cigarettes. That makes them affordable to a greater number of people, increases corporate profits, and secures future markets. But because smuggling puts cigarettes in more hands, especially younger ones, it=92s not just an issue for government tax collectors. The World Bank last year predicted that by 2030 smoking would kill one in six adults to become the single leading cause of death in the world. With smoking rates in the United States and other Western countries declining, the Bank warned that smoking deaths increasingly would occur in low- and middle-income countries, least able to afford the costs of treating smoking-related illnesses. The Bank recommended raising taxes on tobacco, and therefore the price of cigarettes, as a way to reduce consumption. The Aruba-Colombian Connection Colombia =96 a country wracked by decades of civil war and cocaine trade, with a long history as a crossroads of contraband =96 proved to be fertile ground for cigarette smuggling. The BAT records show that millions of cigarettes were shipped from BAT subsidiaries in the United States, Venezuela, and Brazil to BAT=92s distributor in the free-trade zone of Aruba, an island in the Caribbean just off the coast of Colombia that historically had been a mecca for contraband. From Aruba, the cigarettes would be sold to dealers who would bring them by boat to Colombia=92s La Guajira region, an isolated and lawless haven along the Caribbean coastline. The Guajira peninsula, which straddles the northern border of Colombia and Venezuela, has itself been a smugglers=92 paradise since colonial times. Maicao is a town in La Guajira that was given special customs status in 1991 in order to spur job growth. The government=92s intent was to allow ra= w materials to enter the zone untaxed, have workers there turn them into finished product, and then re-export the finished goods outside Colombia. The law allowed for a certain amount of goods to pass from Maicao into the Colombian interior, but only if they were declared to customs officials and duty was paid on them. BAT records indicate, however, that its cigarettes moved outside the Maicao special customs zone "duty not paid" and from there into the black market. A "DNP Distribution" diagram in Dunt=92s files showed DNP cigarette= s traveling from Aruba to Maicao and from there westward to the "consumer" in Barranquilla. Another document in the files [http://www.public-i.org/COL_GrMeeting.pdf] showed that officials from BAT and its subsidiaries supplying Colombia =96 Brown & Williamson, Souza Cruz, Cigarrera Bigott =96 agreed at a Miami meeting in January 1992 that Souza Cruz would give a 5% "free goods incentive in Maicao and in the San Andresitos to expand distribution in Bogota and Medellin." The term "sanandresitos" =96 from the Colombian island of San Andres that has been a tax-free port since the early 1950s = =96 refers to the clusters of small stalls found in many Colombian cities that for decades have been widely known as locations that sell mostly contraband goods. An attachment to those minutes gives a detailed breakdown of prices per brand for cigarettes as they left Aruba, as they left Maicao, and in the "sanandresitos." Asked if a company doing business in Colombia might not know about "sanandresitos," Fanny Kertzman, the director of the country=92s tax and customs office, responded, "This question is ridiculous. It is obvious, so evident, that if you distribute goods through sanandresitos you know most of the merchandise sold there is smuggled." In 1993, corporate records show that BAT subsidiaries imported a total of 3.98 billion cigarettes into Colombia. However, 3.89 billion of those cigarettes entered as Duty Not Paid goods. By BAT=92s own estimate, its Dut= y Paid imports accounted for only 2% of its in-country business that year. = =20 BAT=92s 1993 figures, showing that across all local and imported brands there was a total of 13.9 billion cigarettes on Colombia=92s Duty Not Paid market, match almost exactly a Colombia government report on the contraband cigarette problem. In 1998, the Federation of Colombian governors circulated a detailed and confidential report to several public officials to draw attention to cigarette smuggling and the underpricing of legal imports. The report estimated that in 1993 there were 13.4 billion cigarettes on the black market. The report further said that by 1997 smuggling accounted for 44% of Colombia=92s total cigarette market and 93% of all foreign brands coming into the country. Kertzman echoed that in her June 1999 testimony before the U.S. Congress, saying that 90% of all cigarettes entering Colombia were doing so illegally. An internal 1999 document from Colombia=92s DIAN office, the country=92s customs and tax authority, calculated the value of contraband cigarettes coming from Aruba into Colombia to be around $400 million dollars per year. The BAT documents show that cigarettes also moved from Aruba to Panama=92s free-trade zone of Colon as a staging point into nearby Turbo, another special customs zone in Colombia. In addition, some of the cigarettes shipped from Venezuela to Aruba and on to Maicao went back into Venezuela. (The Caracas daily El Nacional estimated in 1998 that Venezuela=92s annual loss from cigarette smuggling was around $35.4 million dollars.) Similar operations went on farther south, too, with cigarettes from BAT=92= s Brazilian subsidiary Souza Cruz being shipped through Paraguay into Argentina. Notes from a visit to Paraguay in July 1994 show that "excellent work has been done in the border town, which is the main supply point of DNP product for the Argentinean market." Another notes that BAT=92s Brazilian and Argentine subsidiaries "recycle product through Paraguay and back into their respective markets making use of the lower excise rates in Paraguay." BAT=92s main distributor in Latin America was Romar Free-Zone Trading Co. N.V. of Aruba, run by Roy Milton Harms, Jr., the documents show. BAT=92s three wholly owned subsidiaries in the region "use Romar in Aruba as their transit agent into Colombia. =85 Romar also sells Belmont 70 mm and Consul 70 mm into Colombia with Venezuela as the end market," Mark Waterfield, then an executive at BAT=92s Venezuelan subsidiary Bigott, wrote in a Feb. 12, 1992 memo [http://www.public-i.org/BAT_Proposal.pdf]. The documents paint a close relationship between BAT and its distributor. In the same letter where Dunt halted attempts to limit Romar=92s sales to Maicao, he noted that the issue "was mentioned to me by Harmes [sic] yesterday on his U.K. visit =96 and with some forcefulness =96 as you can imagine." Harms and his father, Roy Harms Sr., were in London at BAT=92s invitation [http://www.public-i.org/BAT_to_Harms.pdf]. They were booked into the Carlton Tower Hotel in Knightsbridge, near Harrods, and given two tickets to Wimbledon. Cousin Bryan Harms said in a March 5, 1998, letter to Colombian authorities that he "personally gave windsurf lessons to Mr. Pat Sheahy [sic], top director of BAT when there was a great meeting of BAT and Bigott in Aruba in those times." "Those times" refer to the period before the Harms family split into two factions in 1988, with one side taking the exclusive BAT business. That family feud prompted Bryan Harms to contact Colombian and Venezuelan authorities in 1998 with allegations that BAT and Romar were in the cigarette smuggling business. Before the family business split, Harms told authorities he had accompanied officials of BAT and its Venezuelan subsidiary several times for "marketing work to Maicao," the special customs zone in northern Colombia. Romar did not respond to faxed questions and several calls requesting comment. In BAT's faxed statement, it refused to respond to a list of specific questions, including about Romar. Bryan Harms confirmed he told Colombian and Venezuelan authorities that he had witnessed high-ranking BAT officials coordinating the shipment of cigarettes from Aruba to the Colombian and Venezuelan coasts. But he refused to elaborate. Harms Brothers Limited of Aruba, started by Bryan=92s father, Lionel, and I.D.F. International Duty Free Trading N.V., which Bryan Harms directed from 1996-1998, were identified in last December=92s Canadian RICO lawsuit as being part of RJR=92s smuggling operation but were not named as defendants. Competitors or Bedfellows? Fierce competition for market share drove many of BAT=92s actions in Latin America, the documents suggest. However, they also show that company executives had discussions with representatives of Philip Morris International about "DNP" and "transit." At a meeting on Feb. 14, 1992, at John F. Kennedy airport in New York, Philip Morris=92 then president for the Latin American region, Peter Schree= r and his deputy Fred Hauser met with BAT=92s Keith Dunt and David Etchells. "Transit business from Paraguay into Argentina needs to be watched, particularly bearing in mind Industry agreement on quantum level of excise," said a file memo written by Etchells, summarizing the discussions. The two sides agreed to have "more regular meetings," and in August 1992, the BAT and PMI representatives met again, this time at the posh Pennyhill Park country club near BAT headquarters outside London, according to a "SECRET" document summarizing their talks [http://www.public-i.org/Meeting_w_PhilipMorris.pdf]. "PMI raised the =91contraband from Honduras=92 issue which was counteracted by BATCo=92s ra= ising the price gap argument. No ground conceded on either side," the notes said. "BATCo suggested an aggressive price increase to be negotiated at a local level for DNP to be implemented if possible by the end of August," the notes later said, referring to Venezuela. "Following action on DNP PMI suggested we should pursue a DP price increase. PMI wanted linkage between the DNP increase. This was not supported by us." Philip Morris confirmed there were meetings between Schreer and Dunt in 1992 "to discuss general industry issues in Latin America," but was unable to say "what precisely was discussed." Beyond the issues of smuggling, tax evasion, and undermining governments=92 attempts to set health policy, there have been allegations that the activities of tobacco multinationals have complemented drug money laundering. The 1998 Colombian governors=92 report and two other independen= t studies said that smuggled cigarettes had become a vehicle for money laundering, and the subject was the focus of a U.S. congressional hearing last summer. The nexus of cigarette smuggling and drug money laundering in Latin America is known as the black market peso exchange, in which "peso brokers" convert U.S. dollars from drug lords into clean pesos. Their sources of clean pesos are smugglers who need U.S. dollars in order to purchase international goods. James Johnson of the U.S. Treasury Department has called the system "primarily an exchange of currencies" but one that is "perhaps the most dangerous and damaging form of money laundering that we have ever encountered." With access to U.S. dollars regulated by Colombian law and administered by banks, requiring proof of legal import, the peso broker "offers a businessman a choice and the drug trafficker an opportunity," Bonni Tischler, U.S. Customs Service Assistant Commissioner for Investigations, told the June 1999 congressional hearing. She said the cigarette industry was one of the "most affected" by the black market peso exchange. "Some American companies, and I would give Philip Morris as an example, have been accused of implicitly supporting the black market peso exchange in order to increase their market share in Colombia and avoid paying hefty Colombian taxes," noted the hearing=92s chairman, Sen. Charles Grassley (R-IA). "Some Colombians have gone so far as to threaten to sue Philip Morris, arguing that the volume of advertising that Philip Morris chooses to have in Colombia is not justified by levels of legitimate sales." For over 50 years, Philip Morris=92 main distributor in Latin America was the Mansur Free Zone Trading Company, N.V., run by a rich and politically powerful family in Aruba. Cousins Eric and Alex Mansur were indicted on federal money-laundering charges in August 1994 for allegedly being part of a network that laundered proceeds from the Colombian drug trade. In a Dec. 2, 1996 letter to Congress, President Clinton identified Aruba "as a major drug-transit country," and took the unusual step of publicly identifying the family, saying that "a substantial portion of the free-zone=92s businesses in Aruba are owned and operated by members of the Mansur family, who have been indicted in the United States on charges of conspiracy to launder trafficking proceeds." Philip Morris International broke its contract with the Mansurs at the end of 1998 "for business reasons," company spokeswoman Elizabeth Cho said in an interview. She refused to elaborate. But a source close to the family said the two sides agreed to a $22 million settlement and that the Mansurs continue to work with Philip Morris=92 non-tobacco product lines. The Mansu= r company changed its name last year to Glossco Freezone N.V. following six years of unwelcome scrutiny. Eric and Alex Mansur, meanwhile, have yet to go on trial, their case initially delayed by years of extradition battles between the United States and Aruba. Now they are in Miami, where U.S. and Colombian sources say they have been offered a plea bargain by U.S. prosecutors that would greatly reduce or eliminate any jail time in return for cooperation with investigations into cigarette smuggling and money laundering. Their lawyer, Robert Josefsberg, refused to comment. "We will not condone, facilitate or support contraband or money laundering," Philip Morris International said in its statement [http://www.public-i.org/PMII.pdf]. Twice in the last two years, the company has defeated shareholder resolutions that have suggested corporate complicity in smuggling and called for an internal review. The BAT documents suggest that its officials were aware of the linkage between cigarette smuggling and money laundering, and they discussed how black market money flows in Aruba affected their business. On March 8, 1995, Keith Dunt received an e-mail [http://www.public-i.org/BAT_to_Dunt1.pdf] about the "difficulty of obtaining =91clean=92 $" that BAT=92s Venezuelan subsidiary had in January.= "It was necessary, in December, to reduce the selling price from US $125.00 to US $96.00 per case, ie in line with Belmont HL price (such that Romar could then sell through at US $106.00 per case and receive =91clean=92 US$)= =2E" Epilogue The publicly available BAT documents end, for the most part, in 1995. Since the mid-1990s, legal imports of cigarettes have risen exponentially in Colombia. DIAN figures show that while only $4.6 million in cigarette imports were registered in 1994, that number had leapt to $39.9 million by November 1999. In August 1999, BAT signed a letter of commitment with the DIAN promising, according to director Fanny Kertzman, "that if they have any evidence that distributors to whom they sell their products are, in turn, selling to smugglers, they will stop selling to these distributors." In a final desperate attempt to crack down on its contraband problem, Colombia two weeks ago (Jan. 18) announced a new ban on bringing cigarettes, liquor, or home appliances =96 the three most common types of contraband goods =96 from Maicao and Turbo into the rest of the country, effective July 1. Despite street protests, President Andres Pastrana vowed, "The government has already bit into contraband and is not going to let go until this scourge is eradicated." Researcher Kathryn Wallace contributed to this report. From owner-intl-tobacco@venice.essential.org Wed Feb 2 11:42:56 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 32EB421B0B for ; Wed, 2 Feb 2000 11:42:56 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id LAA14365 for ; Wed, 2 Feb 2000 11:42:55 -0500 Date: Wed, 2 Feb 2000 11:42:55 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] Tobacco giant implicated in global smuggling schemes (fwd) The Guardian (UK) has published a series of articles on the smuggling schemes: Tobacco giant implicated in global smuggling schemes Exposed: How billions of BAT cigarettes end up on black markets by Kevin Maguire and Duncan Campbell ; Source: The Guardian/The Observer, Monday, 1/31/00 British American Tobacco condoned tax evasion and exploited the smuggling of billions of cigarettes in a global effort to boost sales and lure generations of new smokers, secret company documents reveal. The London-based corporation, the world's second-largest international tobacco company with sales of 900bn cigarettes a year, has benefited from black marketeering on a massive scale. Senior BAT executives arranged to supply huge numbers of "sticks" a year - the industry term for cigarettes - to wholesalers and distributors, expecting that they would find their way into crooked hands and onto black markets after being smuggled across national borders, without duty being paid. In some countries the company also knowingly advertised and promoted smuggled cigarettes to improve its market share. Facts and figures about the contraband trade are detailed in internal company documents, including memos and faxes marked "restricted" and "secret", found among 8m pages BAT lodged at a depository in Guildford, Surrey, as part of the settlement of a 1998 US court case. The International Consortium of Investigative Journalists, a group based within the Center for Public Integrity in Washington DC, spent six months analysing 11,000 pages of the papers that BAT agreed to make public. They suggest that the background to the growth of international cigarette smuggling in the 1990s included rivalry between BAT and its major competitors, as well as the tobacco companies' joint wish to bring down high taxes and increase smoking markets. The disclosed documents, which span a period up to 1995, do not suggest that BAT employees committed any crime in Britain. They show that the smuggling "channels" which the company's cigarettes travelled along were always operated and managed by others. But the documents do show how euphemisms - including "duty not paid", "general trade" and "transit" - were often used to describe unorthodox cigarette sales channels, which could be as an alternative to legal "duty paid" deals. Sometimes the duty paid and duty not paid markets were combined so sales of smuggled goods could benefit from advertising for the legal products under so-called "umbrella operations" which expanded sales. Marketing strategies and sales drives in Canada, Latin America and Asia were uncovered by the CPI team. Well-know BAT brands involved included Kent, Kool and Lucky Strike as well as regionally popular brands such as State Express 555 and Belmont. Since the 1997 general election Kenneth Clarke, the former Tory chancellor and health secretary, has been appointed deputy chairman of BAT, a FTSE-100 company that reported profits of more than =A31bn for the first nine months of last year. BAT declined to answer specific questions about its activities and those of individual executives named in the papers, including Ulrich Herter, the managing director, and Keith Dunt, finance director. The company issued a general statement denying the "allegations of smuggling". It claimed that researchers "have 'cherry picked' a selected number of documents from the 8m pages in the depository, and could be at high risk of drawing and publishing conculsions which are at variance with the facts". BAT went on: "We do not intend to answer questions or address allegations apparently based on highly selective and out-of-context documents about matters which are more properly addressed - and in many instances are being addressed with our full co-operation - by governments and customs authorities around the world." Many of the disclosures concern routes that go through the Caribbean island of Aruba and enter Colombia, where they finish up in contraband markets. In an interview on Channel 4 News tonight, Ricardo Ramirez, the Colombian government minister responsible for tax and customs, says BAT recently agreed not to sell to any unauthorised dealers. "We have told them not to sell through the San Andresitos markets but through official channels. If we have evidence that directors or anyone else in the organisation promotes smuggling we will not hesitate to prosecute them." Today's disclosures, however, could lead to Martin Broughton, BAT's non-smoking chairman, being recalled before the Commons all-party health select committee to explain his company's policy. David Hinchcliffe, the committee's Labour chairman, said last night: "This information is of direct relevance to our current inquiry. I will be suggesting to the committee that we seek further evidence on this matter from the company concerned." Another member of the committee, the Liberal Democrat MP Peter Brand, said: "It's as clear as a pikestaff that they are deliberately trying to undermine the governments' efforts by, if not in in cahoots with the black marketeers, certainly doing nothing to hinder them." The UK government alone loses an estimated =A32.5bn in duty from smuggled cigarettes. Clive Bates, director of Action on Smoking and Health, today challenges Mr Clarke to order an internal BAT inquiry and calls for an independent Whitehall inquiry into the corporation. "The deputy chairman of BAT, former chancellor Kenneth Clarke, should immediately launch an internal inquiry and report back to the BAT AGM on April 27," he says. "The DTI should begin an in-depth inquiry into BAT's business practices and conduct. It is up to the government to ensure British multinationals do not treat developing countries like some lawless wild frontier." From owner-intl-tobacco@venice.essential.org Wed Feb 2 11:47:44 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id EDF7921AFF for ; Wed, 2 Feb 2000 11:47:43 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id LAA14527 for ; Wed, 2 Feb 2000 11:47:43 -0500 Date: Wed, 2 Feb 2000 11:47:43 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] Ex-minister under pressure over BAT (fwd) More from the Guardian: Ex-minister under pressure over BAT by Kevin Maguire and Duncan Campbell Source: The Guardian/The Observer, Wednesday, 2/2/00 =09 Kenneth Clarke was under growing pressure last night to investigate fresh evidence that British American Tobacco exploited cigarette smuggling. The former chancellor and health secretary, now the London-based multinational's deputy chairman, has a legal duty to protect the company's integrity. BAT documents reveal that huge numbers of cigarettes produced in Southampton, one of the most modern tobacco plants in the world, and other factories were made for the Far East, Middle East and Asia - markets which are dominated by black marketeers. Mr Clarke, paid nearly =A368,000 for the part-time post, yesterday failed t= o respond to repeated requests for a comment about the serious allegations. When pressed, Michael Prideaux, BAT's director of corporate and regulatory affairs, said: "We don't propose to answer any questions." Mr Prideaux, a member of the company's management board, said it would reply at an unspecified time in the future. Today's revelations about the exploitation of smuggling in the Far East, Middle East and Asia follow Monday's disclosure in the Guardian of how the company benefited from black marketeering in Latin America. BAT stonewalled as Labour MPs demanded explanations from the world's second largest tobacco company. Kevin Barron, the chairman of the all-party group on smoking and health, said: "Ken Clarke holds his position within BAT because of his past office as chancellor and health secretary. "He has a wider public duty to answer what are very serious allegations about smuggling." Fraser Kemp, Labour MP for Houghton & Washington East, said: "The company cannot bury its head in the sand and hope all this will go away. "Very serious allegations have been made and Kenneth Clarke and his fellow directors have a responsibility to answer them now." The all-party Commons health committee is considering whether to recall BAT's non-smoking chairman, Martin Broughton, or ask for fresh evidence as part of its inquiry into the tobacco industry. On Monday night, a senior World Health Organisation official promised a clampdown on powerful tobacco companies with an international treaty planned to curb their activities. BAT sells 900bn cigarettes a year and is challenging US-based Philip Morris for pole position in the global tobacco business. From owner-intl-tobacco@venice.essential.org Wed Feb 2 11:52:30 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id A99C621AFF for ; Wed, 2 Feb 2000 11:52:30 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id LAA14673 for ; Wed, 2 Feb 2000 11:52:30 -0500 Date: Wed, 2 Feb 2000 11:52:30 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] BAT denies black market allegations - report BAT denies black market allegations - report Source: Reuters, Monday, 1/31/00 Sunday January 30, 9:54 pm Eastern Time LONDON, Jan 31 (Reuters) - British American Tobacco (quote from Yahoo! UK & Ireland: BATS.L) has denied allegations it benefited from black market sales of its cigarettes, Britain's Guardian newspaper reported on Monday. The Guardian said the allegations were based on internal BAT documents found in a depository in Britain and analysed over 11 months by the International Consortium of Investigative Journalists, a group based within the Center for Public Integrity in Washington. It was alleged that the world's second largest cigarette-maker arranged to supply cigarettes to wholesalers and distributors expecting they would find their way into the hands of smugglers. A spokesman for British American Tobacco (BAT) contacted by Reuters on Sunday said he had not seen the Guardian report and could not comment on it. The documents -- which covered the period from 1990 to 1995 -- were alleged to show the smuggling channels which the company's cigarettes travelled along were always operated and managed by others. They were also alleged to show how euphemisms, such as ``duty not paid,'' ``general trade'' and ``transit,'' were used to describe unorthodox sales channels, the Guardian said. It said BAT, which sells cigarette brands Kool, Kent and Lucky Strike, had issued a general statement denying all allegations and saying that researchers had selectively chosen documents. ``We do not intend to answer questions or address allegations apparently based on highly selective and out-of-context documents about matters which are more properly addressed -- and in many instances are being addressed with our full cooperation -- by governments and customs authorities around the world,'' the Guardian quoted BAT as saying in its statement. From owner-intl-tobacco@venice.essential.org Wed Feb 2 11:54:59 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 8F15921B08 for ; Wed, 2 Feb 2000 11:54:59 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id LAA14813 for ; Wed, 2 Feb 2000 11:54:59 -0500 Date: Wed, 2 Feb 2000 11:54:59 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] Vietnam's losing battle against the tobacco smugglers (fwd) Vietnam's losing battle against the tobacco smugglers Source: The Guardian/The Observer, Wednesday, 2/2/00 =09 In the years since the end of the war, Vietnam had fought a seemingly losing battle against smugglers. Until 1990, the "transit" or smuggled market into Vietnam was estimated by BAT to be 12-18 billion cigarettes a year. Then, after a clampdown that September, "smuggling was virtually eliminated for 18 months", according to a report to Paul Adams, Asia-Pacific regional director. The hiatus did not last long. As border conditions relaxed, contraband routes again appeared, particularly through Cambodia. In 1992, the company's Cambodia business plan referred to this situation as, apparently, a temporary contingency: "Cambodia will continue to service the Vietnamese market until the [Vietnamese cigarette import] ban is lifted". Soon, contraband into Vietnam was climbing to pre-1990 levels. In 1992, Mr Adams was told that BAT's State Express 555 brand cigarettes was the "major smuggled brand in the area ... there is no doubt it has a tremendous image and sales potential". Sales of smuggled SE555 were then estimated to be about one billion cigarettes, worth roughly =A310m a year. A series of company papers showed that from 1991, BAT pursued a twin-track strategy to maximise earnings from Vietnam. One track was to negotiate with the Vietnamese government and its tobacco monopoly, Vintaba, to produce international brand cigarettes locally. The other track was monitored from BAT's Asia-Pacific Regional Business Unit, where one executive made notes on "the high margins on illegal product [being] justified on grounds of risk. The amount of handling associated with imported distribution [is] coupled with the requirement of frequent concealment". Both projects went ahead. By mid-1993, BAT State Express 555 brand cigarettes were being sold as "Made in Vietnam". Meanwhile, back in Britain, executives in BAT's Far East Support Unit (FESU) juggled complex calculations to assess what balance of trade channels would deliver maximum profit. In a document suggesting the clarity and precision of BAT's understanding of pricing in the GT trade, Brookes was told that: "Ex-factory price should be such that retail price falls at parity with GT (not fully controllable). GT price structure is: BATUKE to SUTL, $245, SUTL to importer, $290, Importer to Wholesaler, $348, Wholesaler to Trader (Cambodian border) $350". In other words - and in recognition of the independence of smugglers - BAT staff in Britain seemed to wish to adjust the sale price of their cigarettes to their agent to set the final end-market price in Vietnam. BAT's records suggest that Vietnamese officials treated the company's conduct with suspicion - and told them so. Company executives had a series of meetings with Le Dinh Thuy, director general of the Vietnamese Vintaba tobacco company. A letter from Singapore to BAT's headquarters, then in Staines, Middlesex, reported that at a June 1991 meeting "Mr Thuy was obviously fully aware of both BATUKE's and SUTL's activities in Vietnam, stating 'what are these people doing visiting Vietnam when the import of cigarettes is banned?' It is a point I think should be taken very seriously". Similar enterprises took place across Asia. In Taiwan, BAT reckoned in the early 1990s that it had about a one billion share of the four billion a year "transit" market. In Thailand, the market was more than 555 million a year. In Vietnam, it was one billion. In 1993, BAT employed a single senior executive to take charge of GT sales around the world. The post of "senior regional export manager" was based at BATCo's HQ in Staines. Although the job was to co-ordinate sales in Asia and the Pacific, the executive's second task was "co-ordinator of GT worldwide". In this capacity, the manager was made "responsible to all five regional directors for the co-ordination of all BATCo general trade sales worldwide". This person was charged with the "maintenance of profiles of all main dealers, and monitoring of supply routes; negotiation of trans-regional accounts, [for example] SUTL". But there was a special warning "due to the nature of export general trade business, the distributors handling this are not easy to manage and difficult to motivate. Their loyalty is sometimes questionable. Due to the type of business and the sums involved, bribery attempts are frequent ... [The person appointed] must be permanently alert to the confidentiality needed in some areas of the business". The executive had to be on continual alert for new trade by conducting a "proactive search for new GT business". The report concluded, without any apparent irony, that "integrity is an absolute must". The disclosed BAT documents indicate that "GT", "transit" or, more plainly, smuggling, seemed to be seen by BAT Industries in the early 1990s as a necessary and substantial part of being competitive and successful in the international tobacco business. Its directors were told in a 1993 paper that "a significant proportion of the world export trade is transit. It exists wherever there are widely different excise rates and trade restrictions, and is expected to continue. Guardian Unlimited =A9 Guardian Newspapers Limited 2000 From owner-intl-tobacco@venice.essential.org Wed Feb 2 11:55:44 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id B949E21BCA for ; Wed, 2 Feb 2000 11:55:44 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id LAA14862 for ; Wed, 2 Feb 2000 11:55:44 -0500 Date: Wed, 2 Feb 2000 11:55:44 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] Paper trail to markets of the East (fwd) Paper trail to markets of the East Papers leave little doubt that company's top directors and executives were far from blind to smuggling activities by Duncan Campbell, Maud S Beelman and Erik J Schelzig Source: The Guardian/The Observer, Wednesday, 2/2/00 British American Tobacco's Southampton complex is one of the most modern tobacco plants in the world and will soon be capable of churning out 96bn cigarettes a year. Virtually all the tobacco is exported, with 20 huge containers loaded most days on to ships bound for the Middle East, the Far East and Asia. Many go to Singapore, a key hub in Asian distribution routes, and to Hong Kong and Dubai. In their search to maintain and enlarge cigarette markets, BAT exploited a sophisticated network of smuggling routes operated by others in Asia and the Near East, company documents reveal. Unlike in Latin America, where company executives commonly used the euphemism "DNP", meaning duty not paid to denote smuggled goods, BAT documents discussing Asian operations mainly used a different term, "GT" or general trade. Company documents repeatedly contrast legal export sales with GT, and break down the total trade into particular countries into the categories of legal or "GT". One plan for Singapore refers to how "the legal market fell but the shortfall was taken up by GT product". Another plan, for Taiwan, showed "the split between Legal and GT." Legal routes Other pointers to the meaning of GT in company documents include references to difficulties with customs or closed borders, indicating that the reason why GT trade was illegal was because it involved smuggling. In relation to moving cigarettes into Myanmar (formerly Burma) from Thailand, a fax of November 30, 1992 from BAT's Singapore subsidiary warns: "Duty-paid sales to Myanmar had been strong but the political situation had closed all legal routes in from Thailand, leaving only GT trade..." The report added: "This closure coincided with the monsoon season and the consequent redeployment of security forces from rebel engagements to internal security activities. The GT route thereby became more difficult." A large part of BAT's GT sales in Asia were handled by one Singapore distributor Singapura United Trading Limited (Sutl). According to company papers, Sutl handled both legal and GT products in the region. Its normal market channels were broken down into domestic sales, duty paid exports, which were legal, duty free sales in airports and to ships and GT. A document of December 10, 1991 identified risks to the company's GT business "Sutl appreciate that dependency on GT leaves them very vulnerable to market liberalisation (Thailand) and market closure (Vietnam), therefore they are seeking to move that core business to long-term legal ventures involving ownership interest." Other company documents from Latin America and Asia used GT interchangeably with DNP and "transit", internal euphemisms which also appeared on BAT papers in place of direct references to smuggling. This and other similar evidence from the BAT papers leads to the conclusion that, within British American Tobacco, references to GT in the papers of directors and managers were references to smuggled cigarettes. Network of agents The documents from their Guildford depository do not suggest that BAT employees themselves ever transported contraband across borders. But they took advantage of smuggling markets around the world, using a network of agents who on an annual basis transferred billions of cigarettes into the hands of smugglers. But so large was the role of GT that, according to the most recent information available, a plan covering the period from 1993 to 1997, more than one fifth of the output of BAT's UK factories were made for this market. From their factory at Southampton billions of cigarettes are made annually by BAT (UK and Export) Ltd (Batuke). The information appears in the Batuke company plan for 1993 to 1997. This was one of thousands of documents examined by the International Consortium of Investigative Journalists, part of the Centre for Public Integrity (CPI) based in Washington DC in the course of their BAT investigation. The copy of this document obtained by CPI and seen by the Guardian is identified as being the copy provided to the then chairman of the BAT Company Ltd, Barry Bramley. Batuke was then the main UK tobacco manufacturing subsidiary of BAT Industries plc. It is marked "Secret". According to the plan, Batuke operates in 125 different markets, shipping tobacco products to these markets through 360 agents. The markets are broken down into "domestic", "duty free" and "general trade (GT)". During the period covered by the disclosed documents, extending to 1995, BAT anticipated that over one fifth of its UK and export production would be "GT". Under the heading "General Trade", it states that "two key General Trade markets "will account for 4.7bn units or 22% of Batuke's total shipments". The two key centres identified in the report are Sutl and "Unit 1". Sutl covered countries from Afghanistan to the Philippines, while Unit 1 was involved with Africa. Other centres which can be identified as playing a major role in BAT's GT trade are Dubai, and Hong Kong. The company plan suggests that BAT then proposed to invest in expanding its utilisation of GT methods to reach its end markets. The company "strategy [focuses] on maximising the GT market opportunities to provide funds to build a stable volume/profit base for the long term ... via investment in duty free and domestic markets". It added that "=A33.8[m] wil= l be invested to grow our business in the GT markets". BAT has refused to comment on the meaning of terms like GT, or to discuss the implications of any particular document. The company's public affairs director, Michael Prideaux, said in response to earlier allegations that "if people wish to draw the inference that we are turning a blind eye to smuggling, they are free to do so. Deterring smuggling is a matter for the governments concerned. The only sure way is to cut tobacco taxes". But the hundreds of documents in BAT's files on marketing activities in Asia and around the world leave little doubt that some of BAT's top directors and executives were far from blind to smuggling activities. They received reports about new opportunities in GT trade, as well as regular assessments of sales levels that went through legal and GT channels. Important markets in the region for GT cigarettes, according to a report prepare by Fred Coombe, Batuke area manager for Far East, were Bangladesh, Myanmar, Thailand, Laos, Vietnam, Indonesia, Philippines, North Korea, Afghanistan, and Taiwan. The largest potential market was mainland China. Evidence from Hong Kong suggests that BAT cigarettes worth more than =A3490= m were smuggled into China during the 1990s. Floating corpse In the late 1980s, competition between Hong Kong based rival traders smuggling BAT cigarettes into China became so intense that bribes were paid to the BAT local director whose job was to deal with them. After one jilted trader exposed the system to Hong Kong's anti-corruption commission, former BAT (HK) export director Jerry Lui was extradited from the United States. BAT itself was not charged with any offence. The case against Lui nearly foundered after the chief witness against him, trader Tommy Chui, was murdered. In 1995 his body was found floating in Singapore harbour. His corpse had been placed in a rubbish bag, with tape over his mouth. The warning to other witnesses could hardly have been clearer. Another potential witness committed suicide. Nevertheless, in June 1998, Lui was convicted and sentenced to three years and 8 months imprisonment. He later launched an ultimately unsuccessful appeal and awaits the outcome of a continuing appeal application. BAT company documents disclosed during Lui's trial led judge Mr Justice Wally Yeung Chun-kuen to comment: "The evidence suggests that management of BAT (HK) was aware duty-not-paid cigarettes ... would ultimately be smuggled in China and other countries. There could be no other explanation for this enormous quantity of duty-not-paid cigarettes worth billions and billions of [Hong Kong] dollars. "To some extent such irresponsible behaviour amounted to assisting criminals in trans-national crime". The company claimed at the time that the smuggling was the work of "rogue employees", and replied "British American Tobacco does not smuggle. It does not condone smuggling and its business is entirely lawful". But the documents now disclosed show that in many Asian countries BAT not merely tolerated GT trade channels, but exploited traditional smuggling routes when they would maximise sales. The documents also trace the rise and fall of Mr Lui within BAT ranks. From owner-intl-tobacco@venice.essential.org Wed Feb 2 12:11:17 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 6F7DD21AFF for ; Wed, 2 Feb 2000 12:11:17 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id MAA15446 for ; Wed, 2 Feb 2000 12:11:17 -0500 Date: Wed, 2 Feb 2000 12:11:16 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] list of links on smuggling story The following combines two messages from Clive Bates of ASH UK listing links on the story: There are three launch vehicles - the research done by each is independent but draws on much of the same material: 1. The ASH (London) web site www.ash.org.uk/smuggling/ which has about 150 relevant scanned documents (PDFs), summaries, follow-up letters from ASH to BAT etc and links to background material and other sites. 2. The London-based Guardian newspaper www.newsunlimited.co.uk with the story at http://www.newsunlimited.co.uk/bat/ 3. The Washington DC-based Center for Public Integrity www.publicintegrity.org with the story at http://www.public-i.org/story_01_013100.htm A second in-depth story on Asia from the Center for Public Integrity: Global Reach Of Tobacco Company's Involvement In Cigarette Smuggling Exposed In Company Papers www.public-i.org/story_01_020200.htm There are many gems in this piece, for example the first public admission that Colombian Govenors may be seeking a RICO [Racketeer Influenced Corrupt Organization] action against BAT. There are rumours that this may start in the next few weeks. www.public-i.org/story_01_013100.htm Finally, we are updating the ASH smuggling site with links to press coverage about BAT and other reaction.... www.ash.org.uk/smuggling/ From owner-intl-tobacco@venice.essential.org Wed Feb 2 12:24:42 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 6EB8E21AFF for ; Wed, 2 Feb 2000 12:24:42 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id MAA15853 for ; Wed, 2 Feb 2000 12:24:42 -0500 Date: Wed, 2 Feb 2000 12:24:41 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] Global Reach of Tobacco Company's Involvement In Cigarette Smuggling Exposed By company Papers Global Reach of Tobacco Company's Involvement In Cigarette Smuggling Exposed By company Papers Source: Center for Public Integrity, Wednesday, 2/2/00 "With regard to the definition of transit it is essentially the illegal import of brands from Hong Kong, Singapore, Japan, etc. upon which no duty has been paid. A. George-Perutz, BATUKE In a second report by the International Consortium of Investigative Journalists, a project of the Center for Public Integrity in Washington, D.C., British American Tobacco=92s exploitation of smuggling routes in Asia and the Third World are examined. (Washington, Feb. 2) In their search to maintain and enlarge cigarette markets and corporate revenue, British American Tobacco =96 the world=92s second largest tobacco multinational and parent company of Brown & Williamson =96 exploited a sophisticated network of smuggling routes throughout Asia. A review of more than 11,000 corporate documents, conducted over a six-month period by the International Consortium of Investigative Journalists at the Center for Public Integrity, shows that, as with corporate operations in Latin America, BAT managers and executives used a series of euphemisms in corporate correspondence to discuss smuggling operations that helped them gain a greater share of smokers and profits. But unlike Latin America, where company executives commonly used the euphemism =93DNP,=94 meaning Duty Not Paid, to denote smuggled goods, BAT documents discussing Asian operations most often used the term =93GT=94 or General Trade. The company documents, on Asia, mostly covering the years 1990-1994, repeatedly contrast legal export sales with GT and break down the total trade in particular countries into the categories of legal or =93GT.=94 One plan for Singapore, for example, refers to how =93the legal m= arket fell but the shortfall was taken up by GT product." Another plan for Taiwan showed =93the split between Legal and GT.=94 http://www.public-i.org/bat_to_cotter.pdf Other pointers to the meaning of GT in company documents include references to difficulties with customs or closed borders, indicating that the reason why GT trade was illegal was because it involved smuggling. In relation to moving cigarettes into Myanmar from Thailand, a Nov. 30, 1992 fax (http://www.public-i.org/Combe_to_Horne.pdf) from BAT's Singapore subsidiary warned that duty-paid sales to Myanmar had been cut off because of political turmoil. "The closure of the Thai border as the result of the May political upheaval meant that Embassy, legally border traded and duties paid, no longer had a legitimate route into the country." The same report also noted that "this closure coincided with the monsoon season and the consequent redeployment of security forces from rebel engagements to internal security activities. The GT route thereby became more difficult =2E.." A large part of BAT=92s GT sales in Asia were handled by one Singapore distributor, SUTL (Singapura United Trading Limited). According to company papers, SUTL handled both legal and GT products in the region. Its normal market channels were broken down into domestic sales; duty paid exports, which were legal; duty-free sales in airports and to ships; and GT. A Dec. 10, 1991 document identified risks to the GT business. =93SUTL appreciate that dependency on GT leaves them very vulnerable to market liberalisation (Thailand) and market closure (Vietnam), therefore they are seeking to move that core business to long term legal ventures involving ownership interest.=94 Other company documents from Latin America and Asia used the phrase =93GT= =94 interchangeably with =93DNP=94 and =93transit,=94 internal euphemisms that = also appeared on BAT papers in place of direct references to smuggling. This and other similar evidence from the BAT papers lead to the conclusion that, within British American Tobacco, references to GT in the papers of directors and managers were references to smuggled cigarettes. The reviewed documents, part of a cache of about 8 million pages made public as a result of the 1998 U.S. tobacco settlement, do not suggest that BAT employees themselves ever transported contraband across borders. But they sought to exploit and control to their advantage smuggling markets around the world through a network of agents who, on an annual basis, transferred billions of cigarettes into the hands of smugglers. So large was the role of GT that, according to the most recent information available, a plan covering the period from 1993 to 1997, more than one-fifth of the output of BAT=92s United Kingdom factories was made for this market. From its factory at Southampton, in southern England, more than 60 billion cigarettes are made annually by BAT (UK and Export) Ltd (BATUKE). On average, about 20 containers of cigarettes leave the port every day. The information appears in the BATUKE company plan for 1993 to 1997. Marked =93SECRET,=94 the document is noted as having been provided to the then-chairman of the BAT Company Ltd, Barry D. Bramley. BATCo was then the main tobacco manufacturing subsidiary of BAT Industries Plc. According to the plan, BATUKE operates in 125 different markets, shipping tobacco products to these markets through 360 agents. The markets are broken down into =93domestic,=94 =93duty free,=94 and =93General Trade (GT)= =2E=94 During the period covered by the disclosed documents, BAT anticipated that more than one-fifth of its UK and Export production would be =93GT.=94 Under the heading =93General Trade,=94 it states that =93two key General Tr= ade markets will account for 4.7 billion units or 22% of BATUKE=92s total shipments.=94 The two key centers of distribution identified in the report are SUTL and =93Unit 1.=94 SUTL covered countries from Afghanistan to the Philippines, while Unit 1 was involved with Africa. Other centers that can be identified as playing a major role in BAT=92s GT trade are the Gulf state o= f Dubai and Hong Kong. The Company Plan suggests that BAT then proposed to invest in expanding its utilization of GT methods to reach its end markets. The company =93strategy [focuses] on maximising the GT market opportunities to provide funds to build a stable volume/profit base for the long term via investment in duty free and domestic markets.=94 It added that =93=A33.8 [million]. . . will be invested to grow our business in the GT markets.=94 BAT has refused to comment on the meaning of such terms as =93GT,=94 =93DNP= =94 or =93transit,=94 or to discuss the implications of any particular document. I= n a statement last week, BAT said the 11,000 pages of reviewed documents were taken out of context. However, a year ago, the company=92s public affairs director, Michael Prideaux, said in response to smuggling allegations that "if people wish to draw the inference that we are turning a blind eye to smuggling, they are free to do so. Deterring smuggling is a matter for the governments concerned. The only sure way is to cut tobacco taxes.=94 But the hundreds of documents in BAT=92s files on marketing activities in Asia and around the world leave little doubt that some of BAT=92s top directors and executives were far from blind to smuggling activities. They received reports about new opportunities in GT trade, as well as regular assessments of sales levels that went through legal and GT channels. Important markets in the region for =93GT=94 cigarettes, according to a 199= 2 report prepared by Fred Coombe, BATUKE Area Manager for Far East, were Bangladesh, Myanmar, Thailand, Laos, Vietnam, Indonesia, Philippines, North Korea, Afghanistan and Taiwan. The largest potential market of all was mainland China. Evidence from Hong Kong suggests that BAT cigarettes worth more than =A3490 million ($810 million) were smuggled into China during the 1990s. In the late 1980s, competition between Hong Kong-based rival traders smuggling BAT cigarettes into China became so intense that bribes were paid to the BAT local director whose job it was to deal with them. After one jilted trader exposed the system to Hong Kong=92s anti-corruption commission, former BAT (HK) export director Jerry Lui was extradited from the United States. BAT itself was not charged with any offense. The case against Lui nearly foundered after the chief witness against him, trader Tommy Chui, was murdered. His body was found floating in Singapore harbor in 1995, stuffed in a garbage bag with tape over his mouth. Another potential witness committed suicide. Nevertheless, in June 1998 Lui was convicted and sentenced to three years and eight months=92 imprisonment. He later launched an ultimately unsuccessful appeal and awaits the outcome of a continuing appeal application. BAT company documents disclosed during Lui=92s trial led Justice Wally Yeun= g Chun-kuen to comment: =93The evidence suggests that management of BAT (HK) was aware duty-not-paid cigarettes . . . would ultimately be smuggled in China and other countries. . . . To some extent such irresponsible behaviour amounted to assisting criminals in transnational crime.=94 The company claimed at the time that the smuggling was the work of =93rogue= =94 employees and replied that =93British American Tobacco does not smuggle. It does not condone smuggling and its business is entirely lawful.=94 The documents obtained and reviewed by the Center=92s international consortium of investigative reporters show that in many Asian countries BAT did not merely tolerate GT trade channels, but exploited traditional smuggling routes when that would maximize sales. The documents also trace the rise and fall of Lui within BAT ranks. http://www.public-i.org/bat_to_korfhage.pdf At first, Lui worked for BAT=92s U.S. subsidiary Brown & Williamson. His jo= b was =93aiding and abetting our efforts to get U.S. brands well established in export markets,=94 a BAT document said. At the end of 1991, he was appointed the director of exports for British American Tobacco (Hong Kong) Ltd. His job was to supply export distributors in the region. Many of them transported contraband cigarettes into China. In internal BAT documents, the job that Lui had held in Hong Kong was described more clearly as =93Director of Exports to China." The same BATCo file also noted company worries about the =93dependence of continued transi= t trade into China.=94 According to court proceedings in Hong Kong last year, Lui had to report to BAT (HK) executive meetings on the volume of cigarettes being supplied to each distributor. =93It was because the market in China was the largest source of profit for BAT (HK) Ltd that the post of director of exports was so important within the BAT organisation,=94 according to the Hong Kong Court of Appeal. At the time, only the Chinese Tobacco Import and Export Corporation was legally allowed to import cigarettes and charged heavy duties to do so. When officers from the Hong Kong Independent Commission Against Corruption raided the offices of BAT=92s largest Hong Kong distributor in 1994, they found accounts showing that $5.36 billion [HK] dollars worth of cigarettes had been purchased =96 about 50 billion cigarettes. In Vietnam and other nations, where the documents note that all cigarette imports were illegal in the early 1990s, files held by BAT Asia-Pacific Regional Director Paul Adams show that the company monitored, encouraged and facilitated =93GT=94 or =93transit=94 sales imports when these suited corporate needs. It is clear from the documents, many of which are marked =93SECRET,=94 that the senior directors and staff who handled such sales understood what they were doing. One company document referred to =93transit=94 as =93essentially the illegal import of brands =85 upon which= no duty has been paid.=94 http://www.public-i.org/bat_to_syta.pdf Marketing Intelligence Another report noted that transit sales created =93apparently paradoxical requirements of an arm's length approach and close supervision.=94 In 1992 and 1993, for example, smugglers about whose activities the company were informed faced particular difficulties in getting cigarettes into Bangladesh through adjacent Myanmar because of =93(a) Increased custom= s surveillance in Chittagong/Cox's Bazaar; (b) border confrontation between Bangladesh and Myanmar over the Rohinga Moslem refugee crisis.=94 The same report also promised that SUTL would =93strive to improve this situation by developing land routes via Myanmar and optimising duty free leakage." Another problem encountered was that BAT representatives were unable to visit countries such as Vietnam, Bangladesh, and Pakistan because of =93legal or political sensitivities.=94 SUTL was a Singapore company, Singapura United Trading Ltd (SUTL), and is characterized in BAT files as a family dynasty run by Chinese patriarch Tay Choon Hye. During a decades-long relationship, Tay and SUTL had developed an intimate working partnership with BAT. BAT staff oversaw many aspects of company activities while others were seconded to work inside SUTL. SUTL=92s significance to BAT=92s trading was such that Tay, its boss, was felt by some BAT staff to have access to the highest levels of BAT Industries Plc. SUTL was responsible for serving four duty-paid markets, 20 duty-free markets, and 11 =93GT=94 markets, according to a 1993 BAT =93Asia-Pacfic st= udy.=94 SUTL was not itself involved in smuggling cigarettes across national borders, according to the reviewed documents, but sold them on to other distributors or wholesalers. Attempts to reach SUTL for comment before publication were unsuccessful. Company executives examined which mix of these channels would serve BAT best. In August 1994, Asia-Pacific Regional Director Paul Adams received a lengthy report on BAT=92s plans for SUTL from 1995 until 1999. The report defined the company=92s responsibilities as =93to maximize BAT=92s market a= nd profit shares in South-East Asia / Indian Sub-Continent export business through the most efficient distribution of our international and regional brands, irrespective of sub-channel (Domestic, Duty Free, GT).=94 While other BAT companies took responsibility for sales channels into China, SUTL focused on developing new markets such as Vietnam. This plum Asian market had a population of 71 million and was viewed as a strong prospect for new business. In the years since the war had ended, Vietnam had fought a seemingly losing battle against smugglers. Until 1990, the =93transit=94 market into Vietnam was estimated by BAT to b= e 12-18 billion cigarettes a year. Then, following a clampdown that September, =93smuggling was virtually eliminated for 18 months,=94 accordin= g to a report to Adams. The hiatus did not last long. As border conditions relaxed, contraband routes again appeared, particularly coming through Cambodia. In 1992, the company=92s =93Cambodia Business Plan=94 referred to this situation as, apparently, a temporary contingency: =93Cambodia will continue to service the Vietnamese market until the [Vietnamese cigarette import] ban is lifted.=94 Soon, contraband into Vietnam was climbing toward pre-1990 levels. In 1992, Adams was told that BAT=92s =93State Express 555=94 brand of cigarett= es was the =93major smuggled brand in the area . . . there is no doubt it has = a tremendous image and sales potential.=94 Sales of smuggled SE555 were then estimated to be about 1 billion cigarettes, worth roughly =A310 million ($1= 6 million) a year. A series of company papers showed that from 1991 BAT then pursued a twin-track strategy to maximize its earning from Vietnam. One track was to negotiate with the Vietnamese government and its tobacco monopoly, Vintaba, in order to produce international brand cigarettes locally. The other was track was monitored from BAT=92s UK-based =93Asia-Pacific Regional Business Unit,=94 where one executive noted that =93the high margi= ns on illegal product are justified on grounds of risk. The amount of handling associated with imported distribution [is] coupled with the requirement of frequent concealment.=94 Both tracks went ahead. By mid-1993, BAT State Express 555 brand cigarettes were being sold as =93Made in Vietnam.=94 Meanwhile, back in Britain, executives in BAT=92s =93Far East Support Unit=94 (FESU) juggled complex calculations to assess what balance of trade channels would deliver maximum profit. A memorandum found in the file of then-New Business Development Manager Nick Brookes =96 now CEO of Brown & Williamson =96 set out BAT=92s pricing strategy, which attempted to predict the final consumer price of BAT cigarettes smuggled into Vietnam. In a document suggesting clarity and precision of BAT=92s understanding of pricing in the GT trade, the document noted: =93Ex factory price should be such that retail price falls at parity with GT (not fully controllable). GT price structure is: BATUKE to SUTL, $245, SUTL to importer, $290, Importer to Wholesaler, $348, Wholesaler to Trader (Cambodian border) $350.=94 (http://www.public-i.org/McPhail_to_Millbank.pdf) In other words (and recognizing the independence of smugglers), BAT staff seemed to wish to adjust the sale price of their cigarettes to their agent so as to set the final smuggled end-market price in Vietnam. BAT=92s records suggest that Vietnamese officials treated the company=92s conduct with suspicion and told them so. Company executives had a series of meetings with Le Dinh Thuy, director general of the Vietnamese Vintaba tobacco company. A letter from Singapore to BAT=92s then- headquarters in Staines, England, reported that at a June 1991 meeting, =93Mr Thuy . . . wa= s obviously fully aware of both BATUKE=92s and SUTL=92s activities in Vietnam= , stating =96 =91what are these people doing visiting Vietnam when the import= of cigarettes is banned?=92 It is a point I think should be taken very seriously.=94 http://www.public-i.org/bat_to_watterton.pdf Similar enterprises took place across Asia. In Taiwan, BAT reckoned in the early 1990s that it had about a 1 billion share of the 4 billion a year =93transit=94 market. In Thailand, the market was over 555 million a year. = In Vietnam, it was 1 billion a year. In 1993, BAT employed a single senior executive to take charge of GT sales around the globe. The post of =93senior regional export manager=94 was based at BATCo in Staines. Although ostensibly the job was to coordinate sales in Asia and the Pacific, the executive=92s second task was =93Co-ordinator of GT worldwide.=94 In this capacity, the manager was made =93responsible to all five Regional Directors for the co-ordination of all BATCo general trade sales worldwide.=94 He was charged with the =93maintenance of profiles of all mai= n dealers, and monitoring of supply routes; negotiation of trans-regional accounts, e.g. SUTL =85 .=94 But there was a special warning. =93Due to the nature of Export General Trade business, the Distributors handling this are not easy to manage and difficult to motivate. Their loyalty is sometimes questionable. Due to the type of business and sums involved, bribery attempts are frequent . . . [The person appointed] must be permanently alert to the confidentiality needed in some areas of the business.=94 He had to be on continual lookout for new smuggling routes, by conducting a =93proactive search for new GT business.=94 The report concluded, without apparent irony, that =93integrity is an absolute must.=94 The disclosed BAT documents indicate that =93GT,=94 =93Transit,=94 or, more plainly, smuggling seemed to be seen by BAT Industries in the early 1990s as a necessary and indeed substantial part of being competitive and successful in the international tobacco business. BAT Industries directors were told in a 1993 paper: =93A significant proportion of the world export trade is transit. It exists wherever there are widely different excise rates and trade restrictions, and is expected to continue where these conditions exist.=94 But, as with their Singapore agent SUTL, they also had a long-term desire to move, when and if advantageous, to legal markets =96 provided always that national taxes were low and that current and future smokers were easy to reach. Brown & Williamson Brands: American, Barclay, Belair, Capri, Carlton, GPC, Herbert Tareyton, Kool, Lucky Strike, Misty, Pall Mall, Prime,=20 Private Stock, Raleigh, Richland, Silva Thins, Summit, Tall, Tareyton, Viceroy From owner-intl-tobacco@venice.essential.org Thu Feb 3 11:37:42 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 1C74021AFF for ; Thu, 3 Feb 2000 11:37:42 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id LAA04463 for ; Thu, 3 Feb 2000 11:37:41 -0500 Date: Thu, 3 Feb 2000 11:37:41 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Action on smuggling If you want to take action to follow up on the recent revelations relating to international tobacco smuggling, here are a couple suggestions: 1) Write a letter to Stephen Byers at the Department of Trade and Industry. Points you might want to cover (in your own words): + you have seen some of the documents and coverage and are shocked/disturbed by what they show + that smuggling undermines efforts of developing countries to control the epidemic of smoking related-disease + point out that although the smuggling was happening abroad and BAT does not do the smuggling itself, the company seems to be orchestrating it. This raises serious issues of corporate conduct and governance that are appropriate matters for the DTI rather than HM Customs and Excise or other arm of the government. + call for a DTI investigation and ask what he intends to do, if he doesn't call an inquiry. Rt. Hon Stephen Byers, MP Secretary of State for Trade and Industry Department of Trade and Industry 1 Victoria St London SW1H 0ET United Kingdom Fax: 44-207-215-5468 2) Write to Kenneth Clarke calling for British America Tobacco to immediately launch an internal investigation that will provide answers to these serious allegations. Clarke as Deputy Chairman of BAT is the most senior non-executive Director and is responsible for corporate governance and the conduct of the executive management of the company. Clarke was former Chancellor of the Exchequer and Secretary of State for Health. Letters could have the following form: + you have seen the serious allegations and hope that BAT will act to stop this if it is still going on + that as Deputy Chairman, Kenneth Clarke has a special responsibility to supervise the actions of the company + what ihe intends to do if anything Rt. Hon Kenneth Clarke, MP Deputy Chairman British American Tobacco Globe House, 4 Temple Place London WC2R 2PG United Kingdom Fax: 44-207-845-2191 You can see what ASH UK, which helped uncover the smuggling documents, said in its letters at www.ash.org.uk/smuggling. From owner-intl-tobacco@venice.essential.org Thu Feb 3 11:54:59 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 0383B21B3D for ; Thu, 3 Feb 2000 11:54:59 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id LAA05000 for ; Thu, 3 Feb 2000 11:54:58 -0500 Date: Thu, 3 Feb 2000 11:54:58 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Clarke admits BAT link to smuggling (fwd) Clarke admits BAT link to smuggling by Kevin Maguire Source: The Guardian/The Observer, Thursday, 2/3/00 Thursday February 3, 2000 Kenneth Clarke, the former Tory chancellor who is now deputy chairman of British American Tobacco, today admits that the multinational company supplies cigarettes knowing they are likely to end up on the black market. Mr Clarke publicly defends the world's second largest tobacco company for the first time after the Guardian disclosed how it profits from smuggling. Writing in today's paper, Mr Clarke says it is "faced with a dilemma" because smokers switch to other brands or counterfeiters cash in if it restricts supplies. "Where any government is unwilling to act or their efforts are unsuccessful, we act, completely within the law, on the basis that our brands will be available alongside those of our competitors in the smuggled as well as the legitimate market," says Mr Clarke. Internal BAT documents analysed by the Guardian were dated up to 1995 but the non-executive director makes no attempt to deny that the exploitation of smuggling is continuing. The all-party Commons health committee will today consider recalling Martin Broughton, BAT's chairman, as part of an investigation into the tobacco industry. Audrey Wise, a Labour member of the committee, said: "If there was ever a case of being within the letter of the law but clearly outside the spirit of the law then this is a gem. Smuggled goods are illegal goods, so if you're deliberately making your goods available for smuggling knowingly and deliberately you are an accessory to the fact." Clive Bates, head of the anti-smoking group Ash, said: "It is now absolutely clear that vicious competition for cigarette sales in developing countries has led BAT into the manipulation of illegal markets through intermediaries. "However they try to distance themselves from it, Clarke's incredible and candid admission does mean that they are treating smuggling as a normal part of tobacco business. "Once they started down this route, they were inevitably led into the kinds of controlling actions we see described in the memos released in the Guardian." The documents obtained from the firm's Guildford depository revealed widespread exploitation of smuggling around the world. BAT had previously claimed it merely turned a blind eye to smuggling but the papers show it is central to the company's operation. Mr Clarke went public after pressure from MPs for a statement. He said it was "not in our wider commercial interests" but blamed governments levelling high taxes on cigarettes for the trade. From owner-intl-tobacco@venice.essential.org Thu Feb 3 11:55:29 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id A1E8721BBC for ; Thu, 3 Feb 2000 11:55:29 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id LAA05031 for ; Thu, 3 Feb 2000 11:55:29 -0500 Date: Thu, 3 Feb 2000 11:55:29 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] CLARKE: Dilemma of a cigarette exporter (fwd) CLARKE: Dilemma of a cigarette exporter by Kenneth Clarke Source: The Guardian/The Observer, Thursday, 2/3/00 =09The Guardian this week disclosed 1993 BAT plans to "grow our business" in smuggled markets. We invited the former Conservative chancellor of the exchequer, now BAT's deputy chairman, to respond Kenneth Clarke =09 British American Tobacco is a good corporate citizen which maintains high ethical standards. We reject allegations that we have "condoned tax evasion and exploited smuggling". We seek to work with governments around the world to find solutions to the problem of smuggling. Smuggling is a serious global problem faced by many industries including alcohol, electronic goods, cars and tobacco. It is caused by high tax levels, different levels of tax on two sides of a border and the imposition of national trade barriers to legal imports. Tobacco products command high values. They are easily transportable, making them an easy target for smugglers. Too many governments follow a policy of raising tobacco taxes to excessive levels and ignore dramatic tax differentials between neighbouring countries. Smuggling is boosted by every tax-change that improves the profit margin for the smugglers. The effect of such a policy can clearly be seen here and now in the erosion of the legitimate tobacco market in the UK, due to far higher British taxes than those in mainland Europe. The level of tobacco smuggling into Britain today is higher as a proportion of the total market (over 25%) than it is in Colombia (below 10%). British American Tobacco sells goods through wholesalers and distributors. We invest heavily in building a legitimate business through proper and well-managed distribution networks. In many markets we suffer from smuggling. It is not in our wider commercial interests to encourage or condone smuggling and it is certainly contrary to our standards as a responsible company. Our policy therefore is to engage in constructive dialogue and to cooperate with governments to try to eliminate the causes of the smuggling. British American Tobacco group companies work with governments and customs and trade authorities around the world and we sometimes have successes, proposing solutions and supporting initiatives to help reduce the problem. We have reached an agreement with the government of Colombia, for example, which has dramatically reduced the proportion of their market taken by smugglers despite the long-standing tradition of smuggling many products that is endemic to parts of that country. However, where governments are not prepared to address the underlying causes of the problem, businesses such as ours who are engaged in international trade are faced with a dilemma. If the demand for our brands is not met, consumers will either switch to our competitors' brands or there will be the kind of dramatic growth in counterfeit products that we have recently seen in our Asian markets. Where any government is unwilling to act or their efforts are unsuccessful, we act, completely within the law, on the basis that our brands will be available alongside those of our competitors in the smuggled as well as the legitimate market. British American Tobacco group companies around the world are good and reliable taxpayers. We provide some =A313bn annually to national exchequers through excise duties and other taxes which is well over 10 times as much as the group's combined profit after tax. Governments are, and always have been, significant stakeholders in our business. We aim to act responsibly to the benefit of all our stakeholders: shareholders, customers, consumers, governments, employees and suppliers. We are as aware as every member of the public that our products are often smuggled. Our business interests are damaged by the prevalence of smuggling. When governments and health campaigners are prepared to accept policies to reduce and control smuggling we will always welcome such policies and cooperate with them. From owner-intl-tobacco@venice.essential.org Thu Feb 3 13:35:39 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 0FD9A21AFF for ; Thu, 3 Feb 2000 13:35:39 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id NAA08560 for ; Thu, 3 Feb 2000 13:35:38 -0500 Date: Thu, 3 Feb 2000 13:35:38 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Cigarette firms launched secret tactics to fight plain packs, documents show (fwd) Here is the first of a series of posts that I'm sending out today from the past two-plus weeks. Please be careful to check the dates on them. Robert Weissman Essential Information | Internet: rob@essential.org Cigarette firms launched secret tactics to fight plain packs, documents show Industry moved to harm reputation of health minister by Mark Kennedy / Ottawa Citizen Source: National Post, Monday, 1/17/00 OTTAWA - The Canadian tobacco industry secretly mounted a campaign in the mid-1990s to "undermine" and "attack the motives" of the then federal health minister when she advocated a plan to strip cigarette packages of their distinctive labels, internal industry documents reveal. Health groups say the documents provide a hint of what is to come once Allan Rock, the Health Minister, unveils a government proposal on Wednesday to force cigarette makers to place photos of diseased lungs and cancerous mouths on their packages. Government insiders and anti-tobacco activists are expecting a fierce pressure campaign from the tobacco companies to force Mr. Rock to back down. "They will put in a full-court press against these measures," says Cynthia Callard of Physicians for a Smoke-Free Canada. "They've done it before, they'll do it again." In 1994, the industry was so fearful of the proposal for generic cigarette packs -- commonly known as plain packaging -- that the tobacco companies banded together to launch a special "campaign organization" within their Ottawa-based lobby group, the Canadian Tobacco Manufacturers' Council. At the time, the Chretien government had just dramatically lowered tobacco taxes to stop the cross-border smuggling phenomenon. To appease outraged health groups, the government also said the Commons health committee would hold public hearings on plain packaging. It was apparent at the time that the tobacco companies were unsettled by the notion of being forced to sell their products in similar drab packages, with no distinctive colours or markings to make them attractive to smokers. But only now is it clear how worried they were. Last year, as part of a U.S. lawsuit settlement, the companies were forced to file previously secret internal documents in public depositories in England and Minnesota. It is from the British depository that the files on plain packaging have emerged. They show how the Canadian Tobacco Manufacturers' Council established a special squad -- organized "much along the lines of a political campaign" -- to stop plain packaging. Among the pressure tactics they formulated: - They used so-called "third-party" allies with more public respectability (printing companies, retailers and union officials) to help wage the tobacco companies' battle, including helping them write the presentations they delivered to the Commons committee. Those groups warned of job losses if generic packages were adopted. - They curried favour with "selected" journalists to ensure sympathetic media coverage. - They "targeted" certain cabinet ministers and Liberal caucus members to be hit with "continuing pressure from appropriate sources." But perhaps most revealing is how the industry moved beyond arguing its case on the merits to discredit the personal reputation of Diane Marleau, then health minister. One document that outlined the various tactics to be pursued by the industry's internal group noted that it would "feed selected journalists material attacking motives of [the] health minister and undermining credibility of [the] anti-smoking lobby." The Commons health committee issued a report that endorsed plain packaging, but Ms. Marleau decided not to move until she had the results of a special study that her department commissioned. According to the internal industry documents, Ms. Marleau had been given a "blank cheque" by the committee and it was "inconceivable" the study would oppose plain packaging. Under the heading "strategic considerations," the document noted that Ms. Marleau would likely present draft legislation on plain packaging to the caucus and cabinet. "This dictates two basic strategic approaches," the document concluded. One approach was to continue the pressure campaign on Liberal MPs and cabinet. The other was "undermining [the] credibility of the study and minister on the grounds it is rigged." Ultimately, the study did support plain packaging. But just a few months after it was released, the momentum toward plain packaging hit a sudden halt. The Supreme Court of Canada released a decision that struck down previous legislation that banned tobacco advertisements. The government focused on recovering lost ground through a new bill that would set limits on how the industry used sponsorships of arts and sports groups to create "lifestyle ads." From owner-intl-tobacco@venice.essential.org Thu Feb 3 13:36:27 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 3472821AFF for ; Thu, 3 Feb 2000 13:36:27 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id NAA08602 for ; Thu, 3 Feb 2000 13:36:26 -0500 Date: Thu, 3 Feb 2000 13:36:26 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Govt may consider suing tobacco firms -- The Press -- Monday, January 17, 2000 (fwd) Govt may consider suing tobacco firms -- The Press -- Monday, January 17, 2000 NEW ZEALAND; Source: The Press, Monday, 1/17/00 WELLINGTON -- Tobacco companies say they will vigorously defend any legal action taken against them by the Government to recoup health costs associated with smoking. Prime Minister Helen Clark said yesterday she would meet Action on Smoking and Health (Ash), an anti-tobacco smoking group that was urging the Government to sue the industry. New Zealand's biggest tobacco company, British American Tobacco (New Zealand), would fight any legal action, spokesman Tony Maguire said. But the tobacco industry hoped the Government would focus on smoking prevention rather than throw money at lawyers. Mr Maguire said the industry was already working with Ministry of Health officials to educate retailers that selling cigarettes to smokers under 18 was illegal and not supported by cigarette companies. Ms Clark received a letter from Ash asking the Government to consider suing tobacco firms, and said she would be happy to discuss the possibility. However, a lawsuit would take resources, staff and policy away from the prevention focus that Labour had had on smoking for the past 10 years, Ms Clark said. "Obviously there would be tremendous satisfaction in holding the tobacco industry legally accountable and extracting large sums of money from them. "However, it's not a foregone conclusion that you would extract large dollops of money in our legal system." Ms Clark said the key question she would ask ASH was whether a lawsuit would stop anyone smoking. It was essential that efforts were still put into reducing the number of New Zealanders who smoked, particularly Maori numbers, she said. "Maori are really facing the most horrendous death figures from tobacco and the only thing that will bring that death toll down is concerted effort to prevent smoking or get people to quit." A 1999 Ministry of Health report, Taking The Pulse, showed that one-quarter of all New Zealanders were smokers, while 45 per cent of Maori were smokers. The report said that smoking had cost the health system at least $185 million in 1989 due to increased hospital, GP and prescription costs. Another report, by economist Brian Easton, said the overall social cost of smoking was $22.5 billion for 1990. The figure took into account the loss of human capital when people took days off work for smoking-related illnesses. Ash director Trish Fraser said it was time that New Zealand took real action against the tobacco industry. Ash and its lawyer, Wellington medico-legal expert David Collins, would meet Ms Clark, Health Minister Annette King and Justice Minister Phil Goff to discuss possible legal action, Ms Fraser said. The Queensland and South Australian state governments were already investigating legal action against tobacco companies. In the United States, four tobacco firms signed a $391.4 billion settlement in 1998 after 46 states sued for the public health costs incurred through smoking.--NZPA From owner-intl-tobacco@venice.essential.org Thu Feb 3 13:40:03 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 236B621AFF for ; Thu, 3 Feb 2000 13:40:03 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id NAA08752 for ; Thu, 3 Feb 2000 13:40:02 -0500 Date: Thu, 3 Feb 2000 13:40:02 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] Tobacco firms behind tax protest (fwd) Tobacco firms behind tax protest "Spontaneous grass-roots" tobacco-tax protests were secretly organized by big cigarette companies to press the federal and provi by WILLIAM MARSDEN / The Gazette Source: Montreal Gazette, Monday, 1/17/00 While Canada's major tobacco companies were funneling billions of cigarettes into the United States only to be smuggled back into Canada, they staged a series of so-called "spontaneous grass-roots" tobacco-tax protests, tagging one of them with the code name Boston Tea Party. Secret industry documents that have recently come to light in U.S. civil actions show the degree to which these protests, which took place between 1991 and 1994, were little more than well-orchestrated industry initiatives designed to press the federal and provincial governments to reduce taxes. They demonstrate the determination of the industry to dominate the government agenda and push the questionable view that smuggling was a direct result of high taxes. The documents show the careful planning that went into orchestrating the so-called "grass-roots" protests, letter-writing campaigns and the organizing of industry-favourable reports on smuggling. One document admits that RJR-Macdonald used smuggling and offshore production as "political leverage" against high taxes. In many ways, the tobacco companies were playing a deceitful role - on the one hand, feeding and encouraging the smuggling; on the other hand, pretending to offer the government support in its law-enforcement attempts. But the strategy worked. It escalated the smuggling and the political protests to such a level that in 1994 the federal government and the eastern provinces rolled back tobacco taxes by about $20 a carton. "Throughout this period, the industry played the government like a violin," former RJR-Macdonald sales executive Les Thompson said in an interview. "They played the government like the dumb kid next door. They lied to them," he added. "They complained about smuggling and, meanwhile, they were fueling the black market. They were speaking out of both sides of their mouths." Thompson is the only tobacco executive to have been convicted of a smuggling offence. He pleaded guilty last year in U.S. Federal Court in Syracuse, N.Y., to a money-laundering charge and now faces 70 months in a U.S. prison. In interviews with The Gazette, he said the tobacco companies organized the tax protests "from the bottom up." Michel Descoteaux, public-relations director for Imperial Tobacco, played a major role in co-ordinating and writing press releases for the tax protests. Asked whether, while organizing protests, he was aware that Imperial and RJR-MacDonald were shipping cigarettes to New York state to be smuggled back into Canada, Descoteaux said: "Well, uh, sir, the company certainly was (aware). The extent to which I personally was, the answer to that was, I don't know. =C9 That would be irrelevant, sir." The so-called "Boston Tea Party" was the first of the protests organized by the tobacco companies in 1991. They spent $3 million to mobilize smokers for a mail-in campaign to oppose high tobacco taxes. Working through their industry association, the Canadian Tobacco Manufacturers Council, or CTMC, Imperial Tobacco and RJR-Macdonald financed marketing and focus-group studies to gain support for the campaign and to show that it was "spontaneous." According to Imperial Tobacco documents, the impression of spontaneity was a prerequisite for a "successful program." The protest itself consisted of forms printed on the slide-out back of cigarette packs. The forms were titled "Tax Protest" and carried the following message to the prime minister: "I want you to stop the unfair taxation of tobacco products in Canada." Because they were addressed to the prime minister, postage was free. The protester simply printed his or her name and address on the form and slipped it into a mailbox. A protester could send any number of these tax-protest "postcards." The companies printed 50 million forms. Before issuing them, they launched a public-relations campaign to ensure smokers and non-smokers alike knew about the "spontaneous" campaign against high taxes. According to Imperial documents, RJR-Macdonald and Imperial spent $1.8 million advertising the tax-protest forms in 66 newspapers across the country and another $932,000 for 30-second spots on 46 radio stations. They also spent additional funds tracking the protest to gauge its effectiveness. The companies also ordered their field salesmen to push cigarette retailers to promote the protest. Thompson, who at the time was in charge of tobacco sales in Ontario for RJR-Macdonald, said his company was responsible for pushing the convenience-store chains while Imperial had the drugstore chains, some of which their parent company, Imasco, owned. He said that while Rothmans didn't print the tax forms on their packages, they agreed to lobby the food and other chain stores. The campaign, officially launched May 31 by the Canadian Tobacco Manufacturers Council, received front-page coverage in many dailies. The industry never disclosed the fact that it code-named the project the Boston Tea Party, a reference to an event in U.S. history that marked the beginning of the American Revolution. At the launch, CTMC president William Neville read a statement approved by the tobacco companies in which he claimed smokers had been "calling and writing our member companies to protest the tax increases." He added that smokers approached manufacturers "out of a sense of helplessness." "They felt they were lone, unheard voices and were frustrated and angry," he said. "That is why we decided to do what we could to help them vent that frustration and anger. =C9 Again, our only role in this exercise is that of a conduit." Descoteaux said in an interview that he could not remember how many calls tobacco companies received from irate smokers. Also unanswered was the question of why smokers, if they were so irate, couldn't just write to the government themselves. Postage was free, after all. Internal documents show that in April 1991 the tobacco companies formed focus groups from which they obtained a string of comments they claimed supported their contention that the movement was "grass roots." Cited Focus-Group Comments Included: - "It's not fair. Smokers and drinkers always get screwed." - "The tobacco industry has shown no inclination to support smokers in the past. Will we be alone again?" A CTMC document, stamped confidential and titled "Boston Tea Party II - Possible Questions and Appropriate Answers," instructed CTMC officials to state that high taxes were causing smuggling: "The cause of smuggling is simple: Canadian tobacco taxes are much too high in relation to those in the United States." The industry never disclosed to the public or the government that during this time, RJR-Macdonald was supplying smugglers through Buffalo, N.Y., free-trade zones and was switching production offshore. The smuggling market became so lucrative for RJR-Macdonald that by the end of 1991 as much as 50 per cent of its shipments were going to the United States to be smuggled back into Canada. Thompson, who was one of the RJR-Macdonald executives overseeing the sales into the black market, told The Gazette that by 1993 more than 60 per cent of the company's net profits came from cigarettes sold to smugglers. The Boston Tea Party protest lasted two weeks. Tracking reports by the tobacco companies showed that about 9 per cent of Canadians (26 per cent of smokers) mailed the protest form. The complete story of the tobacco industry's lobbying attempts is contained in a report written in August 1994 by Descoteaux. The report was sent to David Bishop, tobacco-tax manager for British American Tobacco Co. Ltd., which owned 42.3 per cent of Imperial Tobacco's parent company, Imasco. (BAT says it will close a deal Feb. 2 to buy the remaining shares of Imasco.) The report refers to the Boston Tea Party project as the "most spectacular 'untraditional' initiative" pulled off by the industry. ' But that was only part of the industry's anti-tax campaign. Descoteaux notes that to give the government an indication of the size of the smuggling problem, the industry in 1992 hired outside expert Rod Stamler, a former RCMP superintendent working for a private investigation company in Toronto. Stamler came up with a series of reports that the industry distributed to government departments. The reports indicated that smuggling in 1993 accounted for as much as 40 per cent of the tobacco market, a figure the government used when it reduced taxes in February 1994. His reports have since been criticized by anti-smoking organizations for broadly overstating the smuggling problem. The government has since admitted the 40-per-cent figure was exaggerated. The industry sent Stamler on a publicity tour across Canada to push the argument that high taxes caused massive smuggling. Descoteaux's report goes on to state that the industry arranged for Stamler to meet politicians and government officials "so that his report could become the document of reference on these aspects of the issue." Stamler's reports never mentioned that the tobacco companies were actively feeding the smuggling networks. (Stamler also hired himself out to the National Coalition Against Crime and Tobacco Contraband, a Washington, D.C., lobby group financed by RJ Reynolds Tobacco Co. Big tobacco in the United States has been lobbying heavily against increased tobacco taxes. Stamler has written a series of reports for the coalition, titled Organized Crime and the Smuggling of Cigarettes in the United States. The latest is dated 1999. It describes the smuggling situation in Canada during the early 1990s and gives the same erroneous figures he used in his Canadian smuggling reports. (The coalition sent Stamler on a 16-city tour during which he warned that gun-toting smugglers from Mexico would be pushing black-market cigarettes on U.S. children. The coalition boasts that Stamler's reports have been referenced by U.S. government agencies. Nowhere in his reports does he mention the part played by RJR-Macdonald or its parent RJR-Nabisco in smuggling.) Stamler did not return phone calls. Under the subtitle "More Mobilization," Descoteaux described how tobacco companies helped organize in 1993 a protest by growers, wholesalers and unions called the Quebec Coalition for Fair Tobacco Taxation. He states the protest finally caused the Quebec government to agree to lobby the federal government to roll back taxes. "The government did not want to face the electorate without having solved a problem that showed up daily in question period and in the media," Descoteaux said. Finally, Descoteaux describes a small group of retailers in Quebec who publicly announced that they would sell black-market cigarettes, "in effect daring the government to arrest them." He says this "last initiative" was "probably the straw that broke the camel's back" and forced the federal government to roll back taxes on Feb. 8, 1994. But that wasn't enough for Imperial. Descoteaux bemoans the fact the five western provinces did not join the rollback, that the tax reductions are probably temporary, and that with tax increases in the United States, tobacco taxes in Canada will probably rise anew. He said this still represents a "problem" for the industry. That tobacco-company executives used smuggling as a lever against the government is probably best summed up by a statement made by RJR-Macdonald president Ed Lang. In a 1993 strategic report that commented on taxation issues in Canada, Lang states: "Offshore production will be maintained to optimize (market) share and political leverage." He was referring to the fact that RJR-Macdonald had transferred production of Export A cigarettes to Puerto Rico, from where they were shipped to smugglers. The company was also producing fine-cut tobacco out of a plant in North Carolina. This production was also shipped to smugglers. The Canadian government launched a $1-billion lawsuit in Syracuse, N.Y., last month against RJR-Macdonald, several affiliate companies and the CTMC, claiming they defrauded and lied to the government. The lawsuit claims the CTMC knew RJR-Macdonald was involved with smuggling but nevertheless "falsely claimed, through meetings, letters and agreements with Canada, to be engaged in active steps to combat smuggling." Federal justice and revenue ministers have stated that the government is also examining the conduct of Imperial Tobacco and Rothmans Benson & Hedges. The government initiated a policy of high taxes in the mid-1980s to discourage people, mostly adolescents, from smoking. The tobacco industry hired Ottawa consulting firm Informetrica Ltd. in 1990 to prepare a report that said the federal government was losing huge revenues because the "prevalence of cigarette smoking has plunged with the price increases." When this argument failed to reverse the tax hikes, three years later big tobacco again hired Informetrica. This time the report stated that high taxes were not discouraging smoking because of cheaper black-market cigarettes. Smuggling and the subsequent tax rollback have caused the government to lose at least $5 billion in taxes. From owner-intl-tobacco@venice.essential.org Thu Feb 3 14:01:23 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 5D74421AFF for ; Thu, 3 Feb 2000 14:01:23 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id OAA09384 for ; Thu, 3 Feb 2000 14:01:23 -0500 Date: Thu, 3 Feb 2000 14:01:22 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Tobacco Council calls for total smoking ban in restaurants (fwd) Tobacco Council calls for total smoking ban in restaurants Source: Norway Post, Tuesday, 1/25/00 The National Council on Tobacco and Health wants to introduce a total ban on smoking in all bars and restaurants within three years. The reason is that laws governing smoking are not working satisfactorily. Up to now, bars restaurants have been charged with providing smoke-free areas for their customers, but many have not complied with this. Director of the Tobacco Council, Liv Urdal, says that workers in the restaurant trade must have a reasonable work environment. A new study shows that 32 percent of all adult Norwegians were smokers in 1999. The number is the same for both men and women. In the age group 16-24 there was a reduction from 32 to 28 percent last year. (NRK) Rolleiv Solholm From owner-intl-tobacco@venice.essential.org Thu Feb 3 14:01:53 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 6BD4621BB5 for ; Thu, 3 Feb 2000 14:01:53 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id OAA09434 for ; Thu, 3 Feb 2000 14:01:53 -0500 Date: Thu, 3 Feb 2000 14:01:52 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Industry opposition thwarts ministry plan to cut smoking (fwd) Industry opposition thwarts ministry plan to cut smoking Source: Yomiuri Shimbun., Wednesday, 1/26/00 The Health and Welfare Ministry's antismoking policy that aims to halve the number of smokers by 2010 seems unlikely to be launched this month as scheduled due to resistance from industry groups and a Liberal Democratic Party committee, ministry sources said. The ministry on Tuesday briefed the panel, comprising physicians and health and hygiene specialists, established to develop the policy, about the new development, and requested that the plan be reviewed, the sources said. According to a draft of the policy, which was announced last year, the number of smoking-related disorders, including lung cancer, is soaring and that the number of deaths annually from such disorders has reached 95,000. The ministry, therefore, announced in the draft that it would seek to halve the number of smokers aged 20 or older--52.8 percent of the male population and 13.4 percent of the female population, according to a 1998 survey. In response, a special committee on the tobacco and salt industries under the LDP's Policy Research Council criticized the draft in a resolution it submitted to the health and welfare minister in November. "It is inappropriate under the Constitution if a government office set a numerical target and attempts to alter adults freedom of choice," the resolution said. "Such a move will have a grave impact on the tobacco industry." The content of the resolution was almost identical to that of a petition presented earlier to the minister jointly by Japan Tobacco Inc. and organizations of tobacco farmers and other related industries. More than 50,000 were contained in the petition. During the Tuesday meeting, many panel members expressed opinions such as "The detrimental effects of smoking are now universally understood" and "The policy will pose no problem as it will only provide information. Adult consumers will still have the freedom to make a choice based on the available information." From owner-intl-tobacco@venice.essential.org Thu Feb 3 14:04:15 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 25B5621B0A for ; Thu, 3 Feb 2000 14:04:15 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id OAA09559 for ; Thu, 3 Feb 2000 14:04:14 -0500 Date: Thu, 3 Feb 2000 14:04:14 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Philip Morris, RJ Reynolds to Boost Production in Russia (fwd) Philip Morris, RJ Reynolds to Boost Production in Russia Source: Bloomberg News, Thursday, 1/27/00 Moscow, Jan. 27 (Bloomberg) -- Tobacco companies Philip Morris Cos., the world's largest tobacco company, and RJ Reynolds Tobacco Holdings Inc., the No. 2 U.S. tobacco company, plan to start producing their international brands in Russian plants next month to take advantage of low manufacturing costs, the Moscow Times reported. Philip Morris plans to begin producing Marlboro cigarettes in Russia for the first time since 1986 when its new $330 million factory open in the Leningrad region in mid-February. RJR plans to begin production of Winston and Camel cigarettes at its RJR-Petro factory in St. Petersburg next month, the paper said. Foreign tobacco manufacturers have invested about $1 billion in the country since 1992, with nearly 80 percent of that going to the Leningrad region and St. Petersburg. (The Moscow Times 1/27 13 www.moscowtimes.ru) From owner-intl-tobacco@venice.essential.org Thu Feb 3 14:06:26 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id A9D0321B0A for ; Thu, 3 Feb 2000 14:06:26 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id OAA09648 for ; Thu, 3 Feb 2000 14:06:26 -0500 Date: Thu, 3 Feb 2000 14:06:26 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Argentina Seeks Crackdown on Contraband Cigarettes, Other Goods (fwd) Argentina Seeks Crackdown on Contraband Cigarettes, Other Goods by John Lyons Source: Bloomberg News, Thursday, 1/27/00 Buenos Aires, Jan. 27 (Bloomberg) -- Argentine President Fernando de la Rua wants to crack down on sales of contraband goods such as cigarettes, which are estimated to cost tobacco companies more than $340 million in lost sales this year. The government is working with companies such as Massalin Particulares SA, a unit of the world's No. 1 tobacco company Philip Morris, to deliver a bill to congress next month that will propose retraining and expanding Argentine border enforcement units, and arming them with advanced vehicle scanning equipment. Contraband cigarettes account for as much as 12 percent of the $3.3 billion Argentine cigarette market, a jump from 1 percent in 1992, based on a Massalin study. Cigarette makers are concerned illicit tobacco will capture more of the market as the price of legal cigarettes is jacked up by recent tax increases. ``Contraband has a great impact on potential sales,'' said Massalin President Rafael Arguelles. He noted that the legal market for cigarettes had stagnated around $2.9 billion as contraband cigarette consumption grew in the last half of the decade. ``Two separate markets are developing, and once that starts, it's very hard to turn back.'' Massalin, which has about 64 percent of the legal market, could be losing more than $200 million in possible sales to contraband cigarettes, the company said. Paraguay Much of the contraband cigarettes originate or pass through Paraguay, a landlocked country that's winning a reputation for lax enforcement along its borders with Brazil, Argentina and Bolivia, officials said. Smugglers and contraband profiteers there are taking advantage of growing demand for cheap black-market goods in Argentina, where consumers are squeezed by new taxes and a yearlong recession. Argentina, which recently raised taxes on cigarettes, has a higher such tax than all of its neighbors. About 73 percent of the price of a Massalin cigarette is tax, the company said Today, Argentine customs officials confiscated 140,000 packs of cigarettes in Argentina's Cordoba province -- much of which originated in Paraguay, Officials say the Argentine cigarette market is supplied mainly through two methods. First, excess production of cheap cigarettes from Paraguayan factories, which have an estimated capacity of 20-times local demand, is smuggled over the border into Argentina. In a second scenario, called ``round-tripping,'' Argentine cigarette manufacturers export their cigarettes to buyers in Paraguay and Chile, where the cigarettes are smuggled back into Argentina. Massalin, which earned $70.6 million in the first nine months of 1999, up from $57.7 million in the year-ago period, nearly closed its 500-employee plant in Corrientes province this month because rising tax and contraband pressure was hurting profits there. The plant remained open after the government delivered assurances that extraordinary measures would be taken to block the flow of contraband cigarettes From owner-intl-tobacco@venice.essential.org Thu Feb 3 14:08:55 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id E938321AFF for ; Thu, 3 Feb 2000 14:08:54 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id OAA09795 for ; Thu, 3 Feb 2000 14:08:54 -0500 Date: Thu, 3 Feb 2000 14:08:54 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Korean Companies Hope Smokes Will Extinguish Fires of Animosity (fwd) Korean Companies Hope Smokes Will Extinguish Fires of Animosity by MEEYOUNG SONG / Staff Reporter of THE WALL STREETJOURNAL Source: The Wall Street Journal Interactive Edition, Friday, 1/28/00 CIGARETTE COMPANIES in North Korea and South Korea are hoping citizens of the two countries soon will be smoking their way to improved ties. A new cigarette brand called Hanmaum, or "One Spirit," goes on sale next month, the product of an unusual manufacturing and marketing alliance by companies on opposite sides of the demilitarized zone that divides the Korean peninsula. "This is the first time a same-brand product will be manufactured and distributed both in North and South Korea," says Lee Cheul Soo of Korea Tobacco & Ginseng Corp., the South Korean partner in the joint venture. "It was a very long and difficult process, but we made it." The two Koreas are still technically at war, but mixing marketing with reunification politics has become all the rage. The trend partly has been spurred by South Korean President Kim Dae Jung's "sunshine policy" toward the North, which aims to increase business interaction between the neighbors in the hope of improving relations. The most publicized project has been Hyundai Group's tours for South Koreans to the popular Kumkang Mountain in North Korea. In late 1998, Korea Fuji Film used the same mountain as a backdrop for a film ad, using the catch phrase "Bring back a picture of Mount Kumkang." A more recent print ad by Sammi Fur Co. shows a young woman dressed in a typical black-and-white hanbok, or traditional dress common in North Korea. The caption reads: "When Korea is reunified, we dream of wearing our Sammi fur coats with you at Kaema Heights," an area in the North known for its cold climate. Korea Tobacco is one of 581 South Korean companies authorized to do business with North Korea. Most take part in small-scale businesses, importing primary goods such as agricultural products and exporting industrial goods, or are related to the larger conglomerates' businesses. But Korea Tobacco is taking things to a whole new level, because the cigarettes are both made and sold in North Korea as well. The smokes will be made in a factory near Pyongyang in North Korea, with raw materials and machinery supplied by Korea Tobacco. The North Korean partner is the state-owned Kwang Myong Song General Corp. The company couldn't be reached for comment. ALTHOUGH the final touches to the marketing campaign haven't been completed, the strategy will be to focus on the joint manufacturing. "The ads will be explanatory, to help consumers understand how the cigarettes were made," says Jang Koo at Korea Tobacco's business-support bureau. He didn't know if North Korea would run its own ads. Although promoting an unhealthy, cancer-provoking product as the first cross-border project between the two Koreas may seem worrisome to many countries that spend large amounts of money trying to make people quit smoking, Korea Tobacco hasn't heard of complaints so far. "Cigarettes are luxury products," says Mr. Lee. "It appeals to one's emotions. Therefore, people in North and South Korea will feel a togetherness when they smoke Hanmaum." Korea Tobacco currently manufactures 21 brands of cigarettes. Last year's sales are estimated to total 4.22 trillion won ($3.74 billion). Hanmaum is expected to eventually to account for 2% to 3% of that figure. When Korea Tobacco got the idea of doing business with North Korea in 1996, it didn't know where to start. The company spent two years doing research and simply trying to find potential partners. "People in North Korea are hard to contact," says Mr. Lee at Korea Tobacco. The big break came in 1998, when a North Korean businessman advised them to contact a North Korean government office that oversees business relations with the South. That office appointed Kwang Myong Song, a trading company, to be Korea Tobacco's partner. The companies contacted one other through Kwang Myong Song's representative office in Beijing. A joint manufacturing contract was signed in July 1999. THE MACHINERY had to be shipped to North Korea on Chinese ships traveling between South Korea's Inchon port and North Korea's Nampo port, on the western coast. It shouldn't be shipped by land because a heavily armed border separates the two Koreas. The name Hanmaum was chosen because it was the only one that both companies had put on their separate lists of suggested names. The logo, three mountains in a circle, was suggested by Korea Tobacco, and modified by Kwang Myong Song. Korea Tobacco invested $2.4 million in Kwang Myong Song to manufacture a total of 100 million packs of cigarettes a year. A pack of 20 cigarettes will cost about 1,500 won in South Korea; in the North, most will be rationed or sold at luxury shops and hotels. Though the cigarettes only go on sale in March, early samples have fans in at least one South Korean office. "It's a bit mild," says an official at the Ministry of Unification, "But even if it doesn't taste good, just the thought that North and South Koreans will be smoking the same cigarettes together makes it taste good." Write to Meeyoung Song at meeyoung.song@awsj.com From owner-intl-tobacco@venice.essential.org Thu Feb 3 14:09:56 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id F387C21AFF for ; Thu, 3 Feb 2000 14:09:55 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id OAA09868 for ; Thu, 3 Feb 2000 14:09:55 -0500 Date: Thu, 3 Feb 2000 14:09:55 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] Kenya Braces for Battle as War on Smoking Hits Third World (fwd) Kenya Braces for Battle as War on Smoking Hits Third World by ANN M. SIMMONS / Times Staff Writer Source: Los Angeles Times, Friday, 1/28/00 =A0=A0=A0=A0=A0NAIROBI, Kenya--Officials and health care activists, determi= ned to fight an increase in smoking-related diseases in another Third World market, are pushing legislation to reduce Kenya's growing demand for tobacco. =A0=A0=A0=A0=A0A bill sponsored by the Ministry of Health with the backing = of anti-smoking activists calls for a crackdown on placing cigarette billboards in areas accessible to children under age 18 and would prohibit tobacco companies from sponsoring sporting events. It also would ban tobacco advertising on television and radio, impose stiff penalties for selling cigarettes to underage smokers and declare most public places to be smoke-free. =A0=A0=A0=A0=A0The bill comes as concern is rising about an explosion of ci= garette smoking in Third World countries. =A0=A0=A0=A0=A0With the United States and Europe beginning to win their own= wars against smoking, research by the World Bank shows that cigarette manufacturers are seeking to boost markets in developing countries. =A0=A0=A0=A0=A0Kenyan health care officials seem determined not to allow mo= re of their citizens to get hooked. Although no official statistics exist, medical observers estimate that as many as 5 million people, about a third of Kenya's adult population, are smokers. And the numbers are rising. =A0=A0=A0=A0=A0The Tobacco Control Committee, affiliated with the Kenya Med= ical Assn., accuses the tobacco industry of using advertising strategies that target young people. It blames lax regulations for the increase in smoking among youth. =A0=A0=A0=A0=A0Only a basic warning is required on cigarette packs, and in = some cases it is nearly illegible. Some billboards carry no warnings at all. Unlike in the United States, proof of age is not required when purchasing cigarettes in Kenya. =A0=A0=A0=A0=A0"[Cigarette] advertisements are very attractive, especially = to young people like me, because we normally want to look like the people we see in the advertisements," said Edwin Onyango, 18, a high school graduate who started smoking at age 13. =A0=A0=A0=A0=A0"Tobacco is a drug, and at any kiosk you can get a [cigarett= e] stick," said Dr. Charles Maringo, vice chairman of the Tobacco Control Committee. "We need to change those dynamics." =A0=A0=A0=A0=A0Anti-smoking activists want the final tobacco bill to requir= e that at least 30% of a cigarette pack be covered with a stronger warning, such as "smoking kills," and state the quantity of substances contained, such as tar, nicotine and carbon monoxide. =A0=A0=A0=A0=A0Anti-smoking forces also are pushing for the creation of a T= obacco Products Regulatory Board, which would monitor and regulate marketing and sales. =A0=A0=A0=A0=A0Kenya's poor may suffer disproportionately from smoking-rela= ted diseases because tobacco is cheap. Individual cigarettes can be purchased for less than 4 cents apiece. The most popular brands here retail for less than $1 for a pack of 20. =A0=A0=A0=A0=A0Medical officials confirmed an increase in the number of cas= es of tobacco-related lung cancer, asthma, cardiovascular disease and premature death. =A0=A0=A0=A0=A0Still, it is unclear whether parliament will approve new con= trols. =A0=A0=A0=A0=A0More than a million Kenyans owe all or some of their livelih= ood to tobacco through farming, retailing or advertising. Cigarette manufacturers say that, without tobacco, the Ministry of Finance's revenues would suffer a shortfall of nearly $100 million a year. =A0=A0=A0=A0=A0Those who oppose new regulations also argue that banning ind= oor smoking would hurt Kenya's lucrative tourism and hospitality industries because patrons of restaurants and bars would be likely to avoid facilities that enforce a smoking ban. =A0=A0=A0=A0=A0"Smoking is purely an adult choice," said Titus Mutiso, mana= ger of corporate and regulatory affairs at British American Tobacco (Kenya), which has done business in the country since 1907. "The public is appropriately informed of the risks. . . . Our advertising is targeted at adults who have already made a decision to smoke." =A0=A0=A0=A0=A0Mutiso said his company limits its advertising on television= to after 9 p.m. and that none of its billboards are placed near schools. =A0=A0=A0=A0=A0Regardless of who wins the political tussle, many Kenyans sa= id anti-smoking laws would do little to curb the urge to smoke. =A0=A0=A0=A0=A0"I feel cool and relaxed after smoking," said Phillip Peyie,= 32, a company administrator, who smokes a pack a day. "It's a way of getting rid of all my mental stress." * * *=A0=A0=A0=A0=A0Samuel Hinga Mwangi of The Times' Nairobi Bureau contri= buted to this report. From owner-intl-tobacco@venice.essential.org Thu Feb 3 14:13:50 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 6B99F21B0A for ; Thu, 3 Feb 2000 14:13:50 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id OAA10016 for ; Thu, 3 Feb 2000 14:13:50 -0500 Date: Thu, 3 Feb 2000 14:13:49 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Japan Tobacco Unveils a New Plan To Revamp Former RJR Operations Japan Tobacco Unveils a New Plan To Revamp Former RJR Operations by Dow Jones Newswires Source: The Wall Street Journal Interactive Edition, Tuesday, 2/1/00 TOKYO -- Japan Tobacco Inc. unveiled a new management plan Tuesday to revamp the international tobacco operations recently purchased from RJR Nabisco Holdings Corp., in an effort to improve the operations' efficiency and profitability. RJR Nabisco Holdings is now called Nabisco Holdings Corp. Japan Tobacco said it will cut overseas staff by 2,000 by the end of the fiscal year through March 2003. After this, the company will further slash the work force "as needed," it said in a statement. Domestically, the tobacco and foodstuffs maker said it will continue reducing its head count, cutting the number of employees over the next five years by a total of 2,500. This includes 1,200 jobs cut through an early retirement program and the remaining 1,300 by natural attrition. The measures aim for group annual costs savings of $237 million in the business year starting in April 2004, to be achieved mostly through the restructuring and integrating factories and branches and by reducing staff. Japan Tobacco sees its group net profit rising to 35 billion yen ($326.2 million) in the fiscal year starting in April and 140 billion yen in the fiscal year starting in April 2004. This compares with an estimated 48 billion yen in net profit for the current fiscal year ending in March 2000. The company aims for group sales of 4.58 trillion yen for this fiscal year and 4.8 trillion yen for the fiscal year beginning April 2004. It expects group sales of 4.33 trillion yen for the current business year to March. The early retirement of 1,200 staff, all employed in manufacturing, will result in special losses of 12 billion yen, which company is considering reporting in the fiscal year ending March 31, said Takao Seki, executive director of the JT planning group. In May, the Japanese tobacco company acquired the non-U.S. tobacco business of RJR Nabisco, which it has merged with its own international tobacco business and renamed JT International S.A. Sales in East Europe and the former Soviet Union, which the company sees as major overseas markets, unexpectedly slumped. Because of this, sales from overseas operations fell short of the company's projections for the first year. http://interactive.wsj.com/archive/retrieve.cgi?id=SB949394767510220610.djm From owner-intl-tobacco@venice.essential.org Thu Feb 3 14:15:10 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 8F7C621B0A for ; Thu, 3 Feb 2000 14:15:10 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id OAA10061 for ; Thu, 3 Feb 2000 14:15:10 -0500 Date: Thu, 3 Feb 2000 14:15:10 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Investors Reopen Azerbaijan's Sole Tobacco Plant (fwd) Investors Reopen Azerbaijan's Sole Tobacco Plant BAKU, Feb 2, 2000 -- (Reuters) Investors in the sole tobacco plant in the former Soviet state of Azerbaijan reopened the plant on Tuesday after spending $50 million on its modernization. European Tobacco Inc. won a 92.5 percent stake in the tobacco factory last August through voucher and cash auctions of the company's shares. European Tobacco's Baku director, Nabil Al-Asfar, said that by mid-February the factory would be working at full capacity producing one million cigarettes a day and would satisfy demand in the Azeri market. The factory is to buy tobacco mainly from regions in western Azerbaijan, where it is grown. Production at the plant had fallen to 12,000 metric tons of tobacco a year down from 60,000 metric tons in Soviet days. (C)2000 Copyright Reuters Limited From owner-intl-tobacco@venice.essential.org Fri Feb 4 12:00:13 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 789B421C10 for ; Fri, 4 Feb 2000 12:00:08 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id MAA28714 for ; Fri, 4 Feb 2000 12:00:07 -0500 Date: Fri, 4 Feb 2000 12:00:07 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] MPs to question BAT bosses (fwd) MPs to question BAT bosses by Kevin Maguire Source: The Guardian/The Observer, Friday, 2/4/00 The former Tory chancellor Kenneth Clarke and the chairman of British American Tobacco are to be grilled by MPs about how the company exploits cigarette smuggling. Mr Clarke, now the deputy chairman of BAT, and Martin Broughton will be questioned about black marketeering. The all-party Commons health committee agreed yesterday to question the pair after the Guardian disclosed the extent to which the company benefits from the illegal trade. MPs believe Mr Broughton was less than forthcoming recently when he claimed BAT worked closely with the authorities to combat smuggling. His third appearance during the course of a select committee inquiry is exceptional. Mr Clarke, a non-executive director of the world's second-largest tobacco firm, was "invited" after the MPs were astonished by his admission that BAT supplied cigarettes knowing they would end up on the black market. Both men will appear on February 16 alongside the investigative journalist Duncan Campbell, whose research on BAT inolvement in Latin America, Asia and the far east has been published this week in the Guardian. Peter Brand, a Liberal Democrat member of the committee, said Mr Broughton had previously maintained that the company worked to prevent its cigarettes ending up on the black market. Mr Clarke admitted in yesterday's Guardian that BAT made its brands "available alongside those of our competitors in the smuggled as well as the legitimate market". The admission supported evidence in documents obtained from BAT's Guildford depository and went way beyond the "blind eye" the company had previously claimed it turned. Audrey Wise, a Labour member of the committee, said: "I expect Kenneth Clarke will be appreciative of the chance to explain his extraordinary views expressed in the Guardian. It's obvious that [Mr Broughton] has proved good at avoiding some of the most important issues. We will now have a chance to concentrate on the smuggling which is after all a big unsavoury racket." BAT said last night it welcomed the opportunity for Mr Broughton to appear again. From owner-intl-tobacco@venice.essential.org Fri Feb 4 12:40:43 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 5C8E921AFF for ; Fri, 4 Feb 2000 12:40:42 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id MAA29802 for ; Fri, 4 Feb 2000 12:40:41 -0500 Date: Fri, 4 Feb 2000 12:40:41 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] MINUTES OF EVIDENCE: Examination of witness: DR DEREK YACH MINUTES OF EVIDENCE: Examination of witness: DR DEREK YACH Source: House of Commons, Wednesday, 2/2/00 Examination of witness (Questions 259 - 279)=20 THURSDAY 9 DECEMBER 1999=20 DR DEREK YACH Chairman =A0=A0259. Good morning. Can I welcome you to this session of the Committee= =2E Can I particularly welcome Dr Yach and thank you on behalf of the Committee firstly for your written evidence and for your willingness to come rather a long way to meet us this morning, we do appreciate that. I wonder if you would like to briefly introduce yourself and say a little bit about the WHO in the context of work on tobacco and your own role within the work of that organisation? (Dr Yach) Thank you. We also appreciate the opportunity to participate in this. My name is Derek Yach. I am from the World Health Organisation where I am the Programme Manager for what is called the Tobacco Free Initiative. This is one of the two new Cabinet projects that Dr Brundtland initiated when she took office as Director General of the WHO in July last year. The prime focus of it is to try to increase advocacy and action for tobacco control on a global basis. The decision to do that was based upon the extraordinary evidence of human health impacts around the world. My past activities have been for three years in the World Health Organisation as leading an international consultative process on policy development, that is all policy development not just in relation to tobacco, and previous to that I have been involved in a range of community based community health research and epidemiological activities in South Africa. =A0=A0260. Thank you. I wonder if I could immediately focus on to an area which has obyiously become one of the most important areas of our investigation. That relates to the tobacco industry's internal documents. You refer to these internal documents in your evidence to us. If I can just quote from your evidence. You say: "Only one of the tobacco companies in the UK, the BAT Group, has been subject to significant document disclosure requirements (through US litigation and through the US Congress). In addition, even with respect to the BAT Group, the disclosures are in need of supplementation; for example, most of the document disclosures from BAT Group were subject to a 1994 cutoff date and should be supplemented with more recent documents." I wonder if you could say a little bit about your views of the significance of these documents and the point about supplementation post-1994. How do you believe that this Committee can be of assistance in addressing the contents and implications of these documents? (Dr Yach) I think that for many years we have felt in tobacco policy that we have had to work in the dark. The tobacco industry documents provide us for the first time, in the words of our policy adviser, Judith MacKay, to really walk through the minds of the tobacco industry. The equivalent for us in tobacco, the problem we face, can be seen if you think of malaria. There is no possibility of advancing malaria research and policy if you do not understand the mosquito, its structure, its function, how it works. We now have that opportunity for our programme, which is the tobacco industry. Since the documents started becoming available in the early 1990s and particularly over the last few years it has helped us understand the science of addiction, it has helped us to understand the way in which international, WHO and NGO policy has been thwarted, the way the research direction has been undermined. It has put in the eyes of the public the truth about a range of facts that previously we only had suspicions about. What it is basically doing is it is making the potential for an international dialogue on the true policy very transparent. We believe that will help the policy debate at a global level. Many governments around the world are now looking at the tobacco industry documents from their perspective to find out in their country how has it been that they have had such difficulties in the past in introducing advertising bans or restrictions, trying to move the excise tax process forward. We have found through many of the documents very detailed strategies developed by the tobacco industry over many years to try to thwart that policy process. So we believe that this is an incredibly important resource equivalent to the epidemiological data which actually put the health case out in the first place. Whereas many of the documents in the US and that have been based in the US are now in the Minnesota depository and have been put on-line and are available both by the tobacco industries based in the US as well as by the Government, the US Department for Justice, the Centres for Disease Control, they have all provided support to scan all the documents, the same has not occurred with regard to those that are based in the UK. The first limitation is public access. The intention of the US court case was to make it fully accessible. There is a physical reality in the case of BAT Co`s UK d++epository limited space, limited time, complex searching ability. Making the material available through the Internet we believe is the best and simplest solution. It would mean that everybody would have equal access. It would mean that you would have a fully transparent system. We believe that BAT may have has already scanned all of its documents and this may be something that you would want to ask them about so that you would save the costs of having to scan them yourselves. In addition, the deadline of 1994 was set by the US court cases. This inquiry is happening at the end of 1999. We believe that it needs to be supplemented with information from all the tobacco companies that are selling products in the UK until the point at which the inquiry completes its deliberations. =A0=A0261. You would presumably argue that we have so far only slightly lif= ted the curtain on what is available. What do you think the significance would be of completely drawing back the curtain in relation to the moving of policy, not just in this country but globally on tobacco policy? (Dr Yach) The people who we speak to involved with tobacco products regulation have fairly sound reason to believe that the science of addiction, the science of tobacco product modification, has been considerably advanced within the tobacco industry and much of that has not seen the light of day. We would save enormous public resources by having that information now and not having to repeat a lot of research that may be required. =A0=A0262. Can I just interrupt. To simplify what you are saying, you are implying that the tobacco companies could have produced a much safer product a long, long time ago but chose not to. Or have I misunderstood what you are implying? (Dr Yach) Yes, that is correct. We have good reason to believe, again going back for many years, tobacco companies agreed not to compete in the area of safety and improved health consequences. There were no economic incentives then for any individual company to do that. =A0=A0263. So there was a cross-industry agreement on this issue? (Dr Yach) We believe that there was. I think the documents that we already have at our disposal show that has occurred in many areas of research, that denial of the evidence has been done jointly by many of the companies, the way in which the direction of research in their own areas has occurred, the way many of the animal experiments, the mouse house in Germany and others were closed down. That was all when lines of research were leading into areas where they did not want it to proceed. I need to explain where WHO is in the question of product modification. We must admit that we have come to realise relatively late the critical importance of this as an additional component of comprehensive control. Dr Brundtland announced to the international regulatory authorities in Berlin this year that she would be convening a scientific meeting to look at what do we know about the basis for setting stronger product modification rules. That meeting will be held in Norway in February. Many of your own scientists will be present at that meeting. Part of the problem we have is that not all of the evidence will be on the table because some of it is still being held within the vaults of the tobacco industry. =A0=A0264. You have referred to the Guildford documents. (Dr Yach) Yes. =A0=A0265. Have you accessed those documents? What problems do you perceive= in respect of public access? What assistance might this Committee offer in terms of not just accessing the Guildford depository but also the other archives that you have obviously referred to in respect of other companies? (Dr Yach) First of all, with regard to the US based companies, I think that access has improved considerably. Philip Morris, for example, provided updated information until late 1998/1999 under the terms of the settlement. Much of the material is on-line. We have sent some of our staff to Guildford and in the initial searches, really being able to go through only a few thousand documents, we have found some of the most important information showing the way in which the tobacco industry worked globally compared to the US where probably a lot more of the science is based. So from an international perspective we would regard what is really contained in Guildford as being crucial for many of our developing countries, particularly those, of course, where BAT has historically played an important role. The same probably occurred elsewhere. Step one must be to see whether the documents have already been scanned and, if they have, to make them available on the Internet. Step two would be if they have not been scanned to ensure that we find the public resources to scan them. We believe the costs would be minimal compared to the enormous public benefit. We also believe that a range of research institutions, public and private, should be encouraged to work together with the British Government to actually make that a high priority to occur very fast. We are currently involved in developing the first international treaty WHO has ever been involved in. That will focus on tobacco control. We need that evidence as the treaty making process starts moving ahead. We would also hope that UK institutions, your Medical Research Council and others, for example, would see this as a legitimate area for public funds to be used to do research on the benefits of using the tobacco industry documents to advance public policy. The National Cancer Institute for the National Institute of Health has invested reasonable funds in making this an important research topic in the US. So this is now regarded as the appropriate line of research to advance cancer control as well. =A0=A0266. Over and above pursuing the research issue, clearly in the State= s the action that has been taken arising from the Minnesota action has resulted in a significant amount of money accruing to individual states from the settlement. Some of the states have used this money to invest in anti-smoking policies in quite a detailed and radical way. Do you see the access to records issue possibly leading on to similar litigation elsewhere outside the States, possibly in this country and other countries that globally would be concerned with the tobacco issue? (Dr Yach) A number of countries have approached us for support with regard to finding out whether litigation is a sensible option. Our advice is very simple: we support those activities that advance public health goals. The primary focus of litigation should not necessarily be to regain fund money per se, but to ensure that healthy public policies are put in place. The truth and the information coming out of the documents in itself, independent of the funding, we believe is a means of advancing that policy debate. The answer is absolutely clear that many countries are seriously considering litigation in different forms. There are already a number of court cases under way. The Indian Supreme Court is one of those examples. We suspect that over time they will recognise that fundamental to any court case is the ability to have information about the behaviour of the tobacco industry and certainly in the case of many of the multinationals that would be very important, as with other UK companies. Dr Brand =A0=A0267. A quickie on this. You said that the cost would be minimal compa= red to something. Would you speculate and put a figure to putting the Guildford documents on-line? (Dr Yach) Sure. =A0=A0268. Because clearly that is the raw material from which further research can then be done. That is for the scientific bodies. The actual getting the stuff in the public domain, how much would that cost? (Dr Yach) We would estimate, based upon roughly how many pages of documents there are and how much the scanning costs are, we are probably talking about $2 million to $4 million as a single cost for scanning the material and making it available on the Internet. The comparison would be against the hundreds and hundreds of millions of dollars going into all forms of treatment and other research activities and tobacco control which are run either by the Medical Research Council or the Wellcome Trust or others. Mr Burns =A0=A0269. Earlier in one of your answers you were talking about your belie= f that the companies at some point had joined together to stop progressing any further research in certain areas. Do you have any actual concrete evidence of this or is it more anecdotal? (Dr Yach) No, it is not anecdotal. I think one of the earliest documents goes back to 1980 when a document prepared by the tobacco industry stressed the role of ICOSI, which stands for the International Commission on Smoking Initiatives and was formed by the tobacco companies in the 1980s. One of the goals stated by them=97we will leave the document numbers with you=97was "the first initiative on a worldwide scale to counter the actions of anti-smoking groups". That was their professed aim. Under it they then went on to disclose what specific steps they should take. These were then elaborated further in a range of documents, including one of those held in a conference in Boca Raton in 1988 sponsored by Philip Morris but joined by many of the other companies where Geoffrey Bible, who was then the President of Philip Morris International and now is the Chief Operating Officer of Philip Morris, talking about WHO stated "this organisation has an extraordinary influence on government and consumers and we must find a way to defuse this and reorientate the activities to their prescribed mandate. In addition, we need to think through how we can use our food companies' size, technology and capability with governments by helping them with their food problems and giving us a more balanced profile with the government than we now have against WHO's powerful influence". They went on in the document to talk about the International Labour Organisation. The aim of their plan was to inhibit corporation of ILO into WHO's anti-smoking programmes and to take urgent steps to contact worker and employer leaders of these groups in the ILO governing bodies. One last comment: also in the same period the Boca Raton plan discussed "countermeasures designed to contain, neutralise, reorientate the World Health Organisation" and stated "the necessary resources should be allocated to stop WHO in their tracks". Because of this Dr Brundtland felt this was such a serious influence on WHO historically that it hampered us being able to move ahead with great enough clarity and in October she called for an inquiry into the way in which WHO and the UN systems have had their policies thwarted by the industry and appointed a member of our executive board, Dr Zeltner, who is Head of the Federal Swiss Health Department, to head the inquiry which will be getting under way very soon. This is unprecedented. I need to say that the World Bank has also joined the inquiry and has nominated a top anti-corruption expert to join the inquiry. Chairman =A0=A0270. Would that inquiry have any bearing on the way in which individu= al governments, such as our own, may have had their efforts thwarted by the tobacco companies over the years? (Dr Yach) The terms of reference are mainly to focus on the international domain. Dr Brundtland made it clear in her statement that we would hope that individual governments would carry out their own separate inquiries. I think this is an excellent example of one which would be able to contribute to what WHO is doing and, similarly, I think our insights at the global level will also help to put in perspective the importance of this national initiative as having global relevance. =A0=A0271. So you would be urging us to press the British Government to establish a similar inquiry, but we had ministers in this place in 1954 actually talking about the connection between smoking and ill health. It has taken so long for any meaningful initiatives to be brought in. You would see that as very relevant? (Dr Yach) Very relevant. I think we have to realise the global relevance of the work done by Sir Richard Doll and colleagues afterwards, that is regarded as ground breaking globally important research right from the 1940s and early 1950s. We have looked to the UK epidemiologists to provide the lead on tobacco, and have received it, and increasingly they have played an international role as well. =A0=A0272. You used the word "corrupted" in terms of how your organisation = had been prevented from being effective on this issue. Do you believe that other governments and parliaments have been corrupted by the influence of the tobacco companies? (Dr Yach) We believe certainly the policy process has been thwarted and certainly we would be able to show that there have been severe efforts to stop policies being put in place that are regarded as simply sensible public policies by WHO, the World Bank and its member states. There would be many, many examples of that.[2] =A0=A0273. Have you any examples in respect of where the British parliament= ary system and the British Government system has been thwarted by the kind of influence that you are talking about? (Dr Yach) No. =A0=A0274. That is what we are looking at here. (Dr Yach) No, I do not have any of that. I can assure you that probably many of the people who will give evidence here would have a better insight from an individual national perspective. Audrey Wise =A0=A0275. I just want to refer to the practicalities of these documents at Guildford because it has been made very clear to us, and you are reinforcing it, that the current arrangements are hopelessly inadequate with very limited time and very limited space for researchers to go in. There are a lot of documents. I think I understand that you are saying very clearly that it would be money well spent to have the whole lot put on the Internet. (Dr Yach) Yes. =A0=A0276. Now, I have taken serious note of that and I am sure the Committ= ee has. We have also heard informally and while we have been in the US this question has come up a great deal, as you can imagine, and we have wondered whether there is anything short of that that would be useful. Suppose we made an attempt to be more selective about what we asked for, would there be anybody who could guide us as to how we would select the most important documents? Or is it really very important to have the whole lot? (Dr Yach) I think, given the dramatic advances in information technology and the electronic searching capability, our advice would be to get the whole lot because you can never be entirely sure of setting the right questions and the right search parameters. I think we have found great difficulty even using the available searching ability to find things and often they crop up under different categories that you do not suspect. I do not think that there will be a cost saving, there may in fact be extra costs in being more selective, whereas at least getting the material on to the Internet and then applying our minds using the best of library science to search better, as well as to have access to the indexes used by the tobacco companies themselves, would save an enormous amount of time and effort. There are, of course, many experts we could put you in touch with who would be able to either verify this or give further detailed information on the problems they have faced in searching through documents for many years, those involved in the court cases in the US for example and in Canada. =A0=A0Audrey Wise: I think that would be very useful. Mr Austin =A0=A0277. In answer to the Chairman's question you actually used the phras= e that the research direction had been "undermined". Was this merely as a result of the non-disclosure of the information that was available to the tobacco companies or by some other means? (Dr Yach) I think we know in the case of environmental tobacco smoke, for example, that the research process has been affected in many ways: the setting up of many bogus or front groups involved in research paid by the tobacco company to try to ensure that no association was found. This has happened in the US, in Japan, in Germany, and I am sure in the UK. The funding of enormous amounts of symposia to try to continue to ensure that the passive effects of tobacco on human health were not actually brought to the public domain. The fact that when large scale European research studies were carried out by our own sister agency, the International Agency for Research on Cancer, there were fairly sustained efforts to try to find out who were the researchers, could they influence them, could they thwart the direction? There are many documents, not one or two but tens of documents, that have shown how they were particularly concerned with the European study showing that the impact of environmental tobacco smoke in Europeans was much the same as it is elsewhere, because of the consequences for smoking in public policies moving faster in Europe. In the other areas of research there were examples of animal research which was stopped in its tracks because they realised reading through the documents that these would not look very good if they were ever made public. =A0=A0278. You are actually saying that it is not just the withholding of t= he information but they set out deliberately to create false facts on the ground. (Dr Yach) Yes. =A0=A0279. To mislead. (Dr Yach) This is described particularly in the Minnesota court case and the documents coming out of the Minnesota court case and others. ------------------------------------------------------------------------ 2=A0=A0 Note by witness: I did not use the word "corrupted".=A0Back =A0 =20 =20 ------------------------------------------------------------------------ =A9 Parliamentary copyright 2000 Prepared 2 February 2000 Select Committee on Health Minutes of Evidence ------------------------------------------------------------------------ Examination of witness (Questions 280 - 299) THURSDAY 9 DECEMBER 1999 DR DEREK YACH Mr Burns =A0=A0280. When did the WHO reach the conclusion that cigarettes cause lung cancer? (Dr Yach) Over the last I do not know how many years, but since 1970, we have had resolutions on tobacco based upon concerns about lung cancer. In 1970 the wording was "being aware that there is a strong association, there are serious affects of smoking in promoting the development of lung cancer". By 1978 the wording was much clearer and it was in causal terms. Every time since a resolution has been introduced to the World Health Authority, and I thought I would leave the full list of the resolutions for the Committee, there have been 17 resolutions since 1970, those have reaffirmed and strengthened the evidence base. =A0=A0281. Would the same timescale apply for when you believed that it was addictive, that nicotine was addictive, or would that be different? (Dr Yach) The timescale would be different. Again, I think we should be aware that the knowledge and science of addiction through the tobacco industry documents was strengthening through the 1960s and 1970s. In the public domain the wording on habits was still being used in a very lay, general sense. The first time a deliberative committee of WHO actually made some decisive comment about nicotine being a dependence producing substance as the result of an expert committee, which is a very specific category in WHO, was as recent as 1998. This is the committee report for you as well. =A0=A0282. What sort of data do you have on patterns of smoking around the world? (Dr Yach) We have very detailed data. One of WHO's mandates in all fields of public health is to carry out surveillance. A lot of the countries have weak surveys themselves but just to give you a feeling for what we have available, and again it may be something the Committee may want to have, so this is a gift from WHO to the Committee=97 Dr Brand =A0=A0283. You are not trying to influence us, are you? (Dr Yach) This is available on the Internet. It provides you with information on smoking status in all the countries for which we have data. The basic picture we have got in very simple terms is that if we take the last two decades for which we have recent data, there are some countries which have shown sustained declines=97the UK is one of those countries showing a rate of decline over the last two decades of about 1.6 per cent of adult consumption per capita per year=97compared to increases, over the same period, of eight per cent per year for 20 years in China, 6.8 per cent in Indonesia, almost five per cent in Bangladesh, five per cent in Syria and so on. So we have very clear evidence of declining consumption in parts of the world and rising rates in others. The way you interpret that should not be to say that the problem has been solved in the UK. You are coming off an extraordinarily high base of smoking. The absolute number of deaths remains high and will remain high for many, many decades to come. In the developing countries the opposite is the picture, the smoking rates are extremely high now and the death rates have yet to follow. To give you a feeling of the numbers, we have four million deaths in the world a year, four million, that is in all countries. By the 2020s we estimate that there will be around ten million deaths and 70 per cent of those will occur in developing countries. Just think that the smokers of the 2020s are smoking today, they are alive and smoking today, which means that we are going to face one of the largest, if not the largest, public health challenges in the 2020s and 2030s. To give you the extent of it, this eclipses the sum total of deaths from malaria and tuberculosis and many other causes of death worldwide. Chairman =A0=A0284. One of the worries many of us have in the UK, and we have talked= to people in the States similarly, is that the more work we do in our countries on tobacco then indirectly the more we are pushing the tobacco companies into the developing countries in the way you have described. How do you see policy makers in a country such as Britain addressing that question? Obviously you have a global perspective rather than a narrow perspective of one country but do you appreciate that it is a concern from our point of view that that is indirectly a product of what we may achieve within the UK? (Dr Yach) I think the first point I must stress is that we believe, and Dr Brundtland put this on the record, that the UK Government White Paper was very important for us in WHO for many reasons. It highlighted the need for global action. It highlighted the need for global activities of companies to be equivalent to those which are expected in the domestic markets. That is something which could be pressed for even more strongly, that whatever is acceptable public policy at home should be acceptable public policy in the places in which your products are being sold. There have been steps taken to inform your own UK missions about the importance of this worldwide. We have other governments, like the US, who have formally informed their missions, their ambassadors, around the world that they should no longer provide support to tobacco companies on their missions, rather they should be providing support, when requested, to tobacco control. We believe there are many other areas which are also mentioned in the White Paper: support for developing countries, particularly those which may be the markets of multinationals based in the UK, to strengthen tobacco control through DFID, through your international development programmes. We know that certainly the international development programmes are starting to look at providing that support. One of the biggest areas of concern in many of the poorer developing countries is not only in those where tobacco use is a problem but some where tobacco use may be minimal but tobacco growing may be very important. I am referring particularly to Malawi and Zimbabwe where they have a disproportionate amount of their foreign exchange going into the selling of tobacco. There we believe that we need to work very closely with UK agriculturalists, as well as with your development agencies, to first of all ensure that farmers understand that there is no dichotomy behind strong demand reduction in all countries on public health grounds and looking at the long term consequences for farmers because we realise that there will not be an immediate effect of reducing demand. You have seen the rates, the fastest the UK has gone is 1.7 per cent decline per year. If worldwide we achieve rates of decline of two to three per cent there will still be a large market for tobacco farmers well into the 2020s, 2030s. We need to minimise their concern and particularly their influence on government stopping healthy public policy. There is an enormous amount that you can do. I must say there is a lot that you are already doing. One of the most powerful things to ensure is that the WHO Framework Convention on tobacco control which is being worked on at the moment is a convention that really stops trans-national actions to promote tobacco use. That will mean that as individual countries take strong action they will be doing it in concert with other countries around the world. Audrey Wise =A0=A0285. Tobacco growing is subsidised in the EU. This Committee took thi= s up with the appropriate Commissioner some years ago but without any effect. Do you think that when we go to Brussels, as we will be doing in the course of this inquiry, this is a point we should raise with the European Union Commissioner? (Dr Yach) We absolutely believe it is. In discussions with some Zimbabwean farmers we have indicated to them our belief is first of all we realise there will be a long-term future unfortunately for tobacco, smokers will be around for many, many decades, but we hope that when the last smoker smokes a cigarette the tobacco comes from a country like Malawi or Zimbabwe rather than a heavily subsidised country in Europe or the USA. I need to emphasise as well that the WHO has an additional new role in the UN system and that is to act as the chair of a task force on tobacco control of all UN agencies. That means that we chair a committee, including the Food and Agriculture Organisation, including the World Bank, including the IMF, and what we are trying to do through that committee is define a single, coherent policy where you do not have these contradictions, where on the one hand we are promoting demand reduction in one set of activities and agencies ,and on the other we are subsidising the very activities that undermine our own policies. We believe that policy coherence is something that you could play a vital role in ensuring in the European Union. =A0=A0286. The tobacco companies clearly are conscious of your influence an= d importance. The British American Tobacco's Annual General Meeting was on 29 April this year and the Chairman, Martin Broughton, made a speech in which he said that the World Health Organisation's priorities are different from those of health ministers in the developing world for whom issues like malnutrition, lack of sanitation, infant mortality and AIDS loom much larger. He says that, in fact, WHO is driven by a western agenda. What would your reply to that be? (Dr Yach) The WHO is an intergovernmental agency. We represent the will of all our member states, 192. There is virtually no other area of public health where there has been so much international consensus by ministers involved in the will as in the area of tobacco control. The proof of that is the 17 resolutions that have occurred over the last few years. To be more specific, one of the areas of the world the tobacco industry often cites as not being ready or ripe for tobacco control is the African continent. What are the facts? What are the ministers of Africa themselves saying? The truth of the matter is when they assembled on 18-21 October this year in Cairo, they had an agenda which focused on the need to address AIDS, malaria and polio as well as tobacco. In their discussions on tobacco they acknowledged the need for action on all the policies that are being discussed in western countries and around the world, including increased tax, bans on advertising and promotion, preventing people from involuntary smoking, assisting farmers to diversify was one, adopting the framework convention on tobacco control, all cabinet meetings in Africa should be smoke-free, all buildings at the ministry of health should be declared tobacco free, member states need to report to the Organisation of African Unity on Progress in implementing a long range of recommendations made by the ministers of health. This was a relatively short meeting with a massive public health agenda. They selected to highlight the importance of tobacco as a public health problem because they know that somewhere down the line they are going to face this problem and addressing it early and vigorously is going to save enormous public resources. The truth is that wherever we go there is not a single country where increasingly the ministries of health and the ministries of finance are not beginning to recognise that tobacco control makes sound public health sense and sound economic sense. Our colleagues in the World Bank released a report earlier this year on the economies of tobacco control, again I think a very important report because it compliments the public health perspective we have. Remember, the World Bank's key people it works with are developing countries as well as some of the transition economies. The prescriptions of the World Bank are virtually identical to the prescriptions of the World Health Organisation and we suspect that those of the rest of the UN family will also become more similar over time. =A0=A0287. Of course, in countries where there is malnutrition and terrible infant mortality, it would seem to me that they get poorer if people are distracted into purchasing cigarettes. In Britain certainly poorer people paradoxically are more likely to spend some of their income on cigarettes. Presumably you would agree that actually diverting national resources or individual resources into buying tobacco is likely to make malnutrition worse and infant mortality is not going to be helped by the low birth weight effect of tobacco smoking by women? (Dr Yach) I think there are a couple of points. There is no question that in the developed world and in the transition economies of Eastern and Central Europe, the Central Asian Republics, many of the developing countries are moving very fast, like China. Tobacco is now probably becoming one of the major causes of death among the poor. Not only that, in Europe it is probably the predominant avoidable reason of the social class gap in life expectancy between the rich and the poor. So one means of reducing the social class gap is good tobacco control. We would not want to oversell the impact of tobacco in some of the poorest developing countries amidst conditions of high levels of HIV AIDS, malaria and malnutrition but what you are saying is absolutely vital for many countries where tobacco is fast becoming one of the most important causes of low birth weight. There are parts of South Africa, for example, where calorie intake may be less important as a determinant of low birth weight than the fact that in those populations up to 50 per cent of women smoke during pregnancy. Increasingly we are finding that is the case in many parts of the world where we have documented evidence from Brazil, from India and from other developing countries showing how important tobacco use in pregnancy is as a cause not only of low birth weight but of a range of other ill health problems among children. At the request originally of the G8 Ministers of Environment, we convened a meeting to look at the impact of other people's smoke on low birth weight and on children's health in January this year. We concluded that in developing countries and developed countries this was a major neglected area and means of improving child health on a worldwide basis. =A0=A0288. Finally, you really have got the Chairman of British-American Tobacco very angry. In that same speech he said "The WHO seems to have been hijacked by zealots in its desire to set itself up as some sort of super-nanny". Are you zealots? (Dr Yach) Obviously we are public health professionals who look at the data, the data speaks for itself. Four million deaths now, ten million deaths in the 2020s. I come from a general policy background, the whole organisation has to balance the impact of AIDS, malaria, many other terrible causes of death and disease. Amidst that balancing Dr Brundtland believed the data itself spoke clearly about the need for action, and fast action now. We believe we are sticking to where the evidence guides us. Also we need to address an impression often gained that the entire resources of WHO are being turned to tobacco control and away from many of the other problems of development and poverty. The truth of the matter is that we are probably spending at the moment about 0.4 per cent of our budget on tobacco control which we think is a modest, maybe too modest, investment in the major cause of death in the 21st century. =A0=A0289. Do you think perhaps some of the anger expressed here derives fr= om the fact that the tobacco companies have failed to hijack WHO themselves? (Dr Yach) I think the Committee will give us an answer to that. Mr Austin =A0=A0290. No doubt you have observed the debate and discussion that has go= ne on here about tobacco sponsorship, particularly sport and the arts and the threat when the Government was considering Formula 1 Motor Racing, that Grand Prix motor racing may be taken out of the United Kingdom and go to Eastern Europe or somewhere where such controls did not exist. I would like your comments on that and, also, your view on the tobacco industry's shift in focus generally from West to East and on the movement of cigarette production facilities into the third world? (Dr Yach) I think, first, on the question of sponsorship and advertising, we are very convinced by the work of the World Bank in carrying out probably the most systematic review of the impact of advertising and promotional bans which are well documented in this document Curbing the Epidemic. The basic message that comes out of there is that a total ban makes the difference, a total ban on advertising and sponsorship. When you leave these windows of opportunity open, like sports sponsorship, one cannot epidemiologically detect what the independent effect of a ban on Formula 1 is relative to a complete ban. Our prescription again tries to keep it very simple. The moment you start introducing exceptions the doors open wide and you lead yourself into an endless debate. Rather, the principle should be you should not be allowing the sponsorship by companies of a product that kills half of its users when they use the product regularly. To us that is a simple fact, it is based as well on the evidence. The other curious thing is that we are unaware of sports bodies or sports activities that have ever suffered in the long run when sponsorship has been removed by law. With regard to the shifts, I think there are a number of ways in which the issue is portrayed. On the other hand, we have people saying that the only reason the tobacco companies are moving into the developing world is because of declining consumption at home. We would disagree with that. The reason they are doing that is to increase market sales, it is just sensible marketing and sales practice. The way they are doing it though is to take advantage of the weak regulatory and legislative environment in many countries and they are using many of the approaches and methods that have long since been legislated out in countries like the UK or in Canada or in other countries. They are able to seek the weakest parts of a market, to use marketing strategies that do not exist in the UK. For example, you will have Benson & Hedges being sold by women in flimsy golden dresses in discotheques in Sri Lanka, handed out free. You would have other examples of fairly blatant advertising using semi-clad women in Thailand to sell cigarettes. Worse, in the Philippines you would have Madonna icons used to sell cigarettes taking advantage of it being an inherently Catholic country. =A0=A0291. Which "Madonna" are you referring to? (Dr Yach) We are finding increasingly as well that many of the entertainment people are joining the Tobacco Control Group as well, so maybe that is something we should approach Madonna the icon about. I think the concern is that we are seeing rising levels of investment in marketing and distribution. As you said, production is moving to countries where sales are increasing and being encouraged to increase. A number of joint ventures have been established right across Europe as well as with China. We have been very concerned to see how Chinese trade delegations to the UK are often received by tobacco executives in this country and tobacco executives in this country lead general trade delegations to China. This sends a very confused signal about the desirability of British exports in tobacco leading the way in other fields of exports which would be highly desirable. I think we are generally concerned about the greater linkage occurring between multi-nationals and many state monopolies within countries, particularly in China as well as other parts of Asia. =A0=A0292. You have mentioned certain countries providing cigarettes free o= r at low cost. Is there any difference in the way tobacco companies are acting than any other drug pusher in that they are forcing a product on someone, getting them hooked and then having a permanent market? (Dr Yach) I do not think I would be qualified to answer that. =A0=A0293. On the price mechanism, the other question I want to ask is are = you aware of any international studies which compare the effectiveness of differing rates of tobacco duty and price mechanism on encouraging people not to smoke or reduce smoking consumption? (Dr Yach) Again we have had substantial work=97I am meant to be lending thi= s one to you this time=97and we have had a number of reviews of the economics of tobacco control and this is some of the source document that went into the final World Bank report. The bottom line is very clear, for us the most powerful means of reducing consumption is through the price mechanism and that has its best effect particularly in youth and in poor people. We find also that when there is earmarking of tax for tobacco control activities, you have greater levels of public acceptance and you have a sustained institutional capability in countries to continue tobacco control beyond the pricing mechanism into advertising, media communications campaigns and cessation. The UK again has played a very important leadership role in earmarking part of the exise tax. We know very simply as the price goes up, consumption drops, revenues continue to rise. As the price drops deaths increase and that is the very simple equation. It is the case worldwide. It is the single area where WHO, the World Bank and the IMF will be carrying one message to the Ministries of Health and the Ministries of Finance worldwide increasingly as this report starts being disseminated over the next 12 months. =A0=A0294. Can I just pursue that. One of the issues that has arisen here n= ow in this country, because of the price mechanism and duty, is the issue of illicit tobacco finding its way on to the market due to smuggling, not through the acts of small individuals but really clear evidence of a major criminal conspiracy to smuggle goods in where of course the penalties for so doing are much, much less and the risks much less than smuggling, say, cocaine or heroin. Are there any lessons or advice you would give to Government as far as the penalties for smuggling of tobacco? (Dr Yach) I think you partly decided this by allocating part of your excise tax to strengthen border controls and ensure that there is not smuggling. It seems to be a very important and sensible step which needs to be globalised. Smuggling is a criminal activity and should be dealt with as such, with penalties being appropriate to the fact that the product in the end is going to kill its regular consumers. We find it very interesting that when one looks at the relationship between countries where there are high levels of smuggling and what is called the transparency index, which is produced by Transparency International, which is a measure of the general level of corruption in a country, the higher the corruption index the higher the degree of smuggling, which suggests we are dealing with a problem of organised crime which needs to be dealt with as all forms of organised crime are dealt with. The inappropriate response to smuggling is always to drop prices which is, of course, the response the tobacco industry has requested and suggested over many years. The reason we do not recommend it is because, first of all, it translates into deaths and, second of all, because we know price differentials are only one of a range of reasons for smuggling across national borders. One needs to address them fully in a more comprehensive manner. This is an area which is fundamentally important for WHO as we start working on the Framework Convention which needs to strengthen particularly those aspects of tobacco control which slip through the cracks due to globalisation. Dr Brand =A0=A0295. Can I return to a question which John Austin asked. You clearly illustrated that the tobacco companies tailor their marketing techniques to the Third World, escaping the tighter regulation that might exist elsewhere. Are they doing the same with the products that they actually sell in the Third World? (Dr Yach) Do you mean are the tar and nicotine levels=97 =A0=A0296. Yes? (Dr Yach) First of all, the evidence is pretty scanty on systematically collecting information on that but the information we have shows that in general there have been pretty wide differentials suggesting that tar and nicotine levels are generally higher in the poorer and developing countries. This has not been available on a systematic basis. It is something now that WHO, with a number of agencies, is trying to gather. =A0=A0297. It would be very helpful to have that as evidence. The United States may well move towards a much tighter nicotine content control which makes a less addictive cigarette but it is in the interests of the companies presumably to sell as many highly addictive products in the Third World to open up their market. (Dr Yach) I think again we will learn a lot about this from the tobacco industry documents. We will probably see how in a particular country over time they have adopted the contents over time to meet what they want to, some concept of international standards. The Centre for Disease Control is starting to do these kinds of tests and they may very well have early information already, comparative international information. =A0=A0298. From your evidence, do you find that the tobacco companies tend = to work collectively in most of these instances? (Dr Yach) Well, as I mentioned earlier, certainly they have worked collectively in trying to develop policies around WHO and the UN agencies. In a general sense they have certainly worked collectively to deny the health evidence systematically and now for the first time we are starting to have companies go counter to that. They have probably worked together very carefully in the area of product design and will probably find that has been something which has been sustained over many decades. =A0=A0299. Which makes a bit of a mockery of their claim that advertising i= s just to encourage existing smokers towards their brand. (Dr Yach) Exactly. =A9 Parliamentary copyright 2000 Prepared 2 February 2000 Select Committee on Health Minutes of Evidence ------------------------------------------------------------------------ Examination of witness (Questions 300 - 307) THURSDAY 9 DECEMBER 1999 DR DEREK YACH Mr Gunnell =A0=A0300. I would just like to ask you what you think of the ISO standards= , the International Standards Organisation standards for measurement of cigarettes? Is that data of use to consumers? Have you made any representations to ISO and what would you like to see happen? Is WHO represented on the relevant technical committee or is it still purely dominated by the tobacco companies? (Dr Yach) When we started this initiative, which was only 18 months ago, we recognised pretty soon that the whole area of product design required us to understand the measurement methods used by ISO in detail. We tried to gain official status in the committees, in the particular committee in the Tobacco Control 126 Committee of ISO. Only very recently on 20 October in their last Committee they agreed to give WHO Category B liaison which allows us for the first time full access to all their documentation. Our concerns are exactly what you are saying that, first of all, it is interesting that the delegations coming from countries tend to be dominated by the tobacco industries. In the case of the UK it would include delegates from Imperial Tobacco, Philip Morris, BAT, Gallaher's and so on. In many cases the government regulatory person would not even be represented. Many of the governments are solely represented by tobacco companies, this is the group that finalises the measurement methods and I think there has been outstanding work done by colleagues in this room and elsewhere showing the shortcomings of the measurement methods which I am sure they would go into in greater detail. The bottom line is that as we move into the area of product modification we need to know what we are really measuring and at this stage we have very good reason, from the evidence coming out of the court cases, to believe we are not measuring what is biologically the real dose and impact of all the carcinogens and components of cigarettes. =A0=A0301. So the consequences of you at least having the status you have n= ow gained in that is that you can expose the measurements=97 (Dr Yach) We certainly think that there will be a useful purpose in entering into very serious dialogue through our new status and how we are going to pursue that is still to be finalised. If we are going to move to an international approach to product modification it is essential that this be done pretty quickly. ISO has official status with WHO. Obviously ISO has activities across a wide range of public health measurements. They are a non-governmental association in official relations and attended the Framework Convention meeting, so that dialogue has literally just begun. =A0=A0302. The documents from Minnesota showed that young people were being targeted in the west. To what extent is this happening in the west still and to what extent is it happening today in the east? That does not just apply to young people, it applies to women as well, which is an area where you still have many non-smokers. (Dr Yach) First of all with regard to children, we are concerned that smoking rates are rising among young people in many developed and most developing countries. The problem has not yet gone away. If the tobacco industry had the full will to stop sales to children we believe it could. There are a range of measures that it could truly introduce that would be highly effective in combination with Government=97and this cannot be done without strong government action. We reviewed the evidence on what works to reduce youth consumption in a meeting in Singapore earlier this year and came to the conclusion that the best means of stopping youth consumption continuing to rise is by applying strong tax measures, total advertising and marketing bans on advertising of products, providing youth with the means to quit. A higher proportion of youth worldwide want to quit than we have ever suspected and yet we are not providing the services for them to do so. Similarly, we should use counter-advertising measures that are driven, directed and worked on by youth themselves. Clearly one of the key issues we fail to do is to think of what really appeals and what is going to make a difference in youth groups and that is something which we believe some of the campaigns like the Florida "Truth" Campaign showed could make a difference. We would have to think worldwide how we can do this more effectively. We hosted a meeting two weeks ago in Kobe, Japan which included senior representatives from the Commission on the Status of Women, the Convention on the Elimination of Discrimination Against Women and the outcome of that meeting was grave concern about the fact that on a worldwide basis 12 per cent of women smoke as opposed to 47 per cent of men and that is seen as a massive marketing opportunity for the tobacco industry. From the women's organisations' perspective, they believe this represents one of the greatest preventive potentials for public health in the next century and if we could maintain and reduce the rates of smoking among women by women providing the leadership role in tobacco control, since clearly we men have failed, I think we may very well find that the long-term public health consequences of tobacco would be averted in the next century. I can leave with you the outcome of the Kobe Declaration which will be carried forward into the follow-up Beijing conference on women and development. =A0=A0303. I believe that it is a compliment to describe WHO as a "super-nanny". Do you feel that in order to get effective work in this area we have to abandon the idea of voluntarily moving forward our no smoking policies and we must introduce an element of compulsion into the activities which surround passive smoking? We cannot make progress without some compulsion from government and we should not be afraid of being described as a "nanny state". (Dr Yach) I think we would entirely agree. We have seen that governments who have moved from voluntary agreements to hard law have had greater success. At the international level we have had these resolutions over the years and we are now moving for the first time to a treaty. In 50 years history of WHO they have never used their outlaw option of a Convention, the equivalent approach we will be taking to the need in controlling biological weapons or major environmental risks to the environment. We believe that that is the level of seriousness that we need if we are really going to make a difference for all countries. Audrey Wise =A0=A0304. I would like to pursue the question of women. It is my observati= on that in this country in the past smoking was regarded by some women as a sort of expression of emancipation, i.e. you could be like men and do what men do. I was told by a woman doctor in America last week that there had been an advertising campaign there directed at women which says "Get a voice" and this is expressly to do with smoking. Are there any equivalent things happening, as far as you know, in the marketing ploys in other parts of the world? There will have to be improvements made to the status of women. Is the desire for women to advance being manipulated in marketing in other places? (Dr Yach) Yes. That is happening in virtually every country undergoing development in the world and the tobacco industry are very skilfully using the aspiration of women to seek greater political involvement, to play a greater role in all aspects of society as a means of increasing their sales and marketing. So in Japan you will find advertisements aimed particularly at women moving into the employment sector in greater numbers. You will find that across the world. What was presented in Kobe as well was the most extraordinary review in advertisements over the last 20, 30, 40 years of how the shift has been to focus more and more on the issues of emancipation in advertising and marketing. You just have to look at the women's magazines to start seeing how this is occurring. They are playing on the themes of emancipation, the themes of thinness and slimness and many of the other themes, the desirability of achieving an American lifestyle when at exactly the same time the rates in many parts of the US are declining among women and people are recognising the dangers. We would urge that the video tape of this material may be something you should have a look at. It was produced by the Robert Wood-Johnson Foundation, which was the primary founder of tobacco control at a foundation level in the US and within ten minutes you immediately have a pretty good insight into the way in which they are working. As I said, I will leave with you the Kobe Declaration produced mainly focusing upon women. Many of the people who came to the meeting represent major international women's organisations who had never ever been involved in tobacco and did not see this solely as an issue to do with women in development. They left feeling this is a major neglected area requiring global action. Again, many of the major thinkers are based in the UK and need to be exported to carry the message worldwide. =A0=A0305. So we have got to get across to women that there is no liberatio= n in dying like a man. (Dr Yach) Exactly. Chairman =A0=A0306. That is one way of putting it, Audrey. Dr Yach, I would like to = ask one final question before we finish. We are meeting officials from the EC next week. Do you have any specific thoughts on the role of the EC in respect of tobacco policy and the areas that our Committee should be addressing when we meet with officials in Brussels next week? (Dr Yach) The EC has a unique position now in the WHO Convention as a very special case of an inter-governmental agency itself representing the will of EU members and they can play a very strong leadership role in ensuring that the 15 Member States speak as one and speak at the highest possible level of tobacco control from a public health point of view. They are also thinking very deeply about the area of product modification. I think they need to be encouraged to continue their work in concert with WHO, which is something we know is happening. As they start thinking about the accession countries and the countries who are likely to become members over the next decade I think we should emphasise to them the fact that this is the time for them to bring their tobacco control policies in line with that which applies within the European Union. Many of those countries are focusing at this stage on the financial requirements for joining, but they need to recognise there will be many other Directives, the advertising one being an important starting point. We would see the EC as a vital partner alongside the Member States and at this stage we would regard our relationship as extremely good. The other issue is the issue that you raised, Ms Wise, and that is the need to ensure you have a coherent approach to tobacco control across all sectors and that does require decisive leadership and that is the kind of leadership Dr Brundtland seems to have been able to install in many national leaders. You cannot continue agricultural subsidies simultaneous with trying to profess the need for strong public health measures against tobacco. =A0=A0307. Can I thank you for your very helpful evidence and for your participation in this inquiry and for the documents that you have been good enough to give us. We are most grateful to you. Thank you very much. =A0=A0 (Dr Yach) Thank you. =A9 Parliamentary copyright 2000 Prepared 2 February 2000 From owner-intl-tobacco@venice.essential.org Fri Feb 4 12:42:13 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 4EF9221AFF for ; Fri, 4 Feb 2000 12:42:12 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id MAA29859 for ; Fri, 4 Feb 2000 12:42:11 -0500 Date: Fri, 4 Feb 2000 12:42:11 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] Minutes of Evidence: Examination of witnesses: PROFESSOR JOHN BRITTON, DR JENNY MINDELL, SIR ALEXANDER MACARA and DR BILL O'NEILL Minutes of Evidence: Examination of witnesses: PROFESSOR JOHN BRITTON, DR JENNY MINDELL, SIR ALEXANDER MACARA and DR BILL O'NEILL Source: House of Commons, Wednesday, 2/2/00 Select Committee on Health Minutes of Evidence=20 ------------------------------------------------------------------------ Examination of witnesses (Questions 308 - 319) THURSDAY 9 DECEMBER 1999 PROFESSOR JOHN BRITTON, DR JENNY MINDELL, SIR ALEXANDER MACARA and DR BILL O'NEILL Chairman 308. Thank you for coming this morning. We are most grateful to you for the evidence that you have already submitted. I wonder if I could ask each of you to introduce yourselves briefly to the Committee, starting with you, Dr Mindell. (Dr Mindell) I am a medical doctor. I have spent much of the past 20 years looking after patients suffering from the effects of smoking and dealing with the problems that causes their families as well. I have spent around 15 years being involved with tobacco control, including being Director of a Cancer Prevention Campaign and I have published research on tobacco control. I am trained in epidemiology and public health and I am a member of the Faculty of Public Health Medicines and on their Policy Committee and on their Cardiovascular Working Group. (Dr O'Neill) My name is Bill O'Neill. I am a medical member of staff of the BMA. I was previously a consultant in palliative medicine and prior to that a general practitioner and I have, amongst other things, responsibility at the BMA for our policies on tobacco control, including an EC funded project called the Tobacco Control Resource Centre, working with medical associations across the European region, encouraging the involvement of other medical organisations in tobacco control issues. (Sir Alexander Macara) Sandy Macara, immediate past Chairman of the BMA. I have a particular continuing function in relation to tobacco control in that I chair a tobacco action group jointly between the European region of WHO and an organisation called the European Forum of Medical Associations which is representative of the whole of the WHO European Region and this activity is directly serviced by Dr O'Neill's Tobacco Control Resource Centre which was set up in the Association when I was the Chairman. I am also Chairman of the National Heart Forum. I am also anxious to remind people that it is heart disease as well as cancer which is very importantly involved in all of this. (Professor Britton) I am John Britton. I am a consultant physician in respiratory medicine and I work in Nottingham. I chair a group which advises the Royal College of Physicians on tobacco related issues and I am here today representing the College. 309. Could I begin by asking you, Sir Alexander, a point I have raised with a number of our previous witnesses in earlier sessions which is that we are now 50 years on from fairly significant evidence of the harmful effects of tobacco on health. I mentioned in the previous session that we had the Health Minister in 1954 speaking in the Chamber of the House of Commons about the knowledge at that stage. Since this time we have had six million deaths arising directly from tobacco use in this country. 120,000 people die every year. Why on earth has it taken so long, after all these years of detailed knowledge, to address this matter seriously? (Sir Alexander Macara) That is a very good question. There are a number of starting points. The group of people who responded most rapidly and most effectively to the evidence which our colleagues Richard Doll and others were producing all that time ago were the doctors and other groups who were able to understand and access the information followed suit. Unfortunately that message has not been taken and applied to the same extent by people as a whole. I think there are a number of reasons. One must be that as doctors and scientists we are concerned to base everything we do upon evidence and I think we have been excessively optimistic in our expectation that when we have produced the evidence people will act on it. By "people" I mean government, I mean consumers and I mean the tobacco manufacturing industry. The fact is that none of these groups acted at all in a sufficiently responsible manner to the evidence which we had produced. Perhaps we were insufficient zealots, dare I use that word. Perhaps we should have been stronger in our advocacy about the implications of the evidence which we were producing. 310. There might be another interpretation and that interpretation was implicit in Dr Yach's earlier evidence, which is that governments have been corrupted by the tobacco industry. Would you apply that interpretation to the UK? (Sir Alexander Macara) I have been concerned for some time that a number of Members of Parliament whom I have known, whom I have admired and respected greatly seem to be prepared to take the Queen's shilling from the tobacco manufacturing industry so that they receive retainers. They did not have to declare this interest. I know that some of them are at pains not to declare that interest. I would not claim that that was corruption, but it does seem to me to be unfortunate. 311. Were these people who had some influence in terms of government policy? (Sir Alexander Macara) I certainly had the impression that the exercised influenced beyond that which you would expect the average Member of Parliament to do because they were obviously so very well informed by the misinformation put out by the tobacco manufacturing industry who have always, at least until very recently, sought to rubbish the evidence by suggesting that it is a matter of controversy. There is no controversy about it because the facts are clearly demonstrated. 312. I think you have been unduly modest about the efforts made by your profession in respect of convincing politicians on the health dangers of smoking. Do you have any view on the advice given by successive Chief Medical Officers on the issue of smoking and health to successive secretaries of state and successive governments and how that advice has been acted upon or not acted upon and, if so, why it might not have been acted upon in view of your earlier comments about connections between tobacco companies and Members of Parliament? (Sir Alexander Macara) The four countries of this kingdom are uniquely well served by their Chief Medical Officers because there is no equivocation about their position, they are the Government's advisers. There are other countries, notably in Europe, where the Chief Medical Officer is a political appointment and so he does not have the same credibility. Our Chief Medical Officers have consistently sought to advise Ministers at the time of all the implications of the evidence which the professions have produced. I am bound to say that one gets the impression that Government has been only too happy to use Chief Medical Officers to distance themselves from the possible unpopularity of having to advise people against something that they want to continue doing and where they do not want to face the effect upon their health. Of course, the tobacco manufacturing industry is only too happy to use both the CMOs and their governments as a cordon sanitaire between themselves and the consumers. We should have required the manufacturers to admit they are producing a product which will kill half of all those who become addicted to it. 313. Looking back over the 50 years that we have talked about when all the information was emerging, at what point do you believe that had we had an open system of government and been aware of all these influences government could have acted to save lives? At what point do you feel we might have seen some much more significant action than has been taken over this period? (Sir Alexander Macara) I would put as the crucial date 1962 when Professor Britton and my Royal College of Physicians produced its first report on smoking and health. It could not have been more authoritative without being authoritarian. It projected all the evidence in a thoroughly convincing way and on which, as I have indicated, doctors at least acted. If your predecessors in all parties had taken this matter up at that time we could have saved millions of deaths and a great deal of preventable disease. 314. Can I just focus for a moment on one or two of the issues that we raised with the previous witness to do with the records of the various tobacco companies. I wonder whether any of the organisations represented here have accessed the documents of the depository in Guildford or are aware of relevant information in those documents that has a bearing on what we are looking at or a bearing on the concerns that we have just been expressing about the amount of time it has taken to address this issue politically? (Sir Alexander Macara) Dr O'Neill has looked at this particularly. (Dr O'Neill) At the BMA we have not made a direct attempt to get access to the information because of its inaccessibility. What does one do when faced with a warehouse of documents that are not adequately indexed? I think Dr Yach has made the case very well for the need for electronic access to that information and that point has been made by other witnesses to this Committee. (Dr Mindell) I represent a very small organisation and we do not have the resources to go there and try to look for needles in haystacks. 315. I think one of the impressions we have from having met a number of people in the States who were very interested in this point is that collectively there is a lot of interest and a willingness to look at what this archive contains and the implications of the archive on future policy. Do you have any thoughts from your knowledge of that archive and other archives that may have come to light on steps that we may be able to take through this inquiry or procedures that we may bring about to move forward on the knowledge of information that clearly was retained by the tobacco companies going back many many years? (Sir Alexander Macara) I do not know what my colleagues think, but I was impressed by Dr Yach's replies to your questions about this and, in particular, the way in which electronic access might assist us here. Clearly we do need some assistance to enable the basic work to be done. When we do have some information then we can proceed. (Professor Britton) Whilst the contents of archives, such as the Guildford archive, will be fascinating in the insight that they provide to what has gone on in the past, I would say that in many other ways we have perfectly adequate evidence to make sensible public health policy for the future without spending hours and years trawling through dusty archives. Mr Austin 316. I think Dr Yach was suggesting that $2-4 million may be the cost of accessing that information. Do you feel that that would be public money well worth spending? (Sir Alexander Macara) It depends on whether one is thinking in absolute or relative terms. It may not seem to be as useful as other measures that might be taken, but in absolute terms one would have thought it is a very small amount of money to find as against that which is involved in the whole tobacco manufacturing market. Mr Gunnell 317. You would think that most of the health consequences of smoking are known beyond reasonable doubt. Where would you say there is still genuine scientific controversy about them? Do you not agree, since there is no doubt about the issues and the consequences of passive smoking and that there ought to be action taken by Government on a very firm basis in connection with that, that they should be prepared to legislate and not to rely on the voluntary agreements of companies involved? (Professor Britton) In terms of active smoking, there is no doubt that smoking causes lung cancer and a long list of diseases which I think probably everyone here is familiar with. What is not known is how long that list is and which associations have not yet been detected. In terms of passive smoking, I think there can be no question that passive smoking is associated with an increased risk of lung cancer, respiratory symptoms in young children, and passive smoke exposure of the unborn child with an increased risk of death in the utero. This is imposed on children by smoking adults, which I think is unacceptable in public health terms. 318. Do you think that a much firmer line should be taken by Government to make it clear that they are not going to rely on the voluntary agreements of the companies involved or the restaurateurs or public opinion anymore? (Professor Britton) I want to come back to the question the Chairman asked earlier about who is at fault for the failure of public health measures in tobacco controls. In my view a great deal of fault lies in Government for not grasping the obvious facts and acting on them. The voluntary agreements are part of the reason that tobacco control is still so low. Although it is better than many countries, it is inadequate in this country. 50 years have gone by because of prevarications by Government. 319. So that would indicate that it should be made compulsory through legislation, would it not? (Professor Britton) Yes. (Sir Alexander Macara) Which could well apply to workplaces because just as we should be protecting children, we need to protect workers and not every employer is as responsible as they might be in that regard. (Dr O'Neill) I think that is unquestionably true. I think one should distinguish between voluntary agreements with the tobacco industry and voluntary agreements with other groups and one would not want to criticise the restaurant and pub industry for the initiatives they have taken, but I think one has to draw a clear distinction between groups such as this ,and the tobacco industry, based on the behaviour of the tobacco industry over the last three or four decades. =A9 Parliamentary copyright 2000 Prepared 2 February 2000 Select Committee on Health Minutes of Evidence ------------------------------------------------------------------------ Examination of witnesses (Questions 320 - 339) THURSDAY 9 DECEMBER 1999 PROFESSOR JOHN BRITTON, DR JENNY MINDELL, SIR ALEXANDER MACARA and DR BILL O'NEILL Mr Austin 320. I was at a meeting a few nights ago where one of the physicians was saying that the incidence of heart disease was significantly increased by environmental tobacco smoke and I see you left that off your list. (Professor Britton) There is a long list of diseases associated with that and I have mentioned some of them and heart disease is another. Audrey Wise 321. What do you think of the tobacco company's approach to medical science both over the last few decades and currently? (Sir Alexander Macara) They have been very flattering, have they not? All the evidence now is that they were at pains to repeat the work which had been done by independent scientist; in fact, they employed other independent scientists to research the effects of tobacco. The evidence now is that their own research has confirmed the evidence which had been produced and then they appear to have been at pains, as we now know, to conceal this confirmation. You may say that they were highly flattering in that they recognised the need to repeat the work no doubt hoping to be able to find loose threads that they can pull to unravel the whole fabric of the argument against them. I am afraid in historical terms they have shot themselves in the foot because they have now been revealed to have been responsible for deliberate suppression of the facts and misrepresentation about the facts which had been produced. 322. I am interested in some of your phases you have used, such as "as we now know" and "have now been revealed" and that would not have happened to the same extent by any means without people rooting about in dusty archives. I wonder if you would care to comment a little bit more on that because I have noticed in the BMA evidence you have a list of tobacco company's failures, that is failure to inform of the dangers of smoking and failure to reduce the harmfulness and failure to disclose the contents and so on. Failure is an interesting word in that context because failure suggests you have tried to do something and you have not quite managed it. I would rather say that they have tried to mislead rather than failed to inform and I wonder if you would care to comment on the thrust of your evidence there. Is your own evidence strong enough? We hear that governments are weak. (Sir Alexander Macara) We do not hesitate to use pretty strong language on occasions because we feel it is our public duty to promote public health and to protect our patients, but sometimes we want to assume that there might just be some intention of good faith on the part of the tobacco manufacturers. It may be that they felt their responsibility was to protect their markets and their shareholders and their employees, which is a very worthy matter if you are an employer or a shareholder out with the responsibilities to the public health. They might have thought that was your responsibility as Parliamentarians and ours as medical scientists. We were restrained in the use of that word(failure), but I certainly would not disagree with the view that it is hardly strong enough. 323. You have mentioned your disappointment at the failure of people to act on warnings about health damage. It does seem rather remarkable that there has been quite a lot of knowledge and suspicion about damage to health. I wonder if you would care to reflect and discuss the issue of the public mood in connection with this. We went to the USA last week and I picked up a very strong feeling of anger which is missing here. People are warned and there is a certain amount of anger on the issue of the rights of the non-smoker, but because of the disclosure of the tobacco companies misleading and manipulating people in the USA and ripping off and denial and lying there is a considerable mood of public anger. Do you not think that if people become angry about being manipulated they may be more open to public health messages? (Dr O'Neill) The reality is that in this country it is estimated that we have been spending about =A310 million per year getting across the health message as opposed to probably ten times that amount of money being spent by the industry. There is no doubt that in the United States the series of cases that have gone to the courts has done an enormous amount to highlight the dangers associated with smoking and, in particular, to highlight the behaviour of the industry. The British Medical Association publicly supported the group action that has been taken on behalf of the 52 patients with lung cancer in this country through the courts, not because of the probably relatively paltry sums of money that patients were going to get at the end of the day, but because of the information that would be disclosed in court, because for the first time the truth would see the light of day and we certainly regretted the collapse of that case. 324. I think some of us individually might agree with you on that. Does that not make it even more important to ensure that the truth sees the light of day? (Dr O'Neill) We believe that until the industry are put in the dock in this country, whether it be in front of a Committee such as this or some other forum, we will not have the full truth, and nor will the public, of what has actually gone on over the last 20 to 40 years. 325. The Chairman asked you whether you had attempted to access the Guildford depository. Are you aware that if you did try tomorrow you would almost certainly be told, "I am sorry, nobody can get in for at least the next four months because we are booked up"? (Dr O'Neill) We are absolutely aware of that. 326. Perhaps there is some merit in looking in dusty archives. If they are so keen on keeping it secret, should not all of us be rather keen on getting it revealed? (Professor Britton) I would not wish to be misinterpreted=97 Chairman 327. I think you might have been, Professor. (Professor Britton) On the one hand it is important to establish the truth of events that have gone by if that influences public mood in terms of engendering a sense which I, too, have detected in the United States of betrayal by an industry, but the facts of the health arguments have been with us for nearly 40 years and perhaps it is appropriate to look to the future rather than the past in terms of resolving this problem. Audrey Wise 328. But that implies, does it not, that they have all changed their spots? (Professor Britton) Who has? 329. The tobacco companies. (Professor Britton) Effective public health measures to do with smoking will come from legislation. 330. Are you conscious of the scientific and technological precision and power which we and health authorities in general are facing? We were told, for example, by the US Food and Drug Administration that the scientific knowledge and technological power of the tobacco companies enables them to ensure a nicotine dosage of such precision in every cigarette packet that outweighs the capacity of the pharmaceutical companies to ensure the dosage they want in nicotine replacement therapy. That is the level of scientific and technological power that we are facing. Does that suggest that this is all to do with past attitudes of the tobacco companies? (Professor Britton) Tobacco companies produce very sophisticated products, I do not think anybody here would argue against that. Cigarettes are nicotine delivery devices, that is what they are created to be. Salbutamol inhalers are broncho-dilatory devices used by people with asthma to treat their asthma. They are also very sophisticated devices. The asthma device is legislated to very tight standards of safety and disclosure and cigarettes are not. That is a failure of legislation, not of technological advance. (Sir Alexander Macara) It is even worse than that because we have evidence of the manufacturers deliberately putting additives about which we simply do not know enough into tobacco in order to increase the absorption of nicotine from the bronchi. They even use chocolate for this purpose. I have no doubt if they put on the packet that their product contained chocolate it might be a very clever marketing device. I think they ought to have me as a consultant. They put it there in order to increase the absorption of the nicotine in the cigarettes. That is absolutely right, they are using the results of their own research to potentiate the addictive part of their product. 331. That does suggest that when we talk about manipulation by the tobacco companies it is current as well as past. (Sir Alexander Macara) There is no question about that. I do not know whether my colleagues would like to add anything. (Dr Mindell) I think what Professor Britton was saying is that if governments want to act to introduce comprehensive legislation to control tobacco they can do that on the basis of what is already known without necessarily having additional information from the archives. However, the archive material is important partly because of increasing the public's awareness and acceptance and demand for such legislation but also to avoid the tobacco industry knowing things that Government does not when the legislation is worded and that is why I think that continuing exposure of current research and other internal memos would be important as well. 332. I am very anxious that Professor Britton should not be misinterpreted by anybody else. (Sir Alexander Macara) So are we. 333. We had an exchange with the Department of Health on this when they came to give evidence and some of us were surprised to find that there is no assessment of the real public health consequences made about additives, additives just get approved. We were told, "Well, we don't look at whether they are dangerous because they are used in such small quantities". I did point out that the purpose of some of them was to make the tobacco more palatable and more attractive. You could use an analogy with cocaine: you use spices and salt in very small quantities, but it has a very big effect on whether you want to eat it or not and the same thing could apply to cigarettes. It may be that this message goes into the Department of Health. Would you like to add your comments on this particular aspect? (Sir Alexander Macara) Dr O'Neill certainly will. I would just add that strychnine is very effective even in the very smallest possible doses. Dr Brand 334. Are you suggesting that we add that to tobacco and shorten the course of events? (Sir Alexander Macara) I can think of some people who might think of it as an advantage. (Dr O'Neill) The reality is that we regulate our food, we regulate our drugs and tobacco does not fall into either category. The majority of additives in food are regulated. There is absolutely no reason why additives in tobacco and other constituents in tobacco should not be regulated and until we have effective regulation we are unlikely to see any real change. 335. Can I pick up that point on regulation, Mr Chairman, because we put the same point to the Department of Health, which is that there does not seem to be any consumer protection for people that smoke. The feedback I think we had was, "Well, why should there be since it is such a nasty habit anyway which kills half its consumers", and I think there has been an absolutist attitude towards smokers which is beginning to shift a little. I recognise in the evidence we have received from ASH and in the written evidence from the Royal College of Physicians that people are now talking about safer cigarettes and the regulation of products. I do not want to be too historical, but have we not been at fault in saying that we really cannot cope with anyone that smokes at any time? (Dr Mindell) I will make two points in response to that. Firstly, as regards regulation, we have the bizarre situation at the moment that nicotine delivery devices that deliver only nicotine are highly regulated, but if they deliver thousands of other toxic chemicals as well then they are not regulated. You should remember that almost all smokers start smoking when they are children, when they are far too young to be concerned with dying when they are 40 or 50 rather than when they are 60 or 80. Most smokers want to give up but they are addicted. When you interview teenagers you find that most of them say, "Yes, I smoke now but I'm going to stop", and they find it very difficult to do so. Some find it extremely difficult. Some have managed to stop. We know that there are still a very large number of people who would like to stop smoking. There are a lot of inequalities in this country, not so much in who starts smoking and not so much in who wants to stop, but particularly in those who succeed in stopping smoking and that is where the biggest divide is. Chairman 336. So it is a social class divide, the implication being it is middle class people who can stop and working class people who cannot, is it? (Dr Mindell) Those in the poorest circumstances may not be able to afford the additional benefit of nicotine replacement or they may have so many other stresses in their life that the difficulties of stopping smoking are more than they feel they can cope with. The two most important things in stopping smoking are the desire to want to stop and to believe that you can stop and that you can exist without cigarettes and this is why all these other things that we have also been touching on, whether it is price rises or smoke free areas, are also important for smoking cessation because it can encourage people to exist as a non-smoker. Dr Brand 337. Is it not very important that we have access to the information that clearly the tobacco companies have to their knowledge that allows them to produce products that encourage people to continue? (Professor Britton) It is clearly important to know what is in cigarettes. The gains in public health that are to be realised have to do with legislating against what is there and what is likely to be produced in response to legislation. A point one of my colleagues made was that having a fuller awareness of what is known about tobacco technology is crucial to the phrasing of such legislation and the formulation of legislation, but the public health gains can be made without getting too obsessed with what is actually in the cigarette. Mr Austin 338. Can I deal with what is in the cigarette. In a previous session, we had evidence that suggested that a large number of smokers actually believe that smoking low-tar cigarettes or lights or milds or ultra-lights are less harmful, but we have had evidence that because they need to get their fix, they engage in compensatory smoking, so that more virulent forms of cancer and adenocarcinomas have been increasing as well, which brings me on to whether there is such a thing as a safer or a less deadly cigarette. Obviously the Government's health campaign is that obviously, we all agree, the best thing is not to start and if you do start, to stop, but even if the Government meets its targets of getting people to quit smoking, in ten years' time a quarter of all adults will still be smoking and overwhelmingly in the poorest groups in society. Is it possible to reduce that health impact on those who continue to smoke by requiring, by legislation, changes to the content of cigarettes, to remove selectively or reduce chemicals which we know contribute to cancer and lung and heart disease? (Sir Alexander Macara) It would be one contributory factor, but on its own it would be of limited value. (Professor Britton) I think there are at least two issues raised by that. One is genuine harm reduction in smokers who cannot give up and that is obviously as desirable as any other harm reduction intervention. One of the problems, as I see it, with the whole low tar strategy is that what it may well do is encourage people to continue smoking, believing that they are smoking a safer product, when in fact they are not. I think it is a very difficult judgment to make between something that genuinely reduces harm for those people addicted to the products and who cannot give up from that product which actually increases harm by extending the market for the product. (Sir Alexander Macara) There is no such thing as a safer cigarette; there are only less dangerous cigarettes. (Dr O'Neill) I think we need to be very careful with the terminology because there is no doubt about it, that the industry has scored an enormous goal with the concept of low-tar and light cigarettes. I think we need to make sure that that does not happen again. Having said that, I think we do need to acknowledge the fact that even if we meet the targets which are set, 24 per cent of the population will still be smoking in ten years' time, and whatever can be done to lessen the burden of disease in that group of people clearly is very important, but absolutely accepting the point that Professor Britton made, that we need to be careful that that then does not fudge the whole issue, that we do not find we are actually discouraging people from giving up cigarettes by implying that there actually is a safe product. It is quite clear that there cannot be a safe product in the way in which we understand this product. There are clearly opportunities for looking both at additives, for looking at other constituents in cigarettes, and you have already had evidence about the possibility of lowering nitrosamines in cigarettes and lowering carbon monoxide levels in cigarettes which would respectively have an effect on the burden of cancer and indeed heart disease. I think those avenues should be pursued, but I think we need to make sure that we are actually getting at the truth we have all of the information and that we do not allow the industry further opportunities to score points on this issue. (Sir Alexander Macara) And we do not allow the industry to try to paint those of us who are anxious to help the victims of their successful marketing, that we do not allow them to paint us as nannies or as health fascists because this is the obvious ploy now which I think in part answers Dr Brand's question as to why are we not doing enough to protect smokers. I sense, Chairman, and I am sad to say this, but I sense with your colleagues, within government generally, within the Department of Health a terror about being accused of being nannies or health fascists when all we are trying to do is the job you have been elected to do and we have a moral duty to do which is to stop these people from killing people to the extent that we possibly can. Chairman: I think I will bring Simon Burns in and he is not called "Burns" for nothing! Mr Burns 339. If there is no such thing as a safer cigarette, but there are only less dangerous cigarettes, then how much do you think that nitrosamine-free cigarettes are less dangerous than conventional cigarettes? (Professor Britton) In theory, nitrosamine-free or nitrosamine-reduced cigarettes should be safer than conventional cigarettes, but I think that there is a risk with initiatives such as that, as with the low tar initiative which dates back 30 years, to assume that because it seems logical that something will generate a health gain, it actually will. What we have seen with low-tar cigarettes is a change in the way that people smoke, the products that they smoke and a change in the disease profile that emerges from it, so the assumption that reducing tar will produce a health benefit may have actually backfired by just changing the profiles of cancers caused and by people compensating and finding a way around the measures that have been made to reduce the toxicity of the cigarette, so, in theory, yes, reducing nitrosamines, reducing tar in general should help, but, in practice, you do not know it does until you have introduced it and tried it, and if that perpetuates smoking in society for another 30 years while you decide whether it has worked or not, you have lost. =A9 Parliamentary copyright 2000 Prepared 2 February 2000 Select Committee on Health Minutes of Evidence ------------------------------------------------------------------------ Examination of witnesses (Questions 340 - 359) THURSDAY 9 DECEMBER 1999 PROFESSOR JOHN BRITTON, DR JENNY MINDELL, SIR ALEXANDER MACARA and DR BILL O'NEILL 340. We were in the United States last week and we met up with a company called Star Scientific who have got this patent to take it out of cigarettes. Do you think though that if it were to be shown that that is infinitely less dangerous, then it should be made compulsory on the basis that you are not going to get everyone to give up smoking, so you may as well have a product that is the least dangerous one as possible on the market? (Professor Britton) Well, I think that cigarettes need to be regulated, as I said earlier, like any other drug-delivery device, but you are starting from a situation where instead of a new drug being introduced into the market and having to demonstrate its safety, you have an established product in the market whose market share we want to reduce, whose coverage we want to reduce, and it is important that tobacco manufacturers are made to do as much as they reasonably can to ensure the minimum danger of their product in a background of regulation which has the target of a smoke-free society in a reasonable period of time. (Sir Alexander Macara) You probably know that the Council of Ministers in the EU, which was attended by Gisela Stuart of the UK, in its meeting on the 18th November supported the proposal from David Byrne, the Commissioner for Health, that there should be EU-wide limits on the tar, carbon monoxide and nicotine content of cigarettes, so there is at least a start there within the EU. 341. But picking up on that point, do you think that consumers have been misled in the recent past by the emphasis on lowering nominal tar use? (Sir Alexander Macara) I do not think there is any doubt that they have been misled by receiving part of the truth and not the whole truth. It is sometimes more damaging to have part of the truth because you do not realise what you do not know, and I think it would be fair to say that in recent times the industry has begun to admit not its complicity in concealing facts for so long, but to admit that there is a link between smoking and-ill-health. They are still trying to deny the nature of addiction, so at least perhaps they still deny that tobacco is addictive, but they seem, I think, to be more concerned to fend off the possibility of litigation than to be honest in freely informing their consumers about the risks. 342. Am I right in thinking, and I just have this in the back of my mind from some people we were talking to in America, that with regard to lower-tar cigarettes, the light cigarettes, the medical evidence is now showing that although people believe that by smoking lights, they are in fact enhancing their health prospects, but in fact the illnesses have shifted or different strands have developed, particularly with heart disease, because it is a different product, so in fact it is not safer and it is a myth that if you buy lights, you are actually going to be improving your health prospects? That is correct, is it not? (Sir Alexander Macara) That is absolutely correct and it reinforces the point made earlier about the importance of language; that to suggest that something is light means it is not heavy and, therefore, it is not dangerous, and we do have to be aware of this. (Dr O'Neill) There are two things here because not only has it not lowered the burden of disease, but it has also changed the distribution of disease, which is the point Professor Britton made a few moments ago. 343. So do you think that you can take a logical conclusion from that, that all the publicity about the safer cigarette, whether it be by taking out certain elements in cigarettes or by having lights or lower-tar ones, is in fact leading to encouraging some people to smoke or to continue to smoke who would not otherwise have started smoking or who would have tried to stop smoking with the painful withdrawal symptoms that that entails rather than going on to what they believe is a safer cigarette? (Sir Alexander Macara) Yes. 344. So if the answer is yes, do you think then that we should do anything to stop that sort of marketing of cigarettes that creates the impression that they are safer or better for you? (Sir Alexander Macara) Yes. In fact we believe that you should stop all advertising and sponsorship and, as part of that, misleading statements. Marketing equates with advertising and sponsorship and we think that it should all be stopped. After all, we do not allow heroin, for example, to be advertised and freely available to the public. There is nothing much we can do to stop cigarettes being available in a free society, and perhaps if we had known what we know about them now when Walter Raleigh brought tobacco across that "damn ditch", as Perry Worsthorne once described it, we would have prohibited its consumption a very long time ago, but we did not. Dr Brand 345. James I tried. (Sir Alexander Macara) Yes, James I did try, but then he was a Scot in England! Mr Austin 346. It was James VI, I think. (Sir Alexander Macara) It was James VI and I. Chairman: We are going slightly off beam now. Mr Burns 347. I just wanted to take us slightly off beam as well because something has just occurred to me, arising out of something you said earlier. Forgive me for asking, but when did you leave the BMA? (Sir Alexander Macara) I was Chairman for five years. 348. When did that finish? (Sir Alexander Macara) Seventeen months ago in July 1998. 349. Do you think, given your experience in that role and your liaison and dealings with the Department of Health, that it is surprising to you that the independent Chief Medical Officer would not have given the Government of the day his advice on, say, for example, making exceptions to Formula One sponsorship? (Sir Alexander Macara) One would be speculating of course=97 350. Indeed. (Sir Alexander Macara)=97but I would be surprised if Sir Kenneth Calman had ever withheld any good advice=97 351. I was thinking more of the current Chief Medical Officer. (Sir Alexander Macara) I would again not speculate, except that he was my student. 352. So you do not know how he operates, his modus operandi? (Sir Alexander Macara) Yes. He was a good student and I would expect him to have demonstrated that. The Chief Medical Officers, as I keep emphasising, there are of course four in our devolved kingdom, I would be very surprised if they have not given good advice whether solicited and welcome or not. 353. Even if they had only been in place for two weeks? (Sir Alexander Macara) Or perhaps particularly because they have to establish their position, and their credibility depends upon being seen to give the best advice without any political consideration. 354. Of course. That is fascinating. Would it then come as a surprise to you that he told me that because he had only been in post for two weeks, he had never given any advice to the Government on Formula One and sponsorship? (Sir Alexander Macara) No, it would not surprise me if he had not been given the opportunity or if he had judged perhaps that ministers at that particular time had a great deal more on their minds, and I assume that what I said at the proper opportunity would have been=97 355. I am sorry, but I thought you said a minute or two ago that knowing the man, regardless of whether he was asked or not, he might have given a view. (Sir Alexander Macara) Yes, but a CMO, no more than any other civil servant, they are civil servants, cannot very well bully ministers and force them to=97 356. No, but they can give advice surely in that capacity without bullying by carrying on if the advice is not taken. (Sir Alexander Macara) I was assuming there would be the appropriate opportunity for them to give advice=97 357. So would I. (Sir Alexander Macara)=97whether welcome or not. Dr Brand 358. Chairman, can I help SirAlexander. Would it not be true to say that the Minister that the Chief Medical Officer would have been talking to, the Public Health Minister, was not actually involved in making the decision on Formula One? (Sir Alexander Macara) I imagine that so far as Formula One is concerned we all have something of a problem because I think we could all have handled the matter better and the political sensitivities, I think we all understand the political sensitivities, and it is highly unfortunate, but I would take the view that we should go on from that experience to learn that we cannot make exceptions in terms of essential public policy. Chairman 359. I think you will be aware of the comments of this Committee on the Formula One issue, Sir Alexander. (Sir Alexander Macara) I can imagine, Chairman. =A9 Parliamentary copyright 2000 Prepared 2 February 2000 Select Committee on Health Minutes of Evidence ------------------------------------------------------------------------ Examination of witnesses (Questions 360 - 379) THURSDAY 9 DECEMBER 1999 PROFESSOR JOHN BRITTON, DR JENNY MINDELL, SIR ALEXANDER MACARA and DR BILL O'NEILL Mr Austin 360. To take the cigarette as a nicotine-delivery vehicle, it has certainly been suggested that the tobacco companies have tried to define the addictiveness of nicotine as a habit and I have to say I did make a comment in the earlier session that even the Tobacco Advisory Council seem to use the words "dependency", "habit" and "addiction" almost interchangeably. There is this sort of suggestion that it is a habit a bit like shopping on the Internet, that it is a little damaging. Would you like to tell us something about the medical view of the nature of the addictiveness of tobacco? (Professor Britton) Nicotine "addictiveness" and "dependency" are words that can be used interchangeably for practical purposes. The addictiveness of nicotine is determined partly by the drug itself and partly by how it is delivered.Cigarettes deliver nicotine in a very rapid dose into the arterial blood to the brain and it is that form of delivery, plus the drug itself which is important. In that circumstance, the evidence that the College has recently put together in a report which our submission to the Committee is based on is that nicotine is as addictive, on a par in terms of addictiveness to heroin and cocaine, so to the major drugs of abuse and harm in this society, illegal drugs of abuse. 361. When did you reach the conclusion or when did the medical profession generally reach the conclusion that nicotine was addictive? (Professor Britton) There is reference to the fact that nicotine may well be addictive in the 1962 first Royal College of Physicians Report. I think that the bulk of evidence that our current report relates to has come through over the last ten years or so, between the 1980s and 1990s. I think that is right. 362. You have indicated that there is a comparison with other drugs of dependence, what are often described as "hard drugs". (Professor Britton) Yes. 363. I think some of us might think given the nature of the evidence that nicotine should be classified as a hard drug. (Professor Britton) Yes, it should be. 364. What objective research has been shown to demonstrate that nicotine is this powerful addictive drug on a par with those other drugs? (Professor Britton) There is extensive work in animals showing similar levels of drug-seeking behaviour for nicotine as for cocaine and heroin. The ranking of relative addiction varies according to the experimental system used. Drug behaviour in humans, dependency is defined in relation to certain set criteria from the American Psychiatric Association and from the ICD, the International Classification of Diseases definitions. Nicotine meets those criteria just as clearly as do other hard drugs of addiction and I do not think there is much distinction to draw between them. The main difference is firstly that nicotine does not produce intoxication and perhaps has not been seen historically as such a problem in society, and secondly that it is legal. 365. So apart from the fact that it is addictive, the damage is the delivery vehicle in which it comes? (Professor Britton) In theory, there are some potential ways in which nicotine may be harmful in its own right. They are very, very small effects. In terms of the total damage done by cigarette-smoking, it is minimal, negligible in relation to the harm done by the vehicle. Dr Brand 366. Given the addictive nature of nicotine, do you think we have got the policy right in supporting people that want to withdraw from this drug? (Sir Alexander Macara) I think we have got the policy right in wanting to help people. 367. That was not the question. (Sir Alexander Macara) Thank you. I hoped the question was: are we doing enough? The answer is no, of course we are not. Smoking Kills, which was launched almost a year ago, was a very good start in a statement of government commitment to assist people to quit smoking. What we particularly regretted was the restricted nature of the specific support which could and should be given through nicotine replacement therapy and I know that Professor Britton in particular has strong feelings about that; we all do. It seems very regrettable that the ability for doctors to prescribe for their patients an effective drug which would really effectively help them is so restricted. 368. How long, this is to you or Professor Britton, would you normally think there was a need for nicotine replacement during the withdrawal phase? (Professor Britton) The evidence is that nicotine replacement has most of its effects within the first few weeks of treatment and after about six weeks or so there is little incremental extra benefit. 369. So if you were going to make a recommendation to the Government, you would say that rather than having a week's supply to a very limited number of people in health action zones, you would make six weeks' supply available presumably in weekly bits so that people need to keep in contact with their=97 (Professor Britton) There are two points there. The first is that there is limited supply to a limited number of people in health action zones. People in health action zones qualify for nicotine only if they qualify for free prescriptions, so in fact the coverage of the availability of nicotine replacement therapy at present is less wide than the White Paper perhaps implies. Chairman 370. So it is people on free prescriptions in health action zones for a week? (Professor Britton) Yes, for a week. It is not people just living in health action zones, so in terms of postcode prescribing, which was the bite on the radio last night, health action zones are a particular example of how it should not be. You need to be living in the right postcode and to have free prescriptions to get one week of nicotine. (Dr Mindell) I think even then you actually have to be referred to a specialist smoking clinic. (Professor Britton) Yes, so there are many barriers to getting it. The second thing is that most people who are going to fail have failed by about a week and, therefore, if you make supplies of nicotine conditional on success up to a certain point, there are enormous potential savings to make. To give every smoker who says "I would like to give up smoking" six weeks of nicotine over the counter now would be very wasteful. Dr Brand 371. You believe that there is a distinct role for nicotine replacement therapy as part of a Stop Smoke programme? (Sir Alexander Macara) The important point is as part of, is it not? (Professor Britton) Nicotine replacement therapy works if you buy it over the counter, it just may not work quite so well. Nicotine replacement therapy is one of the most cost-effective medical treatments available. It is the only one that is effective, that I am aware of, that is not prescribable. (Sir Alexander Macara) It will work particularly well within the context of the general practitioner or health adviser supporting and counselling the individual, which is why it is important that general practitioners are able to prescribe it. 372. The Glaxo Wellcome drug, Zyban, is that something that should be evaluated as a matter of urgency by the National Institute of Clinical Excellence? (Dr O'Neill) It is very difficult to measure the word "urgency" in the context of the National Institute at the present time when there are so many things on the agenda. There is no doubt about it, the drug needs to be evaluated and a decision needs to be taken on whether or not it is going to be available in this country. (Professor Britton) The drug clearly works, as nicotine replacement does. Smoking kills 50 per cent of smokers and here is an effective treatment which will reduce that risk, it seems stupid not to take it on. In terms of the economic arguments, medicine embraces many incredibly expensive treatments. Drugs that lower blood fat levels are a classic example. An estimate in the press last week was of about =A35,500 per life year saved and smoking comes out at between =A3200 and =A3800 depending on how you deliver the service. It is remarkably good value. It is quite low tech and a bit simple and I think that is perhaps why it does not get quite the kudos of other interventions. (Sir Alexander Macara) There is just one point I would like to clarify. I expect Dr Mindell has another point. I would not like it to be thought that we are being critical of the concept of Health Action Zones. It has to be a good thing that there are opportunities there to target those people most in need of help and support of all kinds. It is also a good thing that nicotine replacement therapy will be evaluated. The important point Professor Britton was making was that the timescale in which that is to be permitted is far too short to produce the results that we would wish to see. I am sorry, I cut across Dr Mindell. (Dr Mindell) I wanted to add that smoking cessation support is really in two parts, one of which is what we were talking about just now about measures to help those smokers who have decided that they would like to quit and to help them at an individual level, but the public health policy level that requires Government action, apart from support at this individual level, is equally important, measures like banning all forms of tobacco promotion, increasing the price consistently above inflation, preventing smoking in public places. All these types of approaches are just as important in encouraging smokers to try to stop, in enabling them to remain stopped and in reducing the number of adult smoking models that influence young people. (Dr O'Neill) The other thing we must add to all of this is the fact that clearly the case for nicotine replacement therapy is proven. Having said that, we still have a situation where many people have contact with health professionals and are not asked something as simple as their smoking status. I know you have had evidence submitted here of the work of Professor Fowler in the late 1970s and early 1980s who, as a general practitioner, advocated the fact that every general practitioner should ask a patient about their smoking status, should give them brief advice and possibly add nicotine replacement therapy to that. That has been demonstrated to be effective. I think there is a case to answer for every doctor, nurse and health professional in the country, whether they are asking patients about their smoking status, whether they are advising them about the benefits of stopping smoking and, indeed, what doctors, nurses and others are doing themselves about their smoking behaviour. I think that is a very important message that we must get across. Chairman 373. Could I come back to regulation. Dr Mindell, you described broadly your thoughts on what should be included in the regulation. I do not know whether your view collectively is that that regulation should be national or EU-wide. There is another point I want to make before I raise another issue about the "light" cigarettes, a question which Sir Alexander raised. What are your views on the actual regulation of nicotine and whether nicotine can be effectively regulated out of these products in some way? (Dr Mindell) Can I start by saying that in tandem with deciding you can regulate nicotine out, or whether you should regulate it out, you need to know what you are regulating. The measurement of nicotine and tar is crucial. At the moment we have a completely flawed system. Low tar, low nicotine cigarettes actually contain almost identical amounts of tar and nicotine to not low tar ones. The difference is that when you smoke it, as smoked by those machines that are designed for these regulatory purposes, the amount of tar and nicotine is much lower than in the earlier designs of cigarette. That is not the same as when a smoker smokes it. As we have already heard, people who change from medium or high to low tar and low nicotine cigarettes inhale more deeply and leave a shorter stub because they are trying to maintain the same nicotine fix that they were getting on the previous cigarette. The other thing that has become known more recently is the way that tar and nicotine is lowered is through microscopic holes which happen to be where a smoker's lips or fingers would be and when those holes are covered you do not have this lowering effect. One of the things that has to be done is to develop some form of measurement that actually measures what is important rather than measures what customers are currently being told. Personally I am not bothered whether these regulations are at the EU or at the national level. The advantage of the European level is that they will be of benefit to more people. Whichever is easier to implement. Having them at a national level does not preclude, and may even strengthen, European moves to have them across Europe. I do not think that this Government should necessarily wait for European Directives. On the other hand, if that is considered a better or faster or more comprehensive way then that is fine. 374. Coming back to the issue of low tar, so-called "light" cigarettes, Sir Alexander made a point about completely banning advertising and marketing. Presumably you would be against a packet having somehow a claim in the title that was low tar or implicitly less harmful, would you? (Sir Alexander Macara) I think we do have to look at the language, the words that are used. I think we are entitled to restrict the words that can be used in the marketing to make sure that they are not misleading, whatever these words are. Chairman: Do any of my colleagues have further questions to ask? Audrey Wise 375. I would just like to get absolutely crystal clear from all four of you the question of the cost effectiveness of, say, six weeks appropriate prescribing by GPs of nicotine replacement therapy. If we made such a recommendation, for example, and obviously I do not know whether the Committee would be minded to do that or not, could we be shot down in flames on cost grounds or would we be able to back up such a recommendation and show its cost effectiveness as well as its effectiveness? (Professor Britton) This is a document called Smoking Cessation Guidelines and Their Cost Effectiveness, which was published a year ago, and the second part of this section is written by health economists primarily who looked at the effectiveness of different models of providing smoking cessation services. We will leave this document for you. As I said earlier, those costs come out at somewhere between =A3200 and =A3800 per li= fe year saved depending on what model one adopts, some are broad reach, some are restricted access. In terms of health cost effectiveness, smoking cessation is one of the most cost effective interventions available to us. I think the median cost effectiveness of the top one hundred medical interventions shown to prolong life=97and it surprises me sometimes that there are one hundred medical interventions that prolong life=97is about =A317,000 per life year saved. Smoking is under =A31,000. That is with six weeks of nicotine. 376. I appreciate that this is not intended as being an alternative to public health measures but you all concur? (Dr O'Neill) Absolutely. Just to reiterate the point that Professor Britton made earlier on, if someone is using the nicotine replacement therapy and after a week they are still smoking then there is no benefit in them continuing. We would not want to give you the impression that we think everybody should immediately get a six weekly prescription. 377. No, I said "appropriate". (Professor Britton) I think these are worked out on six weeks so it might be slightly cheaper than that. (Sir Alexander Macara) It is not either/or. Helping individuals or promoting and protecting the public health, it has to be both together. 378. It has been suggested to us as well, and I do not know whether you agree with this, that nicotine replacement therapy increases the effectiveness of other forms of health or support or intervention. Is that so? (Professor Britton) It doubles the success. Roughly speaking, whatever else you do is doubled by nicotine, which is why I said earlier that nicotine=97 379. By nicotine replacement therapy? (Professor Britton) By nicotine. Which is why I said earlier that nicotine over the counter without any support at all is probably doubling the chance of success of somebody who goes into a chemist and thinks "I think I might try to stop smoking", or "I am going to get something to help me". In general, the more one puts into smoking cessation, the greater the return. Bupropion, in so far as it has been studied, seems also to have a similar incremental effect on top of whatever else you do. Audrey Wise: So it seems from that that the most cost effective intervention is, as Dr O'Neill suggested, GPs advising and helping and discussing plus nicotine replacement. =A9 Parliamentary copyright 2000 Prepared 2 February 2000 Select Committee on Health Minutes of Evidence ------------------------------------------------------------------------ Examination of witnesses (Questions 380 - 383) THURSDAY 9 DECEMBER 1999 PROFESSOR JOHN BRITTON, DR JENNY MINDELL, SIR ALEXANDER MACARA and DR BILL O'NEILL Dr Brand 380. Primary care team, I think. (Professor Britton) Not necessarily, no, because there is more to it than that, but we are talking of small numbers of pounds. In fact specialist smoking cessation clinics are very cost-effective, but they can only see a small number of people. Audrey Wise 381. So smoking cessation clinics plus NRT, GP support plus NRT=97both of those are definitely spectacularly cost-effective? (Dr Mindell) And smoking cessation training and support for midwives and practice nurses and really all healthcare professionals ideally. Chairman: The GPs are wincing at the moment to that. The PCGs we are talking about. Dr Brand: The primary care team, not a PCG, and certainly in my own experience, I found one of our practice nurses absolutely brilliant at it. We were funded for smoke stop clinics and then the funding was withdrawn and people's enthusiasm waned and it was not as good as it was. Mr Austin 382. Everybody has said not only in this session that smokers become addicted when they are very young and those who do give up tend to give up later in life. I would just be interested to know whether you know of any examples of good practice where young people have been persuaded or enabled to quit the addiction. (Dr O'Neill) We can certainly get that evidence for you and send it to you because there certainly is evidence there from various groups working with schools and youth groups. Chairman 383. Do any of my colleagues have any further questions? Do any of the witnesses wish to add anything to what they have said so far? If not, then I will thank you, Dr Mindell and gentlemen, for your most helpful evidence. (Sir Alexander Macara) And thank you, Chairman, and the Committee for a most enjoyable as well as, I trust, productive session. Chairman: Thank you, Sir Alexander. =A9 Parliamentary copyright 2000 Prepared 2 February 2000 From owner-intl-tobacco@venice.essential.org Sat Feb 5 06:26:42 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 29A3C21AFF for ; Sat, 5 Feb 2000 06:26:42 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id GAA10665 for ; Sat, 5 Feb 2000 06:26:41 -0500 Date: Sat, 5 Feb 2000 06:26:41 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Sao Paulo State Government To Sue US Tobacco Companies (fwd) February 4, 2000 Dow Jones Newswires Sao Paulo State Government To Sue US Tobacco Companies SAO PAULO, Brazil (AP)--The Sao Paulo state government plans to sue U.S. tobacco companies in a bid to recover money spent over the past 35 years in treating smoking-related diseases, a local newspaper said Friday. State Attorney General Marcio Sotelo Felippe told the Folha de Sao Paulo newspaper that American lawyers have been hired to study the case and file the lawsuit in a U.S. court. Felippe did not say which companies would be sued nor for how much. His office said he was traveling and unavailable for comment. Sao Paulo would be the third Brazilian state to file a suit against American tobacco companies in a U.S. court. Last year, Rio de Janeiro hired four Texas lawyers to file a law suit against 15 companies, including Philip Morris, Nabisco and Batus Corp., seeking reimbursement of at least $5 billion. The state of Goias followed Rio's example and is also seeking reimbursement of $5 billion. The president of Brazil's Association of Tobacco Industries, Nestor Jost, told the newspaper that lawsuits pertaining to a local issue had to be filed in a Brazilian court. But attorney Reginaldo Oscar de Catstro of the Brazilian Bar Association, said there was nothing in the constitution that clearly impedes the states' lawsuits from being filed in the courts of another country. From owner-intl-tobacco@venice.essential.org Sat Feb 5 06:27:25 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 0436A21AFF for ; Sat, 5 Feb 2000 06:27:25 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id GAA10698 for ; Sat, 5 Feb 2000 06:27:24 -0500 Date: Sat, 5 Feb 2000 06:27:24 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] UK Tobacco companies to make their research Available (fwd) British Medical Journal 2000;320:336 ( 5 February ) News extra Tobacco companies to make their research available on internet Muhunthan Thillai BMJ Britain's major tobacco companies have agreed to make their medical researc= h freely available on the internet. Appearing as witnesses to a select committee on health at the House of Commons last week= , directors of some of the largest manufacturers, said that they had no problem with their archives being made more accessible. "We would be prepared to make these documents publicly available on the internet," said Peter Wilson, executive chairman of Gallaher Group. Company directors from British American Tobacco, Philip Morris, and R J Reynolds also agreed that they had no objections to the idea. Only Gareth Davis, chief executive of Imperial Tobacco Group, had reservations, citing "practical and legal issues which would first have to be taken into account." Information on tobacco research carried out by the industry is held at a depository outside Guilford, Surrey. Researchers have to apply to view the documents, and the waiting list is currently five months long. The chairman of the select committee, David Hinchliffe, Labour MP for Wakefield, said that it was "ridiculous to expect a researcher to wait until June" to view the documents. Dr Howard Stoate, Labour MP for Dartford and a practising GP, asked the companies: "Just how much is there actually available to internet researchers right now?" Directors from R J Reynolds and Imperial Tobacco Group admitted that there was nothing at all, but Martin Broughton, chairman of British American Tobacco, argued that much of his company's research was available at the moment on their US website. None of the five company representatives claimed to be familiar with the majority of their documents. Mr Broughton agreed that he knew little about the eight million documents held by British American Tobacco. The issue of advertising standards, particularly those overseas, was also picked up on by the committee. Guidelines for British advertising were not met when targeting British tourists overseas, they claimed. In particular, English language newspapers in some countries, such as Spain= , carried advertisements that seem to contravene rules by the Advertising Standards Agency that forbid the use of glamorous, attractive, and wealthy people in advertisements to promote tobacco. Mr Broughton said that British American Tobacco did "not take the view that the UK code has worldwide jurisdiction." He also said that he personally did not see any problem with the use of images of such people to market a tobacco product: "I don't think it is wrong=97not necessarily." From owner-intl-tobacco@venice.essential.org Mon Feb 7 12:03:07 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 6DE7E21AFF for ; Mon, 7 Feb 2000 12:03:07 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id MAA32524 for ; Mon, 7 Feb 2000 12:03:07 -0500 Date: Mon, 7 Feb 2000 12:03:01 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Anti-smoking plan comes under fire (fwd) Anti-smoking plan comes under fire Source: Asahi Shimbum, Friday, 2/4/00 The Liberal Democratic Party and the tobacco industry have denounced the health ministry's plan to create a healthier society in the 21st century. The ministry last year drafted measures to slice the nation's smoking rate in half by 2010. But the ministry backed off that goal after being bombarded by more than 2,000 complaints from the tobacco industry, ministry officials said. In addition, the LDP's Policy Research Council sent a resolution to the ministry, saying that government measures to restrict smoking would be unconstitutional. Before establishing the health target for the 21st century, the ministry suggested in an August interim report halving the current smoking rate-52.8 percent for men and 13.4 percent for women-as well as the current annual consumption of 3,152 cigarettes per smoker. The report came under heavy fire from Japan Tobacco Inc., a union of tobacco producers, a union of tobacco traders and others in the industry, the officials said. ``Smoking should not be controlled by the government,'' one complaint said. Another simply stated that ``cigarettes are legal products.'' The industry collected more than 53,000 signatures to oppose the ministry's proposed target. In November, special committees of the LDP's Policy Research Council sent their resolution to the ministry, saying that administrative guidance is a problem because individuals should decide if they want to use the product. The committees also said that the ministry's plan to set a specific target figure could be problematic, the officials said. Hiroshi Yanagawa, chief of the ministry panel that discussed the proposal, said it would be easy to reach the goal if the ministry offered assistance to people who want to kick the habit. Yanagawa, who is also vice principal at Saitama Prefectural University, said the ministry should indicate a specific figure for a reduced smoking rate because it is a crucial part of the proposal. ``I would like opponents of the plan to understand that the government cannot force the target figure on Japanese nationals,'' a ministry official said. From owner-intl-tobacco@venice.essential.org Tue Feb 8 14:09:37 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id B2A7421AFF for ; Tue, 8 Feb 2000 14:09:37 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id OAA27548 for ; Tue, 8 Feb 2000 14:09:37 -0500 Date: Tue, 8 Feb 2000 14:09:37 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] Ireland to Boost Anti-Smoking Efforts (fwd) Tuesday, February 8, 2000 Irish Times Agency to boost anti-smoking drive By Miriam Donohoe, Political Reporter An agency to step up the fight against smoking is to be established by the Government as part of a new national anti-smoking drive. The Office of Tobacco Control will co-ordinate and monitor Government smoking policy and will help enforce existing anti-smoking legislation. The Minister for Health, Mr Martin, told The Irish Times last night that the agency would be operating "in a matter of months". Staff for the new authority is currently being recruited and an office building is being sought. Mr Martin revealed that from next July all media advertising of tobacco products will be banned in the Republic, a year ahead of our obligations under a 1998 EU directive. The ban will be introduced by way of a statutory instrument. The Minister said the decision to establish the Office of Tobacco Control was prompted by the fact that enforcement of existing legislation and regulations was poor, especially in the area of the sale of cigarettes to minors and the enforcement of smoke-free zones. The Minister has also ordered a comprehensive review of all legislation in relation to smoking and the tobacco industry. "We are very unhappy at the moment with enforcement and compliance and I need to see why current legislation does not appear to be working. I am prepared to introduce tougher laws if necessary to improve matters," he warned. The Minister has also asked senior officials to review the antismoking health promotion campaigns. "While we have had many campaigns over the year, the fact is that there are more and more people smoking. We have to see how campaigns can be improved." Mr Martin confirmed that he would be supporting the Oireachtas Committee on Health and Children, which is seeking powers to summon witnesses and request documentation from the Irish tobacco industry in an effort to find out their knowledge of the harmful effects of tobacco. The chairman of the committee, the Fianna F=E1il TD, Mr Batt O'Keeffe, said last night the matter was to be brought before the Cabinet today or next week. "We need these powers to ensure that the full story of the tobacco industry role in covering up the dangers of smoking and their targeting of young people will be made known to the public." Mr Martin said he would be supporting the committee move. The Minister sent a strong signal to the tobacco industry that one of the main priorities of his ministry will be to cut down on the numbers of people smoking, especially young people. "I want to see us live in a tobacco-free society and will be doing all in my power to achieve this," he warned. The Minister will shortly be launching the 1999 report of the Department of Health Chief Medical Officer, Dr Jim Kiely, which shows that 7,000 deaths a year in Ireland can be attributed to smoking. The report will reveal that 30 per cent of all cancers are linked to smoking. According to the report, cigarettes are the single most common cause of avoidable ill-health. It states that 50 per cent of all smokers will eventually die of tobacco-related illness. Of these, 50 per cent will die in middle age. From owner-intl-tobacco@venice.essential.org Wed Feb 9 15:28:21 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 8FFED21AFF for ; Wed, 9 Feb 2000 15:28:21 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id PAA20836 for ; Wed, 9 Feb 2000 15:28:21 -0500 Date: Wed, 9 Feb 2000 15:28:20 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Bangladesh tobacco control regs ordered PRESS RELEASE On 7th February 2000, the Bangladesh Anti-Tobacco Alliance (BATA) won its second legal victory since its inception in August 1999. The Bangladesh High Court directed the government to enact strong tobacco control measures regarding the production and consumption of tobacco. The measures mentioned by the Court include banning smoking in public places in order to maintain public health, and banning tobacco advertisements. According to a Bangladesh English-language newspaper, The Daily Star, "After hearing both the sides, the bench said uncontrolled consumption of tobacco products not only harms the consumers but also seriously damages the health of people around them." The newspaper further states, "It is also anti-constitutional on the part of the government to remain silent on this issue, the Bench said. People's fundamental rights to lead a happy and healthy life and live in a pollution-free environment have been ensured" by the Constitution. The Court's judgment was based on two separate writ petitions, one filed by the prominent anti-smoking group ADHUNIK (which is also active in BATA) and the other by BATA members. BATA originated in response to a major promotional campaign, "Voyage of Discovery" by British-American Tobacco (BAT) for its John Players Gold Leaf brand cigarette. In addition to a number of activities in protest of Voyage, BATA also submitted a successful writ petition to stop promotional activities of the campaign. BATA will continue to press for strong tobacco control measures, including a comprehensive ban on advertising and promotion of tobacco, protection of non-smokers, and higher taxes on all tobacco products. ------------------- Debra Efroymson, Regional Advisor PATH Canada 67 Laboratory Road, Dhanmondi Dhaka-1205, Bangladesh e-mail: pathCan@citechco.net fax: (8802) 966-0372 phone: (8802) 966-9781 From owner-intl-tobacco@venice.essential.org Wed Feb 9 17:06:00 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 5B60121AFF for ; Wed, 9 Feb 2000 17:06:00 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id RAA23760 for ; Wed, 9 Feb 2000 17:06:00 -0500 Date: Wed, 9 Feb 2000 17:05:59 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] The tobacco papers: The insider The tobacco papers: The insider The Age (Asutralia) By DUNCAN CAMPBELL Sunday 6 February 2000 Ten days from now in London, Sir Kenneth Clarke, Chancellor of the Exchequer in the last Conservative Government, is to face an unexpected confrontation. The man who once presided over Britain's tax and customs departments will answer to the charge that he now oversees a multinational company which encourages and exploits tax evasion and smuggling on a global scale. Since leaving government, Clarke has been deputy chairman of British American Tobacco Plc, the world's second-largest tobacco company. Together with chairman Martin Broughton, Clarke has been summoned to appear before the parliamentary select committee on health to explain BAT's involvement in the cigarette-smuggling business. That BAT hugely enlarges its corporate profits by smuggling will not even be at issue. Clarke admitted as much to the Guardian three days ago, telling readers that "we act on the basis that our brands will be available alongside those of our competitors in the smuggled as well as the legitimate market". Blaming governments for following a policy of raising tobacco taxes to excessive levels, Clarke inserted the qualifications that BAT's support for smuggling occurred where governments were unwilling to act or its efforts were unsuccessful. He also claimed that the BAT's actions were completely within the law. The audacity of such remarks by a Queen's Counsel and former minister is breathtaking. It was scarcely necessary for Audrey Wise MP, a Labour member of the committee, to point out that "smuggled goods are illegal goods, so if you're deliberately making your goods available for smuggling, knowingly and deliberately, you are an accessory to the fact". No less stunned was the reaction of journalists, including myself, who had worked on this story for six months. Just four days had elapsed since a legally dangerous story had been launched; perhaps, like detectives, we were surprised when a feared quarry turned round, hands raised, and said: "It's a fair cop." THE story of the uncovering of BAT's use of the smuggling trade began two years ago as a result of actions for damage to public health brought in the United States. As a result of the case, BAT and its industry rivals had been compelled to place millions of pages from corporate files into records depositories. When the first action was settled in Minnesota in May 1998, the state's attorney-general added a provision that has directed a spotlight on corporate malpractice. He stipulated that the records should become open to the public for the next 10 years. The Minnesota consent judgment created, in effect, a global freedom of information law. Everything had to be disclosed that had already been seen by the courts. Unsurprisingly, BAT did not care for this. Until a year ago, it refused to open its files to the public. Then its London lawyers received a short letter from US attorneys for the state of Minnesota, who reminded BAT it had been allowed to keep its depository in England only on sufferance. If it didn't open up, it could be ordered to relocate the papers to Minnesota. BAT opened up. FIRST in to the depository, located in a bleak industrial estate in Guildford, a regional town near London, were researchers from the World Health Organisation and anti-tobacco campaigners such as ASH, the campaign for Action on Smoking and Health. They were on the lookout for hitherto concealed papers on the medical effects of smoking. Many such documents quickly found their way into the hands of lawyers around the world. But these early researchers soon saw that another story entirely was buried inside the 40,603 BAT files in Guildford. The story of corporate links to smuggling was not one these researchers had met before, despite more than four years of searching tobacco files. Could these documents really mean what they seemed to? They wondered if the story from inside the BAT files could ever safely be told. Soon after, word of the contents of BAT's files was passed to Maud Beelman, a press agency veteran who had recently taken up a new job as director of the International Consortium of Investigative Journalists in Washington (ICIJ). The consortium itself had taken shape a year or so before as a new project of a Washington-based public interest group, the Center for Public Integrity. Its members now include the present writer and Age investigative reporter Bill Birnbauer, among others scattered from Moscow to Melbourne. As the Guardian observed when the tobacco story launched last Monday, we are world journalism's awkward squad. In Washington, Maud Beelman recruited a small team of ICIJ members and claimed a small budget from the parent organisation. A key member of the team, Maria Teresa Ronderos, worked in one of the countries which early papers showed to have been most affected by cigarette smuggling. Since the late 1980s, Colombia's excise income has been decimated by organised inward-smuggling of cigarettes and luxury goods. As the illicit cocaine and crack flowed out ever more profusely to Canada and the US, in had come increasing quantities of contraband. Now at least part of the explanation was in our hands. In the files of BAT's then Latin American director, Keith Dunt, was a map showing how DNP (Duty Not Paid) cigarettes entered Colombia via the small Caribbean island of Aruba. Together with the map were dozens of papers describing plans to launch new smuggled brands in Colombian cities, often supported by a small umbrella of legally imported (and advertised) cigarettes. Other documents in his files referred to BAT products as contraband, or as smuggled. One BAT company was engaged in an overt illegal operation. In Vietnam, the company's top Asian regional brand, State Express 555, was determined to be the major smuggled brand. There is no suggestion that Dunt, BAT or those whose cigarette-smuggling services BAT utilised were involved in the smuggling of narcotics. But the company was clearly aware that Aruba was also a centre where narcotics-related funds would arrive alongside clean currency. I first visited the Guildford depository in September 1999 and started sifting through files under the gaze of an overhead TV camera. On the other end of the TV link, in a room we were never permitted to enter, was a crew of BAT watchkeepers. A solicitor from BAT's legal team was among them. Across the table from me was a representative from Melbourne law firm Slater and Gordon, who had been instructed to gather data for Australian health lawsuits. BAT's staff later confided that the company had been irritated by her Aussie approach. The researcher had simply looked up every BAT file that mentioned Australia and ordered one complete copy of everything to be promptly couriered southward. This wasn't playing fair, in BAT's view. It was supposed to be much more difficult to get information than just to come in and pay for copies of everything in sight. At 10 pence a sheet, copies of BAT's full Australian archive had cost Slater and Gordon just over $A10,000. Playing the way the company wished, I read through the daily personal correspondence of Keith Dunt, who is now BAT's No 2 executive and chief finance officer, and selected parts for copying. I had to pinch myself to believe this experience was real. Mr Dunt was clearly an efficient and hard-working manager, whose thoroughness would have been creditable in the British civil service. But Mr Dunt's files contained much of a character that would be alien to the files of any law-abiding civil servant. Within a month of taking up his new job as BAT's regional director for Latin America and the Caribbean in January 1992, he had popped off a friendly note to BAT's agent on Aruba, who served as a key link in the Colombian smuggling network. Six months later, as he recorded in his files, he flew to Aruba to meet the agent to learn about the DNP/transit business (company code for smuggling) on the ground. Less than three weeks later, the agent and his son were invited by Dunt on an expenses-paid luxury trip to London to be entertained by BAT at Wimbledon. Here in the BAT files, methodically and efficiently recorded, were tales of smuggling routes explored, black-market traders encouraged and a relentless quest for profits regardless of ethical and moral considerations - even though BAT and its staff did not break any British law, or themselves ever take contraband illegally across national boundaries. The next step in our investigation was to order copies of important documents from BAT. These had to be ordered through company lawyers Lovell White and Durrant, one of Europe's largest law firms. We soon received howls of protest. I had ordered copies of much of Mr Dunt's daily files, which included private matters. Neil Withington, BAT's deputy general counsel, wrote to ICIJ to complain. It was hard, he said, to imagine any legitimate reason for my requesting documents such as those concerning Dunt's telephone bill or home insurance. We chose not to fight. Just give us the documents that concern your finance director's complicity with smuggling operations in Latin America, we reasoned, and BAT can keep the letters about his share options, cars and swimming pool. After a couple of months of foot-dragging by BAT, the damning papers were copied and ready to collect. Early in November, I cycled to the offices of Lovell White Durrant to collect the files for the ICIJ. Staff at the law firm thought I was just another untidy bike messenger. REPORTING the significance of these BAT files brought new challenges for the Center for Public Integrity. Its founder, former CBS Sixty Minutes producer Charles Lewis, had set up the centre to carry out independent investigative reporting projects. From a standing start in 1991, Lewis had built the centre from a back- office venture to an authoritative and modestly well-funded US public-interest organisation, backed by cautiously accepted foundation money. It has produced many well-reported stories, among them the 1996 Lincoln Bedroom scandal, in which nights at the White House were auctioned off for political donations. In 1997, Lewis envisaged the ICIJ as an international arm for his centre that could take over the ground being vacated by news organisations as they closed their overseas bureaux and reduced foreign coverage. This has proven to be exactly the right idea and precisely the wrong model. In extending the boundaries of his national project to issues of planetary concern, Lewis's vision has certainly been fulfilled. With the World Health Organisation projecting billions of avoidable early deaths this century from tobacco-related disease, the insidious promotion of tobacco addiction clearly ranks among the world's larger problems. In exporting US concepts of public interest into global journalism (and not forgetting US finance, too), something very important to the global public interest has been demonstrated. Coming alongside this has been the endearing Washingtonian habit of thinking that there is just one view of the world. While an international press agency can work like this, a loosely bound group of grumpy investigative reporters with widely differing affiliations, reporting systems and cultural and legal frameworks was most unlikely to settle on a single view. And we didn't. Among the critical divergences that emerged were the impact of widely differing legal systems. In Britain journalists must be prepared to prove the truth of what they publish. In the United States, where strong protections for a free press are a bedrock of the Constitution, it is for complainers to prove that what was published is actually false. Thus, the same agreed facts may have to be tailored and presented quite differently in different countries, and conform also to local writing styles and cultural perspectives. Divergences also exist about how journalists interact with their wider society. In the US, it apparently is professional anathema to engage with government enquiries. Whereas in Britain, the House of Commons Select Committee has invited myself and ASH campaigner Clive Bates to appear before it at the same meeting as the top BAT executives. Legally, I don't have a choice - a summons from Parliament is compulsory. But I will go to the meeting with enthusiasm. Looking back at week one of the BAT story, one of the most memorable remarks still has to be British American Tobacco's first, limp response to our allegations. I and the other researchers had, they said, been cherry picking among their files. Fair enough. But what cherries. And such a cherry tree. From owner-intl-tobacco@venice.essential.org Mon Feb 14 11:19:08 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 9777B21AFF for ; Mon, 14 Feb 2000 11:19:08 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id LAA29165 for ; Mon, 14 Feb 2000 11:19:08 -0500 Date: Mon, 14 Feb 2000 11:19:08 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Japan Tobacco to cut global tobacco brands (fwd) Japan Tobacco to cut global tobacco brands Source: Reuters, Monday, 2/14/00 Monday February 14, 2:59 am Eastern Time TOKYO, Feb 14 (Reuters) - Japan Tobacco Inc (JT), the world's third-largest tobacco group, plans to cut the number of its global tobacco brands to 139 from 197 under a five-year business restructuring, JT President Masaru Mizuno said on Monday. JT, which operates in some 70 countries across the globe, will also focus on 16 core target countries: 11 mature markets and five growing markets in Asia, Eastern Europe and Russia, Mizuno said in an interview. On the Russian market, which accounted for about one-fifth of JT's overseas tobacco sales in volume terms last year, Mizuno said there were signs the market was stabilising after an unexpectedly long slump resulting from the country's economic and currency crisis. With last year's eye-opening $7.38 billion takeover of RJR International, known for its Camel and Winston brands, JT became the world's third-largest cigarette producer behind Philip Morris (NYSE:MO - news) of the United States and U.K.-based British American Tobacco Plc (quote from Yahoo! UK & Ireland: BATS.L) (BAT). JT holds a 75 percent share of Japan's tobacco market -- the world's third-largest after China and the United States -- and has a powerful presence in Asia with its flagship Mild Seven cigarettes, but it was little known outside the region until the buyout, the most expensive ever by a Japanese company. On February 1, JT unveiled a long-awaited business plan for the next five years that aims to eliminate a total of 4,500 jobs, or 13 percent of its global tobacco-related work force, and streamline its global tobacco operations. Mizuno said JT would further consolidate its 25 domestic cigarette plants and introduce high-speed cigarette-rolling machines, but added that any plant closures may require lengthy talks with workers and labour unions. He gave no specific targets for domestic plant closures. He said the company does not want to follow an overly aggressive course in consolidating its production facilities, while the planned domestic job cuts would largely be achieved through voluntary early retirements. ``I'm aware of the fact that Philip Morris only relies on three or four factories for its entire domestic output...but we need to ensure a stable tobacco supply to any region in the country,'' he said. As for overseas operations, JT now operates 20 RJR factories in 17 countries, in addition to its previously existing factory in Manchester, England. Mizuno said he sees more room for consolidation in Eastern Europe, compared with other regions such as Asia, Western Europe and Central Europe. JT has said it will reduce its total overseas tobacco-related work force by 2,000 from the current 13,000 by the year 2002. To strengthen the value of its four flagship brands -- Camel, Winston, Salem and Mild Seven -- JT plans to boost spending on overseas sales promotion by $100 million this year. About 90 percent of that increased amount will be used for the four brands, Mizuno said. China was another priority area, Mizuno said. Any business strategy in China would be crafted by JT itself, rather than by its Geneva-based subsidiary, JT International S.A., which was set up last October to take control of JT's overseas operations, he added. The Chinese market has huge potential for foreign tobacco manufacturers, especially once the country wins membership of the World Trade Organisation (WTO), he said. ``We must pay special interest to China, especially as regards its international trade conditions,'' said Mizuno. Last year, JT and Shanghai Gaoyang International Tobacco Co Ltd agreed the Chinese company would manufacture two of JT's cigarette brands. JT said last May that the Chinese partner would manufacture 400 million cigarettes per year to be sold in Japan and Hong Kong as well as in China. The two partners would discuss further cooperation in technology and product development, it said at that time. On Monday, JT shares, viewed as a core defensive stock, ended up 0.11 percent or 1,000 yen at 901,000. JT was privatised in 1985 but is still owned 67 percent by the government. From owner-intl-tobacco@venice.essential.org Mon Feb 14 11:19:39 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id AFEF721AFF for ; Mon, 14 Feb 2000 11:19:39 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id LAA29224 for ; Mon, 14 Feb 2000 11:19:39 -0500 Date: Mon, 14 Feb 2000 11:19:38 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] INTERVIEW-JT sees high potential in Chinese market (fwd) INTERVIEW-JT sees high potential in Chinese market by Miki Shimogori JAPAN/CHINA; Source: Reuters, Monday, 2/14/00 TOKYO, Feb 14 (Reuters) - Japan Tobacco Inc (JT), the world's third-largest tobacco group, sees huge growth potential in China once it wins membership of the World Trade Organisation (WTO), president Masaru Mizuno said on Monday. Mizuno also appeared to take heart from what he saw as signs of a stabilisation in sales in Russia, where a lengthy slump in this major market had been seen as a key factor in a poor showing for the company's overseas business. The overseas downturn has fuelled doubts over Japan Tobacco's ability to manage huge international operations, an expansion that followed its takeover last year of the international tobacco business of RJR Nabisco Holdings Corp of the U.S. ``We must pay special attention to China, especially as regards its international trade conditions,'' Mizuno said in an interview. ``It will not be easy to get into China...But given the recent popularity of our products in South Korea and Taiwan, I think we can see some positive prospects for the Chinese market,'' he said, referring to its imminent WTO entry. Any business strategy in China -- the world's biggest tobacco market -- would be crafted by JT itself, rather than by its Geneva-based subsidiary, JT International S.A., which was set up last October to take control of overseas tobacco operations part of which were acquired from RJR Nabisco. JT holds a 75 percent share of Japan's tobacco market -- the world's largest after China and the United States -- and has a powerful presence in Asia with its flagship Mild Seven cigarettes. But it was little known outside the region until the RJR International takeover. The nearly $8 billion buyout of RJR International, known for its Camel and Winston brands, made JT the world's third-largest cigarette maker -- behind Philip Morris (NYSE:MO - news) of the United States and UK-based British American Tobacco (quote from Yahoo! UK & Ireland: BATS.L) (BAT). China now accounts for about 30 percent of the world's cigarette demand and is five times the size of Japan's market. Analysts said the market, a virtual monopoly of China National Tobacco Corporation, would be pressed to open once China wins WTO membership. BAT has had a historically strong presence in China, but JT is not a stranger, they said. Last year, JT and Shanghai Gaoyang International Tobacco Co agreed the Chinese firm would produce two of JT's cigarette brands from this year. JT EYES JOB CUTS, PLANT CLOSURES Besides China, Japan Tobacco, which operates in some 70 countries, would focus on 16 core target countries -- 11 mature markets and five growing markets in Asia, eastern Europe and Russia, Mizuno said. As for Russia, which accounted for about one-fifth of JT's overseas tobacco sales in volume terms, Mizuno said there were signs the market was stabilising the slump that resulted from its economic crisis. Japan Tobacco, which was privatised in 1985 but is still owned 67 percent by the government, now operates 20 RJR International factories in 17 countries in addition to the factory it already had in Manchester, Britain. To wipe out worries about its international operations, the company this month unveiled a five-year business plan under which it aims to eliminate a total of 4,500 jobs, or 13 percent of its global tobacco-related work force, and streamline operations. While cutting the number of its brands to 139 from 197 in the next five years, Japan Tobacco would further consolidate its 25 domestic cigarette plants, Mizuno said. Plant closures, however may require lengthy talks with workers and labour unions. He gave no specific targets for plant closures. Mizuno said he also saw more room for consolidation in eastern Europe, but gave no details. To strengthen the value of its flagship brands -- Camel, Winston, Salem and Mild Seven -- the company would boost spending on overseas sales promotion by $100 million this year. About 90 percent of that will be used for the four flagship brands. Its share, viewed as a core defensive stock, ended on Monday up 0.11 percent or 1,000 yen ($9.24) at 901,000, recovering from a low of 750,000 on January 4. From owner-intl-tobacco@venice.essential.org Mon Feb 14 11:36:20 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 3765221AFF for ; Mon, 14 Feb 2000 11:36:20 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id LAA30086 for ; Mon, 14 Feb 2000 11:36:19 -0500 Date: Mon, 14 Feb 2000 11:36:19 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Listed: the 600 poisons in every cigarette (fwd) Listed: the 600 poisons in every cigarette by Jo Dillon and Jonathon Carr-Brown Source: The Independent, Sunday, 2/13/00 Smokers are inhaling a lethal cocktail of 600 additives as well as nicotine every time they light up. In an attempt to disgust people into giving up, the Health Secretary Alan Milburn has released for the first time the exact make-up of a cigarette. Among additives used are acetone, used to make paint stripper; ammonia, contained in toilet cleaners; butane, a form of lighter fuel; and beta-naphthyl methylether, more commonly known as mothballs. Smokers are also opening themselves to the risk of inhaling hydrogen cyanide, the poison used in gas chambers, methanol, a rocket fuel, arsenic and carbon monoxide, the poisonous gas in car exhausts. Worryingly, given the fight against smoking among children, various scents and sweeteners can also be used in cigarette manufacture. Mr Milburn has put an end to a clandestine deal said to have been struck between the Tories when in power and the tobacco companies to suppress the information. He has posted on the Department of Health website the names of the 600 additives contained in popular brands of cigarettes and the damaging by-products which they can produce when lit. Mr Milburn said details of the additives were supplied to the health department by voluntary agreement in March 1997. But, to date, the tobacco firms have refused to detail which additives are used in which brand of cigarette, prompting the Government to push them for further revelations. The Government is also currently negotiating a European Union directive which would make full disclosure of all additives in cigarettes mandatory. The new policy comes in direct contrast to an agreement made under the Tories to keep the information "confidential". John Carlisle, spokesman for the Tobacco Manufacturers Association, denied there had ever been a secret deal not to release the list of additives but admitted companies are reluctant to publish details of additives in particular brands for commercial reasons. He said: "This information has been publicly available since 1995. The fact is no one has ever asked for it." Mr Carlisle claimed that 95 per cent of all British cigarettes were Virginia blend and contained no flavouring. He added: "Remember this is a government-approved list. If these things are harmful, why hasn't the Government removed them?" Amanda Sandford, of the anti-smoking group Ash, said that tobacco companies had been allowed to put additives in cigarettes for 30 years without any public scrutiny. She added: "There was a conspiracy of silence over this list and, unless we are now told what additives go into particular brands, we will never be able to calculate how these cocktails of chemicals affect people." From owner-intl-tobacco@venice.essential.org Mon Feb 14 12:50:56 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 1E7BD21B26 for ; Mon, 14 Feb 2000 12:50:56 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id MAA32670 for ; Mon, 14 Feb 2000 12:50:55 -0500 Date: Mon, 14 Feb 2000 12:50:55 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] European Advertising: Ad Bans Force Tobacco Firms To Think 'Outside of the Box' (fwd) European Advertising: Ad Bans Force Tobacco Firms To Think 'Outside of the Box' by SARAH ELLISON / Staff Reporter of THE WALL STREET JOURNAL Source: The Wall Street Journal Interactive Edition, Monday, 2/14/00 LONDON -- While governments and tobacco interests battle in court, advertisers are hitting the streets, using what tools they can to sweet-talk customers. "Tobacco companies are being forced, ahead of every marketeer, to think more creatively," says Richard Hammond, managing partner at Spirit, a London-based advertising and customer-relations agency. (Imperial Tobacco PLC is expected to announce soon that it hired Spirit to handle U.K. promotions for some of its brands.) "But they have to do it without the traditional marketing toolbox that other companies have," he adds. "Tobacco companies have found themselves at the forefront of finding ways to build brands." Sound Strategy Take the example of BAT Industries PLC's partnership with the Ministry of Sound nightclubs. At the hip Ministry of Sound in south London, crowds of young partygoers groove to mixes of trip-hop and jungle music. Andrew McNab, a 28-year old computer technician dressed in a tight black shirt and leather cargo pants, stands at the bar and orders three pints of beer for himself and his friends. "Do you have any Marlboro Lights?" he shouts to the bartender. "Just Lucky Strikes," she yells back. He nods and she tosses the pack onto the bar. The partnership between the world's second-largest cigarette manufacturer and the trendy nightclub was engineered by Colin Hearn's team at Bates, London, part of Bates Worldwide, owned by Cordiant Communications Group PLC. Mr. Hearn is the world-wide client director for BAT at Bates, which handles the Lucky Strike brand. "We think the two are a great fit," he says, "and it works well for both companies." Since BAT and the Ministry of Sound linked up in 1998, the club's disk jockeys have toured Asia and Europe and thrown hundreds of Ministry of Sound parties that hosted more than half a million people. Ministry of Sound provides the music and BAT manages the venues and promotional activity. Lucky Strikes are for sale at all events and the whole club is branded as a "free-thinking, dynamic, adventurous" place -- the same words that BAT uses to describe hipsters who smoke its Lucky Strike brand of cigarettes. Direct Approach Likewise, in gold-toned B & H cafes in Asia, shoppers can stop for a drink and buy cigarettes, namely Benson & Hedges, right at the counter. Golden Dreams, another B & H concept, gives away a free vacation to customers who write in with their ideal getaway. "The key is to be able to communicate with the customer," says Mr. Hearn, adding, "You need to get to your customer in a personal relationship." Personal relationships are soon to be about the only relationships tobacco companies can have with customers, given the European Union directive on tobacco advertising, which says it will ban all commercial communication and sponsorship of tobacco products. In the meantime, cigarette makers like BAT have time to plot strategies. Certain areas will be difficult to cover under the EU ban, like controlled-circulation trade magazines, the Internet, company partnerships and point of sale. It is these areas that advertising executives say are the future of tobacco promotions. Trade magazines, which sell themselves to established customers as a sort of lifestyle journal, have become popular in the U.S. For example, Brown & Williamson Co. in the U.S., owned by BAT, sends a fashion and beauty glossy to smokers of its Misty, Capri and Carlton brands and an outdoor-sports magazine to Kool and Lucky Strike smokers. The magazine concept hasn't caught on yet in Europe, but is being explored by BAT, Imperial Tobacco and Gallaher Group PLC, two other U.K. tobacco companies. Another way to cozy up to customers is to talk to them directly on the phone. Brown & Williamson recently sponsored a call-in line for customers that featured an exaggerated, over-the top recording of a company representative who professed love for all Brown & Williamson customers. Less wacky, but perhaps more crucial to sales are in-store promotions. Small retailers have a lot of power over who buys what; companies makes a big effort to keep those retailers happy, says Michael Prideau, head of corporate affairs at BAT. In annual satisfaction surveys of the small shop-owners that peddle cigarettes in gas stations and corner stores, tobacco companies "come out on top," he adds. Question of Effectiveness Despite the eternal optimism of tobacco companies, some ad men and women aren't so positive. "I'm not sure they'll be able to do much," says Andrew Brown, director general of the Advertising Association in London. "The intention in the U.K. is to suffocate all forms of communication between manufacturer and consumer." Some tobacco companies are tight-lipped about their marketing strategies, skittish that either the government or the competition will use their strategies against them. Officials from Gallaher Group, market leader for cigarettes in the U.K. and Ireland, declined to discuss the company's marketing plans. At Imperial Tobacco, a spokeswoman, Liz Buckingham said the company's strategy was "fairly boring" and that it "wasn't planning anything special," to prepare for the ban. For now, tobacco companies are free to advertise just about anywhere except television. When and how European countries implement the EU directive is, to an extent, up to each government, as long as individual deadlines fall within the EU timeline. That means no outdoor advertising after July 2001, no print advertising after July 2002 and no sponsorship after July 2003, except for Formula One car racing, which has until July 2006. In the U.K., the government had planned, albeit unsuccessfully, to implement portions of the ban at the beginning of this year. By contrast, Germany is challenging the ban, saying it violates free speech. Regardless of what happens in court, advertising agencies will keep up their efforts. "Every time they change the rules, you have to apply new thinking," says Spirit's Mr. Hammond, adding, "You have to think out of the box." Write to Sarah Ellison at sarah.ellison@wsj.com1 URL for this Article: http://interactive.wsj.com/archive/retrieve.cgi?id=SB950472948726259540.djm From owner-intl-tobacco@venice.essential.org Tue Feb 15 14:04:00 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 83BC821AFF for ; Tue, 15 Feb 2000 14:04:00 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id OAA29191 for ; Tue, 15 Feb 2000 14:04:00 -0500 Date: Tue, 15 Feb 2000 14:03:59 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] 3 companies interested in Bulgarian Bulgartabak sale (fwd) Three companies interested in Bulgarian Bulgartabak sale by Violeta Simeonova / Bridge News Source: NewsEdge, Friday, 2/11/00 Sofia--Feb 10--At least three multinational companies are interested in the sale of a 51% stake in Bulgaria's state-owned tobacco and cigarette maker, Bulgartabak Holding, the Deputy Minister of the Economy Christo Mihailovsky told local media in Plovdiv Thursday. Philip Morris, British-American Tobacco and Galaghers have already acquired information packages on Bulgartabak. The privatization procedure for the state major started January. * * * According to Michailovsky, it is expected that RJ Reynolds and Spain's SEITA will also buy information packages for Bulgartabak. Letters of intent must be submitted by Feb 29, bids will be accepted by Mar 20. Under the privatization scheme, a 51% stake in the tobacco major will be sold to a strategic investor. The deposit for participation is 1 million euros. The government expects that the deal to fetch up to $150 million. Under the privatization scheme, a 35% stake will be sold directly to a strategic investor, which has experience in the tobacco and cigarette-making industry. Another 16% of the company will be conditionally sold to the same strategic investor and blocked in a special account for 6 to 12 months till the buyer fulfills all the conditions required by the contract. The state will also keep a so-called "golden share" to have a veto on decisions about Bulgartabak's future. Bulgartabak has a 95% market share in Bulgaria. Consultant on the deal is a consortium of Creditanstalt Investment Bank and Dresdner Kleinwort Benson Limited. "Bulgartabak's 1999 preliminary profit was 60 million leva, the turnover was over 1 billion. " Bulgartabak has 3 cigarette factories in Russia, 1 in Ukraine and 1 in Romania. (1.95583 leva--1 euro) End Bridge News, Tel: +359-2-988-8157 Send comments to Internet address: emerg@bridge.com From owner-intl-tobacco@venice.essential.org Tue Feb 15 14:10:47 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id A1DC221AFF for ; Tue, 15 Feb 2000 14:10:47 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id OAA29466 for ; Tue, 15 Feb 2000 14:10:46 -0500 Date: Tue, 15 Feb 2000 14:10:46 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Tobacco giants 'discussed pricing' (fwd) Tobacco giants 'discussed pricing' by John Willman in London and Andrew Edgecliffe-Johnson / in New York LATIN AMERICA; Source: Financial Times, Tuesday, 2/15/00 Two of the largest tobacco companies met to discuss prices and market-sharing arrangements in Latin America, according to a file note of one of the meetings obtained by the Financial Times. The note covers a meeting between Philip Morris, the world's largest cigarette manufacturer, and British American Tobacco, now number two, at a hotel outside London in August 1992. Those present at the meeting included Keith Dunt, then head of BAT's Latin American operation but now the group's finance director. Items on the agenda included prices in Guatemala, Costa Rica, El Salvador and Venezuela. The file note, drawn up by BAT, also refers to agreements between the two companies on pricing and market share and policies to avoid "destabilisation" of one market. The minutes referred to "good co-operation between both companies" and ended with a proposal for another meeting in November "possibly in a Caribbean venue". The six-page document, marked "secret", is one of more than 8m pages on public display in Guildford in the UK following a US tobacco litigation settlement in 1998. It has come to light a week after a class action was launched against five tobacco companies alleging price-fixing in the US for at least 17 years. On Monday the company said the file note first emerged during litigation in Washington state in the US. "The issues were looked at at the time and the review indicated we didn't have a problem." A subsequent investigation by Venezuela had exonerated the company, BAT added. Philip Morris said it could not comment. The file note says Philip Morris complained that BAT's Guatemalan subsidiary had lowered the price of Lucky Strike cigarettes in a supermarket chain to below that of Marlboro. BAT undertook to investigate this and subsequently noted it was a short-term promotion run for three weeks to clear stock. It added that this followed a precedent set by Philip Morris with Marlboro. The note says Philip Morris also complained about promotions in Costa Rica, leading BAT to say it needed to recover market share and "resolve price gaps that had been eroded (albeit with agreement) over the last few years". The note says BAT promised to consider a "share agreement". One industry executive said if any discussions had taken place, they thought they were within the law. "We find examples of governments encouraging us to come together to discuss issues such as pricing," he added. The file notes' appearance follows allegations that BAT, the UK's biggest tobacco company, was involved in cigarette smuggling in Latin America and Asia. These were based on other documents in the Guildford depositary which appeared to show the company supplied wholesalers and distributors with cigarettes that found their way into the hands of smugglers. At the time, BAT refused to comment on the allegations and said they were based on "highly selective and out-of-context extracts from old documents". From owner-intl-tobacco@venice.essential.org Tue Feb 15 14:44:55 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 0F17C21AFF for ; Tue, 15 Feb 2000 14:44:55 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id OAA30683 for ; Tue, 15 Feb 2000 14:44:54 -0500 Date: Tue, 15 Feb 2000 14:44:54 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] One Country, Two Markets (fwd) One Country, Two Markets Source: Tobacco Journal International, Tuesday, 2/15/00 Ten years after the fall of the Berlin wall, the German cigarette market is still divided. Although western trends are slowly picking up, the leading brands of eastern Germany cannot be found on the shelves of western German shops. Prices, advertising campaigns and the importance of the various trade channels remain different in East and West. Total German cigarette sales went up in 1999. The German cigarette market registered a positive trend in 1999: total cigarette sales increased by 2.2 billion to 173 billion units. Trade brands managed to cement their success in Germany in 1999, reflecting the growing price consciousness of consumers; yearly sales in this segment increased by 19.4 per cent to 10.6 billion units. They now account for 7.6 per cent of the total market. Sales of factory-made brands grew by 1.9 per cent to 141.1 billion pieces (1998: 138.4 billion), while cross border sales declined by 2 per cent to 13.9 billion cigarettes in 1999. Philip Morris, who held a market share of 40.4 per cent in 1999, was once more the market leader. However, the company registered its second sales drop after 1998 to 57 billion pieces, and its market share went down by 0.9 per cent. The German cigarette manufacturer Reemtsma managed to increase its sales to 32.2 billion units in 1999; its market share remained stable at 22.8 per cent. The clear winner in Germany during 1999 was British American Tobacco, whose sales rose by 5.5 per cent to 26.3 billion cigarettes. The German division of the UK-based company now holds a market share of 19 per cent and has taken over the second position in the ranking of manufacturers in 2000 after the merger with Rothmans international was fully implemented. However, Rothmans faced a further drop in sales with 7.6 billion cigarettes sold in 1999, accounting for 5.4 per cent of the market (1998: 5.9 per cent). Mr Georg C. Domizlaff, chairman of the board of BAT Germany, stated recently that =93the company will have to integrate the Rothmans brands into the company's portfolio and will have to find a common strategy for the German market=94 =96 which could mean that, at some point, the production of certain Rothmans' brands could be discontinued. With sales of 6.1 billion units, RJ Reynolds =96 now Japan Tobacco International =96 also had to face a drop of 7.8 per cent in volume sold. The latest results frustrated hopes that the company could be able to sustain the positive development of 1998, when it was able to increase its market share slightly from 4.7 to 4.8 per cent, selling 6.6 billion pieces. Marlboro King Size held its position as the top selling brand in the whole of Germany; however, the flagship of Philip Morris' German portfolio lost 1.3 percentage points accounting for 16.8 per cent of total sales of factory made cigarettes (1998: 18.1 per cent). The market share of Marlboro Lights King Size, which ranks second on the top ten list, was stable at 10.8 per cent, while Marlboro Medium continued to grow. Reemtsma's West brand gained market share and now holds 7 per cent of the market (1998: 6.8 per cent); it is followed by BAT's HB with 5.4 per cent, which has been facing a steady decline (1998: 5.9 per cent). Lucky Strike Filters, which ranked seven in 1998 has improved its market share significantly from a 2.8 per cent market share to 3.3 per cent and now ranks fifth. The brand has been helped by a clever advertising strategy. Lucky Strike was the clear front-runner among the fastest-growing brands in Germany in 1999 with a sales plus of 23 per cent or 899 million pieces against 1998. F6, a Philip Morris brand sold in the eastern part of Germany, ranked sixth (3.4 per cent market share), followed by West Lights, Peter Stuyvesant, Camel Filters and Marlboro Medium. The success of the F6 brand, which is sold exclusively in eastern Germany but is among the top ten German-wide, already shows how different the markets in eastern and western Germany are. Ten years after the fall of the Berlin wall and nine years after reunification, differences remain between the two parts of the country. The eastern German smoker is much more price sensitive =96 hardly a surpris= e with a jobless rate around 20 per cent. The average price of cigarettes in the East, currently at DM 4.80, is much lower than in the West (DM 5.80). The so-called =93eastern brands=94 dominate the cigarette market in the territory of the former socialist republic. Whether they are old, traditional brands =96 such as F6, Cabinet and Juno or brands introduced after reunification =96 such as Pall Mall, they are sold only in the east. East German smokers still generally prefer stronger cigarettes; the market share of light brands is still around 20 per cent, while it makes up for more than one third of the west German market. The trend, however, follows the developments in the west, and the growing rate for lighter brands is much higher in the east. Market studies show that the eastern German consumer has different needs than its western counterparts; he or she is much more concerned about the practicalities at life and is generally worried about the future. Thus, the cigarette advertising in east and west Germany reflects this. Pall Mall, for instance, is running an ad that offers a chance for young people to take up practical courses in the USA. Manufacturers had to learn that the eastern consumer can be sensitive to things that are considered to be common ground in the west. For instance, Philip Morris has recently launched an American blend version of its F6 brand. However, it was advised to call it an =93international blend=94 cigarette, since the word =93American=94 may have a negative connotation fo= r some consumers. The trend towards bigger packs of 24 or 25 originally started in the east, and has now established itself in the west. Vending machines are a very important distribution channel for cigarettes in western Germany, with a market share of 31 per cent, and their importance is also growing in the east. These machines are at the centre of a polemic, since they are considered unsafe for minors. Distributors, cigarette companies and manufacturers of vending machines are now developing a kind of =93ID card=94 for these machines that will be given on= ly to adults; this way, the polemic could be taken out of the line of fire of anti-tobacco activists. Besides cigarettes, tobacco rolls (pre-portioned tobacco wrapped in paper to be introduced in a filter tube) still play a role in the German tobacco market. They were originally defined as an unfinished tobacco product and thus taxed as fine-cut , but have gradually lost this status and since January 1, 1999 they are now being taxed as factory-made cigarettes. Most rolls manufacturers, including market leader BTM, Brinkmann-Niemeyer and Philip Morris decided to continue production, although prices had to be increased dramatically by DM 0.90 (US$ 0.55) for a pack of 30. They lost 17 per cent of their sales volume with a drop to 2.9 billion pieces (1998: 3.2 billion units), but the market seems to have reached a fragile stabilisation. =93Classic=94 fine-cut again enjoyed an increase of 2 per cent, with a volu= me equivalent to 15.2 million RYO cigarettes in 1999. Market leader was Brinkmann Niemeyer with 29.5 per cent in the first eight months of 1999, followed by Imperial Tobacco Agio (21.7 per cent), Heintz van Landewyck (11.2 per cent) and Alois P=F6schl with 10.4 per cent. BTM held 7.6 per cen= t while British American Tobacco accounted for 3.4 per cent of the market. The top-selling brand in this segment was Drum Halfzware, followed by Samson, Schwarzer Krauser No.1 and Van Nelle Halfzware. Private label brands are very important in this price-sensitive market. More than half of fine-cut sales come from cheaper brands, which are seen as an alternative to cigarettes. Germany's cigar market continued its upward trend despite opposite developments in other major markets such as the US, where cigar sales have reached their climax. German cigar sales reached 1.84 billion pieces in the first nine months of 1999, 14.5 per cent more than in the comparable period of 1998. Manufacturers forecast a total sales volume of 2.4 billion pieces for the year. This growth is mainly due to the continuing upsurge of so-called =93eco-cigarillos=94, which were first introduced in 1996. Their flavour resembles that of cigarettes but they are, technically speaking, cigarillos. Since the taxation of these products is lower, they offer a further cheap alternative to cigarettes. Their sales volume reached 866 million pieces in the first ten months of 1999 while total sales of eco-cigarillos in 1998 amounted to around 700 million pieces. Especially popular in this segment are the filter cigarillos, which climbed by 91.5 per cent to 542 million pieces in the period. Filterless eco-cigarillos, which can be introduced into a filter tube, stagnated at 324 million pieces. The leading brands are Westpoint Filter cigarillos (Brinkmann Niemeyer) followed by West Rollies (BTM Roth-H=E4ndle) which was only introduced in August 1999. The upsurge in sales of eco-cigarillos contributed significantly to the higher sales volume of the entire cigar segment, whose turnover reached DM 722.7 million in the first nine months of 1999 and is estimated to reach around DM 1 billion for the year. In 1998, the country's cigar sales volume only amounted to DM 860 million. Apart from eco-cigarillos Germany's classic cigar market also grew by 1.5 to 2 per cent to 1.2 billion units in 1999. The highest sales volumes are generated in the low-price segment, mainly due to the dominating role of cigarillos, which account for 84 per cent of the total market. The best-selling brand was Clubmaster (Arnold Andr=E9), followed by Dannemann Speciale (Dannemann) and Meharis (Imperial Tobacco Agio). The 100 per cent tobacco cigarillo Nobel Petit of Gebr. Berens ranked fourth, followed by Biddies (Agio), Fino (Willem II) and Backgammon (Villiger). Aromatic cigarillos continue to gain ground in the German market. An estimated 200 million pieces were sold in 1999. Mainly the young and female smokers have been attracted by the =93aromaticos=94. Meanwhile, almost all cigarillo manufacturers have introduced at least one flavoured brand. The leading brand within this sector is Moods of Dannemann, followed by Clubmaster Fellows of Arnold Andr=E9 and Meharis Mil= d respectively Biddies Aroma, both of Imperial Tobacco Agio. Around 1700 cigar and cigarillo brands are currently being sold in Germany by 40 manufacturers and importers. Four companies hold around 90 per cent of the market, which is led by Arnold Andre and Dannemann, followed by Villiger and Imperial Tobacco Agio. The sales of premium cigars, whose popularity certainly has helped the industry in the past few years is stagnating at 15 to 20 million pieces, accounting for a relatively small sales volume compared to total sales of cigar products in Germany. Pipe tobacco sales have gone down in Germany from 1236 tonnes in 1997 to 1161 tonnes in 1998. There is a wealth of brands available in the country. Stanwell led the market in the first half of 1999 with a share of 28 per cent, followed by Planta (18.5 per cent), Alois P=F6schl (16.3 per cent) an= d Von Eicken (15.9 per cent). Rum & Maple (Planta) was the market leader in the first six months of the year, followed by Mac Baren Mixture (Mac Baren) and Danske Club Black Luxury (Stanwell). Premium tobaccos are not the best-selling pipe tobacco category in Germany; still, their sales have been increasing fast. Flavoured tobacco brands, which have a high acceptance among surrounding non-smokers are also gaining popularity. This category includes, for example, Stanwell Vanilla (Stanwell) or Vanilla Cream (Mac Baren). The German pipe tobacco manufacturer Vauen has introduced Pipoo, a new product aimed at making pipe smoking easier and more popular. A special pipe is filled with pre-portioned tobacco, which does not need to be pressed and can be thrown away after smoking. It remains to be seen whether the new product will be accepted by the German smokers. From owner-intl-tobacco@venice.essential.org Fri Feb 18 14:01:05 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 820EB21B06 for ; Fri, 18 Feb 2000 14:01:05 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id OAA30231 for ; Fri, 18 Feb 2000 14:01:05 -0500 Date: Fri, 18 Feb 2000 14:01:05 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Ministry drops numerical target for smoking-reduction (fwd) Ministry drops numerical target for smoking-reduction by Yomiuri Shimbun Source: Yomiuri Shimbun., Friday, 2/18/00 The Health and Welfare Ministry panel examining a proposed plan to improve people's health decided on Thursday to withdraw a numerical target that aimed at halving the number of smokers by 2010. The panel, chaired by Fumimaro Takaku, president of Jichi Medical School, instead decided to adopt a compromise plan due to opposition from tobacco-related industries and some Liberal Democratic Party members. The numerical target had been the most ambitious feature of the proposed health improvement plan because Japan's smoking rate is remarkably high among the industrialized countries. The decision to remove the numerical target is a blow to the ministry's new plan. At a meeting of the panel, all 31 members were required to present their opinions and it was decided to take the unusual step of deciding the issue by majority vote, instead of by unanimous decision. As a result, the panel decided to drop the numerical target for reducing smoking. From owner-intl-tobacco@venice.essential.org Fri Feb 18 14:19:19 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id CBF1A21B06 for ; Fri, 18 Feb 2000 14:19:19 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id OAA30790 for ; Fri, 18 Feb 2000 14:19:19 -0500 Date: Fri, 18 Feb 2000 14:19:19 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Philip Morris to Raise Cigarette Production in Russia by 65% (fwd) Philip Morris to Raise Cigarette Production in Russia by 65% by John Varoli Source: Bloomberg News, Wednesday, 2/16/00 St. Petersburg, Russia, Feb. 16 (Bloomberg) -- Philip Morris Cos., the world's largest tobacco company, said it plans to boost production of cigarettes in Russia by 65 percent this year and stop importing them to the country by the end of 2001. The New York-based company, which produced 20 billion cigarettes in Russia last year and imported another 3 billion, will step up output at its new $330 million factory to meet growing demand. ``The size . . . of the Russian market makes it necessary to produce in the country,'' said Andre Calanzopoulos, Philip Morris's president for Eastern Europe. ``Our goal is that by the end of 2001, all our cigarettes for Russia will be produced locally.'' Cigarette makers, such as Philip Morris and RJ Reynolds Tobacco Holdings Inc., are moving more production of international brands into Russia to save import and labor costs in a country where about 250 billion cigarettes are consumed a year. Since 1992, foreign tobacco manufacturers have invested more than $1 billion in the country. Philip Morris is also completing a $170 million investment in a plant in Russia's Krasnodar region. Philip Morris, which makes popular brands such as Marlboro, Virginia Slims, and L&M, said its share of the Russian tobacco market is about 16 percent. Other major international companies investing in the region include Ford Motor Co., which is building a $150 million factory, road equipment maker Caterpillar Inc., which will soon open a $50 million plant, and International Paper Co., which has a $35 million plant in the region From owner-intl-tobacco@venice.essential.org Tue Feb 22 16:14:01 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id B915321AFF for ; Tue, 22 Feb 2000 16:14:01 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id QAA31281 for ; Tue, 22 Feb 2000 16:14:01 -0500 Date: Tue, 22 Feb 2000 16:14:01 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] B.C. tobacco suit ruled unconstitutional (fwd) B.C. tobacco suit ruled unconstitutional Source: Toronto Star, Tuesday, 2/22/00 VANCOUVER (CP) - The provincial government's lawsuit against tobacco companies can't go ahead because it's based on a provincial law that is unconstitutional, the B.C. Supreme Court has ruled. Several provinces have been watching the B.C. action with a view to launching similar suits of their own. But a lawyer for British Columbia said Monday he doesn't expect the ruling to put an end to the province's intentions to sue. ''This journey has taken a turn, which is undoubtedly disappointing for the government, but it doesn't change the direction or ultimate destination of what the government intends to achieve,'' said Dan Webster, who helped argue the province's case. The court decision, released by the parties involved Monday, said sections of the provincial law try to lump all the tobacco companies together while ignoring the fact they are federally incorporated and individual. ''I find the Tobacco Damages and Health Care Costs Recovery Act to be inconsistent with the provision of the Constitution of Canada'' and is beyond the jurisdiction of the province, wrote Justice Ronald Holmes. Holmes said he found the ''dominant characteristic'' of the legislation to be the pursuit nationally and internationally of the tobacco industry for the cost of health care benefits incurred by the government of B.C. ''The extra-territorial reach of the act places it beyond the constitutional competence of the province,'' he wrote. But Webster said there are remedies to the problems Holmes highlighted. He said the province has three options: It can appeal the ruling, change the legislation or go after the three Canadian tobacco companies separately. ''When the government decided that it was going to attempt to hold the tobacco industry accountable for the devastating effects of its harmful and addictive products, it appreciated that this would be a long and hard-fought journey,'' Webster said. A spokesman for the Canadian Tobacco Manufacturers' Council said the ruling should send a message to the B.C. government. ''We urge co-operation rather than expensive lawsuits,'' said Dave Laundy. ''We hope governments will stand back and see how they manage their tobacco strategy.'' He urged the governments and the industry have a meeting to discuss ways to deal with the effects of tobacco, particularly smoking by young people. In Ottawa, a spokesman for the Canadian Cancer Society urged the B.C. government to pursue its initial action. ''We see from the U.S. experience that some big U.S. states have been successful,'' said Rob Cunningham, a lawyer and the society's policy analyst. ''B.C. should persist.'' Cunningham suggested the B.C. government consider filing its lawsuit in the U.S. ''If they can't bring it in B.C., they have to bring it somewhere (although) it may mean more of a role for the federal government.' The B.C. act was proclaimed in 1997 and amended last year. It makes it easier for the government to sue cigarette manufacturers to recover the costs of treating smoking-related diseases. The tobacco companies countersued, arguing the law is unconstitutional. Seven tobacco companies, including three Canadian manufacturers, took part in the countersuit. British Columbia's law is modelled on Florida legislation that helped net a $256-billion US settlement with American tobacco firms. The amended B.C. law allows the government to set the ground rules for a lawsuit it intends to file. The industry also complains the law requires the court to accept the government's data on the direct health-care costs the province claims stem from smoking. As of last fall, five other suits were being considered, three in Ontario and two in Quebec. Newfoundland was mulling a B.C.-style law and Manitoba planned court action. New Brunswick has said it is also considering such a move. Cunningham said the effect of the B.C. ruling on other possible suits is not yet clear because the judge's other comments in the long ruling has to be studied. The stakes are huge. Although the B.C. government has not spelled out how much money it hopes to recover from tobacco firms, another lawsuit being considered in Ontario is said to be worth $40 billion (U.S.). If Holmes's ruling is appealed, it could be years before British Columbia and other provinces actually get to court to sue the companies. Industry lawyers argued the law violates the unwritten rule against retroactively penalizing anyone for something that was previously legal. They also said the law violates the Constitution because it allows the government to collect costs for any past ''smoking-related wrong,'' including those incurred before the law was passed. Tom Berger, a former B.C. Supreme Court judge acting for the province, argued last fall it was up to the courts to decide if the lawsuit should go ahead. He said the law is perfectly within the authority of the provincial legislature and accused the tobacco companies of trying to bog down the court process. Berger said 6,000 people die in British Columbia and thousands more become ill with tobacco-related diseases each year. The province spends a half-billion dollars each year in health costs as a result. The industry's legal team had marshalled 18 volumes of legal precedents to buttress its technical and constitutional arguments against the B.C. law. From owner-intl-tobacco@venice.essential.org Tue Feb 22 20:00:50 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id E9D2C21B0A for ; Tue, 22 Feb 2000 20:00:49 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id UAA04723 for ; Tue, 22 Feb 2000 20:00:49 -0500 Date: Tue, 22 Feb 2000 20:00:49 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Israel: Haredi papers consider banning tobacco ads (fwd) Haredi papers consider banning tobacco ads by Judy Siegel-Itzkovich Source: Jerusalem Post, Monday, 2/21/00 15 Adar I 5760 (February 21) - The editors and managers of of Hamodia and Yated Ne'eman, the two Ashkenazi haredi dailies, will meet soon to discuss whether to refuse to accept tobacco advertising, which constitutes a major chunk of their income. Both papers said they will follow instructions from their rabbis. Full-page Dubek advertisements with religious themes, handled by a haredi woman advertising agent in Bnei Brak, have appeared for many years in these papers. One, for example, shows a havdala candle and spice box - signifying the end of Shabbat - alongside a pack of cigarettes, with the slogan shavua tov ("A good week"); another refers to cigarettes and "the lips of wise men." Tobacco companies have long claimed that their ads "merely try to persuade existing smokers to switch to their brand, instead of getting non-smokers to start smoking." The Jerusalem-based Hamodia, read primarily by a hassidic audience, and the Bnei Brak-based Yated Ne'eman, which has a Lithuanian (mitnagdim) following, are three years behind the anti-tobacco campaigns of Yom Le'Yom, the Shas-affiliated weekly inspired to take action by party spiritual leader Rabbi Ovadia Yosef. The Sephardi-oriented Yom Le'Yom went so far as to bar all cigarette advertisements from its pages, even though Dubek and other companies supplied a major part of its advertising income. Hamodia editor Elazar Knopf said yesterday that "we'll certainly discuss it. We will do whatever our rabbis rule." He declined to say how much money the paper received each year for Dubek's ads. Haim Rieger, the advertising manager at Yated Ne'eman, said that a discussion on whether to adopt a new advertising policy regarding tobacco will be held this week. "There are all kinds of legal and other implications," he said. The question of tobacco advertising in the Ashkenazi haredi papers was raised by forceful rulings by leading rabbinical authorities against smoking given prominence on Friday by the two Ashkenazi haredi dailies. Unprecedented front-page news articles accompanied large advertisements placed by Rabbis Yosef Shalom Elyashiv, Aharon Yehuda Leib Steinman, Moshe Shmuel Shapira, Michl Yehuda Lifkovitz, Nissim Karelitz, and Shmuel Auerbach. The articles and the advertisements in the two papers called on young people not to start smoking, and for those who already smoke to "gradually try to quit." A few weeks ago, The Jerusalem Post was the first to publish an even more rigorous ruling by prominent Bnei Brak sage Rabbi Shmuel Halevy Wosner, which appeared in an boxed ad on the Friday front pages of both Hamodia and Yated Ne'eman. Wosner called on people not only to avoid starting to smoke altogether, but said that if they were already hooked, they should gradually kick the habit. He also declared that smokers should not light up in public places and thus harm others, and stated that "those that advertise [cigarettes] in the newspapers and those who assist in this dangerous thing" will have to take responsibility for the harm they cause." From owner-intl-tobacco@venice.essential.org Tue Feb 22 20:07:18 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 01E8721B09 for ; Tue, 22 Feb 2000 20:07:17 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id UAA04928 for ; Tue, 22 Feb 2000 20:07:17 -0500 Date: Tue, 22 Feb 2000 20:07:17 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] European News Bulletin - EU000207 21 February 2000 (fwd) Globalink's European News Bulletin: EUROPEAN BULLETIN EU0007 =96 21 February 2000 Headlines AZERBAIJAN: Sorex buys stake in cigarette plant BALTIC STATES: Co-operation re: tobacco taxes CZECH REPUBLIC: Cigarette vending machines to be banned ISRAEL: Ministry of Health is finding new ways to lure smokers to quit. ISRAEL: Proposed legislation against subliminal advertising of cigarettes UK: Britons risk heart death more than most of EU UK: Byers to investigate cigarette-smuggling claims Full Text AZERBAIJAN: Sorex buys stake in cigarette plant A UK-based company, Sorex Management, has bought an 85 per cent stake in Azerbaijan=92s Baky-Tyutyun cigarette factory. Over the coming years, Sorex will invest US$49.8 million in the plant=92s upgrade. The 1999 instalment will have been $13.15 million. The company will start production at the factory by the end of 2000. Source: Tobacco Reporter, February 2000 BALTIC STATES: Co-operation re: tobacco taxes Lithuania, Latvia and Estonia are planning to work together on excise harmonisation. The three Baltic states will have to raise tobacco duty rates if they are to qualify for membership of the European Union. Lithuania is planning an increase to LT30 (US$7.5) per 1000 cigarettes from 1 March 2000. The increase is projected to yield LT8 million to LT10 million in additional budget revenue. Source: Tobacco Europe February 2000, Tobacco Reporter Feb. 2000 CZECH REPUBLIC: Cigarette vending machines to be banned Among the measures being considered in a forthcoming tobacco control law is a ban on cigarette vending machines and a ban on the sale of tobacco from petrol stations and most shops. Only authorised tobacconists will be allowed to trade in tobacco products. The new law will also ban tobacco advertising. Source: Tobacco Europe, February 2000 ISRAEL: Ministry of Health is finding new ways to lure smokers to quit. The Health Ministry=92s campaign against tobacco smoking has failed to reduce the number of smokers in the adult population in the last six years. Since 1994, the percentage of adults who smoke has remained steady at around 28 percent. Among younger people (under the age of 18) the number of smokers is steadily increasing, and children are beginning to smoke at earlier ages. Faced with these troublesome figures, the Health Ministry has resolved to change its strategy. In a few weeks, the ministry will launch a telephone hotline to assist anyone who wishes to quit smoking. Callers will receive immediate information and counselling regarding various methods of kicking the habit. The ministry has already begun training the hotline=92s personnel, which include psychologists and social workers. The Health Ministry is determined to combat tobacco smoking, and is planning to use the same tools that the tobacco companies employ to sell their products. It has enlisted a number of adolescent celebrities and role models, including Sandy Bar, Liat Ahiron and Adi Azroni, who will star beginning this month in anti-smoking commercials. And for those who can only be lured out of their habit with material prizes, there is a new raffle in town, called "I Quit and Won". Every former smoker who can produce certified proof to the effect that he or she has been weaned off the ugly habit, along with two witnesses, will be allowed to take part in the raffle. Source: Ha=92aretz Daily Newspaper, Monday, 2/14/00 ISRAEL: Proposed legislation against subliminal advertising of cigarettes A new law to ban subliminal advertising of cigarettes and tobacco products in cinema and videos passed on a first reading in the Knesset last week. The bill, proposed by Israel MK Avi Yehezkel, would result in two years imprisonment and a fine for breach of the law. Source: IsraelWire, Friday, 18/2/00 UK: Britons risk heart death more than most of EU British men and women are at much higher risk of death from heart disease than people living in most other European countries, says the British Heart Foundation in a report. At the same time, the number of heart bypass operations carried out in Britain in relation to need is lower than in any other European Union country. The report reveals that British death rates for adults aged 35 to 74 are three times greater than France=92s and twice as high as Italy=92s. Among the EU countries, only adults in Finland and Ireland have a worse record for deaths than Britons. Britain scores better in the smoking statistics, coming seventh among 15 countries. Here, 28 per cent of the adult population smokes, compared with 37 per cent in Greece and 18 per cent in Portugal, which has the lowest rates. These are explained by the small percentage of Portuguese women who smoke, only eight per cent, compared with 28 per cent in Greece, a tobacco-producing country. Source: Electronic Telegraph, Monday, 2/14/00 UK: Byers to investigate cigarette-smuggling claims The Secretary of State for Trade and Industry, Stephen Byers, is to examine claims that British American Tobacco has been involved in large-scale cigarette smuggling. The accusations come from documents unearthed by ASH and investigative journalist, Duncan Campbell, which claim that smuggling has helped to fund South American drug-running operations. ASH has written to Mr Byers asking him to investigate the allegations under legislation included in the Companies Act. A Department of Trade and Industry spokeswoman said the department was considering the points which ASH had raised but she said no conclusions had been reached, and no decision taken on whether there should be an inquiry. Former Conservative Chancellor Kenneth Clarke, who is now British American Tobacco=92s deputy chairman, sought to rebut the accusations that British American Tobacco has been involved in smuggling and indirectly encouraged money-laundering operations. Mr Clarke acknowledged that cigarettes were smuggled into markets including Colombia but insisted that the company was not involved. "We are the victims of smuggling, when our product goes into the smuggled market. There is no evidence I have ever seen that the company is a participant in this smuggling. We seek to minimise it and avoid it," said Mr Clarke. British American Tobacco chairman Martin Broughton also denied any wrong-doing on his company=92s part. Asked if he refuted the accusations that the company was involved in managing cigarette smuggling and money-laundering, he insisted: "I refute those accusations completely." Mr Clarke said that although he raised tobacco duties during his time as Chancellor, he had since come to the view that high duty rates encouraged smuggling into this country by offering criminals the prospect of big returns. "Britain is a burgeoning smuggling market because the tax differential is too high," he added. Source: ITN, Thursday, 17/2/00 Ed: Extracts from BAT=92s documents plus letters and further examples of press coverage can be seen at the ASH website at: www.ash.org.uk/smuggling Amanda Sandford Research Manager ASH 102 Clifton Street LONDON EC2A 4HW tel: 0171 739 5902 fax: 0171 613 0531 From owner-intl-tobacco@venice.essential.org Wed Feb 23 20:05:08 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 68EFE21B09 for ; Wed, 23 Feb 2000 20:05:08 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id UAA30880 for ; Wed, 23 Feb 2000 20:05:08 -0500 Date: Wed, 23 Feb 2000 20:05:07 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Tough anti-smoking ads making an impact: Poll (fwd) Tough anti-smoking ads making an impact: Poll 63% of smokers aware of recent campaign by Jack Branswell CANADA; Source: Toronto Star, Wednesday, 2/23/00 Jack Branswell / Special to The Star MONTREAL - Harder-hitting anti-smoking advertising is starting to influence Canadians' impressions of the tobacco industry, a poll conducted for the federal government concludes. The government and the anti-tobacco lobby are thrilled by poll results that show seven out of 10 respondents, when asked directly, recalled seeing an ad last year showing a woman named Debi smoking through a hole in her throat. ``That is extremely good recall, especially seeing how that ad didn't play very much,'' said Cynthia Callard, executive director of Physicians for a Smoke-Free Canada. Health Canada spokesperson Lynn LeSage said the more aggressive anti-smoking messages have proven effective in the United States so the department decided to run them here. ``When you look at the fact that they (the ads) only ran for 16 weeks during 1999, we think it (the recall) is - pretty impressive,'' LeSage said. `We're trying to show people that smoking kills 45,000 people a year and maybe that is the message we are trying to get out perhaps more than the effect on the industry.' - Lynn LeSage, Health Canada In the Environics poll, obtained through the access to information law, 81 per cent of respondents said they had a very or somewhat negative impression of the tobacco industry. It also found 88 per cent of those who saw the ad featuring Debi thought its anti-tobacco message was effective. The ad - and others such as one showing a teenager talking about how her mother, who died of cancer, will never see her graduate or get married - marked a turning point in Health Canada's willingness to be both more graphic and aggressive in its attack on the tobacco industry. Groups like the Non-Smokers' Rights Association have been calling for aggressive tobacco control ads for a decade. ``This is a major step forward,'' said executive director Garfield Mahood. ``The precedent has been established for harder-hitting ads and (Health Minister Allan) Rock deserves a lot of credit.'' The Environics survey was completed last fall, before Health Canada released its latest weapon in the battle on smoking - graphic ads on cigarette packages depicting rotting gums and other gruesome images. The survey and its accompanying report, prepared for the government, concluded the new strategy is paying off. ``The government-sponsored anti-tobacco ads had a significant impact on opinion about the industry in terms of recall'' among respondents, the final report said. Among Canadians who recall seeing at least one of these ads, 42 per cent said they ``made them more critical toward the tobacco industry and its practices.'' A larger share of respondents, 53 per cent, said the ads had no impact on impressions of the industry. But Health Canada officials said that is to be expected as the aggressive ad approach is new to Canadians. ``We're trying to show people that smoking kills 45,000 people a year and maybe that is the message we are trying to get out perhaps more than the effect on the industry,'' said LeSage, who noted the department has other programs aimed more directly at attacking tobacco companies. The poll found that, without being prompted, 52 per cent of respondents recalled seeing an anti-smoking ad in recent months. But the figure was higher among smokers - 63 per cent recalled seeing an ad. Environics polled 1,400 Canadians across the country. From owner-intl-tobacco@venice.essential.org Wed Feb 23 23:32:31 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id B987821B09 for ; Wed, 23 Feb 2000 23:32:31 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id XAA01165 for ; Wed, 23 Feb 2000 23:32:31 -0500 Date: Wed, 23 Feb 2000 23:32:31 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Korea Foreign Cigarette Market Share Rose to 8.9%, KED Says (fwd) Korea Foreign Cigarette Market Share Rose to 8.9%, KED Says by Jaehyon Cho SOUTH KOREA; Source: Bloomberg News, Wednesday, 2/23/00 Seoul, Feb. 24 (Bloomberg) -- Foreign cigarette makers increased their combined market share in South Korea to 8.9 percent in January from 7.9 percent in December, Korea Economic Daily said, citing Finance and Economy Ministry data. Their market share is expected to return to the pre-crisis level of more than 10 percent soon amid rising consumer income, it reported. Some foreign cigarette makers, such as British American Tobacco Plc, and Philip Morris Cos., plan to introduce new cigarettes with low prices to attract more Korean smokers, it said. The foreign cigarette market share in Korean fell to as low as 4.9 percent in 1998 when the currency crisis was at its peak, compared with 11.2 percent in 1997; Korea Tobacco & Ginseng Corp, the state-run tobacco monopoly, dominates the local market. (Korea Economic Daily, 2/24/2000, p.4) From owner-intl-tobacco@venice.essential.org Thu Feb 24 11:28:27 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 883A221AFF for ; Thu, 24 Feb 2000 11:28:27 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id LAA09446 for ; Thu, 24 Feb 2000 11:28:27 -0500 Date: Thu, 24 Feb 2000 11:28:27 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] South Africa Anti-smoking Group Praises Tobacco Tax In Budget (fwd) BUDGET-ANTISMOKING: Anti-smoking Group Praises Tobacco Tax In Budget Source: ANC News Briefing (Omar Jadwat), Thursday, 2/24/00 JOHANNESBURG 23 February 2000 Sapa Added taxes on cigarettes will save lives, reduce health care costs and raise government revenues, National Council Against Smoking executive director Yussuf (CORRECT) Saloojee said in praise of the budget speech on Wednesday. He said the falling demand for cigarettes over the past eight years had been a direct result of government policy and taxes had been a cornerstone of this approach. "By stimulating people to quit, those who already smoke to cut down and stop those who might start there will be 840,000 fewer deaths from cancer, heart attacks and lung disease," Saloojee said. Saloojee added that in spite of the increase in tobacco costs, cigarettes remained less expensive in South Africa than in many other countries where 60 to 80 percent of retail prices were committed to taxes. From owner-intl-tobacco@venice.essential.org Thu Feb 24 14:32:44 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id D396121AFF for ; Thu, 24 Feb 2000 14:32:44 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id OAA15602 for ; Thu, 24 Feb 2000 14:32:44 -0500 Date: Thu, 24 Feb 2000 14:32:44 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Austria Tabak Warns of Takeover If Govt Sells Stake (Update1) (fwd) Austria Tabak Warns of Takeover If Govt Sells Stake (Update1) by Gabrielle Monaghan Source: Bloomberg News, Thursday, 2/24/00 Vienna, Feb. 24 (Bloomberg) -- Austria Tabakwerke AG, owner of the nation's only tobacco store chain, said it will become a takeover target unless the government keeps a blocking minority instead of selling its remaining stake in the company as planned. Chief Executive Heinz Schiendl said that an alliance with a rival might be the only way to preserve independence in the face of the government's planned sale of its 41.1 percent stake and as proposed cigarette tax increases threaten its ability to compete. ``I don't know of any big tobacco concern that isn't interested in buying Austria Tabak,'' Schiendl said. ``If the government decides it wants Austria Tabak to be fully privatized, a takeover is a possibility.'' U.S. tobacco companies such as Philip Morris Cos. would be interested in gaining access to a European market where they wouldn't face billions of dollars in compensation to smokers, analysts said. Rival European cigarette makers also have been looking for acquisitions, including British American Tobacco Plc, Gallaher Group Plc, Imperial Tobacco Group Plc and Altadis SA. ``Europe has a whole different culture to the U.S. as regards tobacco industry lawsuits,'' said Jan Berger, who helps manage about 20 billion schillings ($1.44 billion) at Constantia Privatbank AG. Austria Tabak shares closed down 0.53 euro, or 1.2 percent, to 45.40 on the Vienna Stock Exchange. Preparing to Sell Austrian state-asset holding company, Oesterreichische Industrieholding AG, said Feb. 8 it's preparing to sell the government's remaining 41.1 percent of the former monopoly. The Austrian government, which was sworn in Feb. 4 and includes the far-right Freedom Party, could reduce its holding to just more than 25 percent as early as the end of 2000, Schiendl said. Austria Tabak would like the government to hold onto that amount, which would be a blocking minority, he said. Schiendl also warned that higher cigarette taxes to be outlined in Finance Minister Karl-Heinz Grasser's budget speech on March 21 would shave sales at Austria Tabak in 2000 and 2001. Grasser, a Freedom Party member, wants to reap an additional 87 million euros for government spending with the higher taxes, which Schiendl said would discourage smokers at home and make its products less competitive in neighboring European Union countries such as Germany and Italy. ``Austrian cigarettes already cost between 5 and 10 percent more than in Germany and Italy,'' Schiendl said. ``Given that one can import 800 duty-free cigarettes per person within the EU, our sales in Germany and Italy would suffer.'' The company's leading own brand, Memphis, currently costs 34 schillings a pack in Austria, compared to 31 schillings in Italy. ``I've heard there could be 5 more schillings a pack in taxes, and that's going to have a negative effect (on sales),'' Berger said. ``Some Austrians will also use it as an excuse to stop smoking.'' Schiendl said higher taxes can be compensated this year by the inclusion of 12 months of sales from Swedish Match's cigarette unit, which it bought last July for $580 million, compared to six months in 1999. For 1999, the acquisition helped push up full-year sales by 26 percent to 3.4 billion euros ($3.37 billion), from 2.7 billion euros a year earlier. Net income, though, declined by one quarter in 1999 to 106.8 million euros, after Austria Tabak didn't repeat the one-time gains that boosted profit the previous year. Operating profit climbed 27 percent to 166.9 million euros. Austria Tabak disposed of property worth 17.7 million euros in 1998, when it also paid about 36.7 million euros less tax. The retailer was able to take advantage of tax breaks in 1998 for provisions from its 1995 sale of Head Tyrolia Mares, a maker of sports equipment such as tennis rackets for Andre Agassi From owner-intl-tobacco@venice.essential.org Fri Feb 25 16:53:35 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 45D8F21B09 for ; Fri, 25 Feb 2000 16:53:35 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id QAA10731 for ; Fri, 25 Feb 2000 16:53:34 -0500 Date: Fri, 25 Feb 2000 16:53:34 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Antismokers submit petition protesting govt's backtrack (fwd) Antismokers submit petition protesting govt's backtrack Source: Yomiuri Shimbun., Saturday, 2/26/00 An antismoking group has handed over a petition with 120,000 signatures protesting a Health and Welfare Ministry panel's withdrawal of a policy to halve the number of smokers by 2010. The Japan Nonsmoking Friendship Association, based in Ina, Nagano Prefecture, started its signature drive early this month as tobacco-related industries and some Liberal Democratic Party members heated up their opposition to the ministry's numerical target. The association said it took only 10 days to collect the 120,000 signatures in Nagano and other prefectures, more than twice the number collected by the tobacco-related industry to oppose the target. The association has 47,000 members nationwide. At a press conference Thursday, Bungaku Watanabe, chief editor of monthly Nonsmoking Journal, said, "I desperately wanted the ministry not to give in to the tobacco industry's pressure and to achieve its original target." A high-ranking ministry official said, "Although we can not change our decision (to withdraw the target), we would like to tackle the issue since we and the association have a common goal to reduce the country's smoking rate." The ministry panel's initial numerical target had been the most ambitious feature of its proposed health improvement plan because Japan's smoking rate is remarkably high among industrialized nations. From owner-intl-tobacco@venice.essential.org Sun Feb 27 17:08:22 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id A4E6921B02 for ; Sun, 27 Feb 2000 17:08:22 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id RAA31930 for ; Sun, 27 Feb 2000 17:08:22 -0500 Date: Sun, 27 Feb 2000 17:08:22 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Subject: [Intl-tobacco] Aust Govt under fire over tobacco company tax breaks (fwd) Govt under fire over tobacco company tax breaks Source: Australian Broadcasting Corporation, Sunday, 2/27/00 The Federal Government is under pressure to scrap research and development concessions for the tobacco industry. The calls follow revelations that the industry is receiving close to $500,000 in concessions a year. ABC Radio National's Background Briefing this morning revealed that the Federal Government has been giving tobacco companies $400,000 a year in tax concessions under the research and development scheme. Philip Morris Australia has used the money to develop faster cigarette-making machines and high tar cigarettes for export to Africa. Philip Morris spokeswoman Nerida White says the company is entitled to the concessions. "Everybody is required to comply with the same guidelines and meet the same eligibility criteria, we don't think we should be discriminated against under tax law," she said. But the Australian Medical Association says the concessions must be scrapped. Anne Jones from Action on Smoking and Health agrees, saying smoking kills 18,000 Australians every year. "I think it's extremely hypocritical of the government to be giving handouts to the tobacco industry, whose products, when used as intended, cause cancer and heart disease," Ms Jones said. Govt defence The government has defended its decision to give tobacco companies $400,000 a year in tax concessions for research and development programs. Industry Minister Nick Minchin told Background Briefing the tobacco industry should not be singled out. "I don't mind if people want to have a debate about whether cigarettes should be prohibited altogether. In my view, that is a separate debate," he said. "If they're not prohibited [and] companies are paying tax producing legal products, they're entitled to seek tax concessions." Opposition The Federal Opposition has promised to end research tax breaks for the tobacco industry. Mr Beazley says previous Labor Governments have also provided similar tax breaks, but that policy has now changed. "Our view would be you should target the new industries, that we need the new industries that are the clever industries that advance our knowledge as a people and advance our productivity as a people," he said. "I strongly suspect that cigarettes don't come into that capacity." ABC VIDEO Health experts are horrified at the concessions given to the tobacco industry. Joe O'Brien reports. From owner-intl-tobacco@venice.essential.org Sun Feb 27 17:21:53 2000 Return-Path: Delivered-To: intl-tobacco@venice.essential.org Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by venice.essential.org (Postfix) with ESMTP id 5A40221B02 for ; Sun, 27 Feb 2000 17:21:52 -0500 (EST) Received: from milan.essential.org (milan.essential.org [216.0.124.12]) by milan.essential.org (8.9.3/8.9.3) with ESMTP id RAA32097 for ; Sun, 27 Feb 2000 17:21:52 -0500 Date: Sun, 27 Feb 2000 17:21:51 -0500 (EST) From: Robert Weissman To: intl-tobacco@venice.essential.org Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=X-UNKNOWN Content-Transfer-Encoding: QUOTED-PRINTABLE Subject: [Intl-tobacco] BAT and TOBACCO SMUGGLING: Submission to the House of Commons Health Select Committee (fwd) More great information from ASH UK on smuggling. Note that this document is a couple weeks old. Robert Weissman Essential Information=09=09=09| Internet:=09rob@essential.org BAT and TOBACCO SMUGGLING: Submission to the House of Commons Health Select Committee Source: ASH London, Monday, 2/14/00 CONTENTS Summary Setting the Scene Smuggling and the tobacco business How cigarette smuggling happens Health implications =96 why smuggling is not a victimless crime BAT's response Terminology How BAT influenced smuggling 1=A0=A0=A0=A0=A0=A0=A0=A0=A0 Summary 1.=A0=A0 Over the last six months ASH has been undertaking research in parallel with others, including the International Consortium of investigative Journalists, on the documents in BAT's litigation archive in Guildford England.=A0 Our work has been independent, but we have co-ordinated publication. 2.=A0=A0 Correspondence between BAT executives shows the company was heavil= y involved in orchestrating, managing and controlling cigarette smuggling in Asia and Latin America in the early 1990s. 3.=A0=A0 BAT exercised control on illegal distribution channels through intermediaries, notably Romar in Aruba and SUTL [Singapura United Tobacco Ltd] in Singapore. The form of control was: Adopting an approach to business planning and sales target setting which treats the various routes for smuggling as near-normal distribution channels which are under the same sort of control as legitimate channels; Deliberately establishing business relations with intermediaries that directly or indirectly supply smugglers and directing these companies so as to gain share in the illegal markets; Controlling the price and availability of products through these channels and so influencing end-market conditions; Building warehouses and stationing marketing personnel close to borders with poor customs controls; Using a small legal or duty-free market to justify advertising campaigns which have the real purpose of stimulating demand for cigarettes on sale in the illegal market (these are known as 'umbrella operations'); Organising complicated movements of cigarettes through several jurisdictions or multiple levels within an elaborate distribution chain =96 leading to difficulties in tracing the products; Identifying and/or developing transit routes where official controls are weak or corrupt. Colluding with other international tobacco companies over pricing and smuggling strategy; BAT executives knew the nature of their business and sought to conceal it. BAT was not the only international tobacco company involved. Quotes from documents illustrating each of the points above form the bulk of the body of this submission. 4.=A0=A0 The personnel involved are very senior =96 the memos feature curre= nt BAT board members including the Managing Director (Ulrich Herter), Finance Director (Keith Dunt) and Marketing Director (Paul Adams).=A0 No documents have been found to date, which refer to the current Chairman or Deputy Chairman. 5.=A0=A0 The assertion by BAT that it only acts legally is false.=A0 While = there is little evidence of BAT smuggling tobacco itself, there is compelling evidence to suggest that BAT is a significant part of a conspiracy which causes smuggling to happen. At least one BAT executive has been convicted for smuggling-related offences in Hong Kong and other legal actions are possible. While conspiracy action in the UK is unlikely for technical reasons, conspiracy-equivalent actions in the jurisdictions where the smuggling has taken place are plausible.=A0 US-based racketeering actions (RICO) have been launched against the tobacco industry for its involvement in Canadian smuggling and RICO actions against BAT and Philip Morris are reportedly under consideration by the Colombian Governors. 6.=A0=A0 The prevalence of tobacco smuggling in Colombia and the Golden triangle points to a wider picture which almost certainly involves the laundering of illegal 'narco-dollars' =96 proceeds of cocaine and heroin trafficking. There is no suggestion in the documents that BAT staff are directly involved in this process, but it is very likely that contraband distribution in these areas is carried out by established organised crime networks, and for these organisations tobacco smuggling would provide effective money laundering with advantages to all parties. By failing to take responsibility for the markets that its product enters, BAT is facilitating the spread of illegal drugs as well as that of tobacco. 7.=A0=A0 Recently smuggling has reached serious proportions in the UK and Europe, and from what we know, it appears that similar patterns of distribution management are being used to those documented from Latin America and Asia. This is particularly true of tobacco company relationships with intermediary groups in specific distribution nodes who supply smugglers. For a time, Andorra was used by British manufacturers, Gallaher and Imperial Tobacco in a manner similar to BAT's operations in Aruba detailed below. As a result of this distribution network, UK tobacco exports to Andorra rose from 13 million cigarettes in 1993 to 1,520 million in 1997 =96 vastly more than the Andorran population of 63,000 coul= d conceivably consume. 8.=A0=A0 ASH believes the issues raised by these revelations are a matter f= or a DTI investigation.=A0=A0 The Secretary of State for Trade and Industry ha= s powers to mount an investigation into corporate conduct in these circumstances under s.432 of the 1985 Companies Act.=A0 An HM Customs & Excise investigation is unlikely because we have already established that the relevant conspiracy offence did not come into force until 1999 and all the evidence we have pre-dates this. 9.=A0=A0 It is also important that BAT's own business practices are subject= to internal checks and balances and that the company is properly supervised by its non-executive directors, led by the Deputy Chairman, Rt. Hon Kenneth Clarke QC MP.=A0 Mr. Clarke should now launch an internal inquiry t= o report to the AGM on 27th April 2000.=A0 BAT should also make a clear statement to shareholders regarding its exposure to smuggling related-legal action. 10.=A0 Smuggling is not a victimless crime.=A0 Current projections suggest = one billion people will die of tobacco-related disease in the 21st Century =96 10 times as many as the 20th Century and overwhelmingly in developing countries.=A0 Taxation is one measure to counter this dreadful toll,=A0 and smuggling undermines it by lowering prices and reducing the political feasibility of a high tobacco tax policy.=A0 To this extent, tobacco companies benefit from the impact of smuggling in their markets =96 and health suffers. 11.=A0 The responsibility for tackling smuggling ultimately lies with governments.=A0 A new WHO convention, the Framework Convention on Tobacco Control has a proposed protocol on smuggling.=A0 This could form the basis of a global response to tobacco smuggling by creating a secure distribution system, introducing anti-fraud markings, tracking and tracing the movement of tobacco products and holding each person responsible for ensuring that they sell only to legitimate businesses. 2 Setting the scene British-American Tobacco (BAT) is in a pitched battle with U.S.-based Philip Morris for the growing global tobacco market.=A0 Both are enormously wealthy companies with global operations.=A0 In virtually every market in the world, these companies are fighting for market share and market growth.=A0 Smuggled cigarettes are the key weapon in a ferocious price war in crucially contested markets. Analysis of trade figures[1] suggests around one third of all internationally traded cigarettes are smuggled=96 about 355 billion cigarettes in 1996 =96 overwhelmingly the international brands of the multinational tobacco companies, such as 555 State Express (BAT), Marlboro (Philip Morris) and Camel (RJ Reynolds).=A0 This fraction and the absolute amount of smuggled cigarettes have been steadily rising through the 1990s.=A0 Although our evidence mostly relates to the period 1988 to 1994, the problem continues. 3 Smuggling and the tobacco business Most countries apply taxes to tobacco products to raise government revenue and, increasingly, to create a disincentive to smoking =96 an approach now advocated by the World Bank[2].=A0=A0 When cigarettes are smuggled the taxe= s are evaded and the black market price is lower.=A0=A0 The manufacturers and wholesalers are still paid for these sales, but the finance ministries and legitimate retailers lose out.=A0=A0 The lower prices increase demand and improve the competitive position of the brand and stimulate overall market demand =96 with knock-on health impacts due to increased smoking.=A0 In countries where many brands are sold illegally without duty not paid, brands that are sold legally (duty-paid) face stiff price disadvantages.=A0 This creates a powerful market pressure on manufacturers to ensure their products are well represented in illegal sales channels, or to go even further and ensure that illegal distribution channels are available for their product. 4 How cigarette smuggling happens Cigarettes legitimately move through the 'in-transit' regime without bearing tax until they reach the final end market =96 at which point tax is payable.=A0=A0 Most smuggling involves the cigarettes moving out of the untaxed distribution chain and entering the final end-market illegally =96 often through a third country.=A0 This can happen by legal export followed by illegal re-import or cigarettes in transit may be diverted from the legal to the illegal distribution chain.=A0 Smuggling is not generally driven by differences in tobacco taxes between countries, but by the avoidance of taxation by diversion from the wholesale distribution chain = =96 where duty has not been paid. 5 Health implications =96 why smuggling is not a victimless crime If current smoking trends persist, there will be about one billion deaths from tobacco during the 21st century compared with 100 million during the whole of the 20th century.=A0 Around three quarters in developing countries= =2E China alone (with 20% of the world's population) already suffers almost a million deaths a year from tobacco, a figure that is likely to at least double by 2025.[3] Tobacco-related illness is the single largest avoidable public health problem and still on the increase. As the international tobacco companies direct their marketing firepower towards developing countries, a range of public health measures including increased taxation, can attenuate the burden of disease and death. The health case for increasing tobacco taxes is clear and well expressed in a 1999 report by the World Bank[4]: "Evidence from countries of all income levels shows that price increases on cigarettes are highly effective in reducing demand.=A0 Higher taxes induce some smokers to quit and prevent other individuals from starting.=A0 They also reduce the number of ex-smokers who return to cigarettes and reduce consumption among continuing smokers.=A0 On average, a price rise of 10 percent on a pack would be expected to reduce demand for cigarettes by about 4 percent in high income countries and by about 8 percent in low- and middle-income countries, where lower incomes tend to make people more responsive to price changes.=A0 Children and adolescents are more responsiv= e to price rises than older adults, so this intervention would have a significant impact on them." Smuggling undermines this tax policy in two ways: by supplying cigarettes at a lower price and by creating political pressure (promoted by the tobacco companies) for reductions of tax policy.=A0 These market-wide effects are another reason why the companies benefit from smuggling =96 in addition to their competitive edge.=A0 The result is increased smoking, and hence increased illness, especially in developing countries, among the poor,=A0 and among children and adolescents. 6 BAT's response BAT responded on 31st January 2000[5] by dismissing the allegations as selective and refusing further comment: We do not intend to answer questions or address allegations apparently based on highly selective and out-of-context documents... The documents are certainly a selection from the total of 8 million pages held in Guildford, and these are a sub-set of the whole of BAT's documents which includes documents post-1994, documents not released to the State of Minnesota, documents for which legal privilege is claimed, and lost and shredded documents.=A0=A0 Even a single document which indicates control ov= er smuggling requires explanation and justification. The decision not to comment was reversed on 4th February when BAT's Deputy Chairman, the Rt. Hon Kenneth Clarke QC MP, made a statement to The Guardian[6] and acknowledged: Where any government is unwilling to act or their efforts are unsuccessful, we act,completely within the law, on the basis that our brands will be available alongside those of our competitors in the smuggled as well as the legitimate market. The thrust of this submission is that the 'acts' that Mr. Clarke refers to amount to control of smuggling through intermediaries, and go well beyond acceptable corporate behaviour, at times have broken the law, and, at best, operate in a legal 'twilight'.=A0 The following two sections outline the different ways in which BAT exercised control by quoting from memos discovered in the Guildford depository. 7 Terminology BAT does not generally refer to "smuggling" or to the product as "contraband" in its internal correspondence.=A0 The company tends to use it= s own marketing terminology to refer to smuggled products.=A0 Though the meaning of such terms is not immediately apparent, the context in which the terms are used in the documents clarifies the meaning.=A0 The crucial terms which are used to describe smuggled product are: DNP ('duty not paid' in contrast to 'duty paid' and 'duty free') Transit (a reference to the usual source of smuggled cigarettes) GT (General Trade) There are also various other descriptions which often refer to illegal tobacco markets: 'border trade', 'parallel exports', 'free markets' and occasionally VFM [value for money]. In each case the context of the text in the document has led us to conclude that the activities described refer to smuggling despite the anodyne language. Documents demonstrating the meaning of the terms of DNP[7] =96 Transit[8] = =96 GT[9] are stored on the ASH web site, but for the sake of brevity these have not been reproduced here. 8 How BAT influenced smuggling One reading of the relationship between tobacco companies is that smuggling goes on entirely outside the control and intent of the tobacco companies =96 they simply acknowledge smuggling as a reality and act accordingly. This has been the basis of BAT's defence. However, the documents suggest BAT's conduct goes way beyond this and that it exerts control over smuggling channels through intermediaries.=A0 The following te= n sections give examples from the documents that illustrate the true nature of BAT's involvement.=A0 There are further documents that support each poin= t available on the ASH web site. 8.1 Documents showing that BAT adopted an approach to business planning which treated various smuggling routes as near-normal distribution channels - subject to the same encouragement, exploitation and control as legitimate channels: One of the most powerful memos shows BAT simply deciding to increase its Argentinean market share through smuggling. Memo: 18/5/93[10] Keith Dunt to Ulrich Herter, Barry Bramley [Chairman BAT Co], Pilbeam, Castro "SUBJECT: DNP BRAZIL =96 ARGENTINA I am advised by Souza Cruz that the BAT Industries Chairman has endorsed the approach that the Brazilian Operating Group increase its share of the Argentinean market via DNP." [The Chairman of BAT Industries at the time was Sir Patrick Sheehy] ********************************** This fax shows that BAT actively encouraged specific players into illegal markets, it also shows that Keith Dunt appeared to be aware of the sensitive nature of the markets described. FAX: Keith Dunt [BAT Latin American Director] to A.M.Castro [Souza Cruz] 25/01/93[11] "As you know I spent last week in Argentina =96 with Nobleza Piccardo. In view of the close liaison needed between us in the Southern Cone I am forwarding you, (by hard copy only) a copy of the trip notes. I would ask that these are not shared nor copied. It is absolutely important that we leverage your Company's muscle into the Argentinian (sic) situation, (plus in fact that of B&W) in terms of the DNP [Duty Not Paid] business." (original emphasis) ********************************** This letter shows that Keith Dunt of BAT actively encouraged those in other organisations to disregard the 'ethical' judgements surrounding breaking the law: 24/6/92[12] "Thanks for your notes of 15th June on the DNP market... 1=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 DNP Market/Ot= her Matters We will be consulting here on the ethical side of whether we should encourage or ignore the DNP segment. You know my view is that it is part of your market and to have it exploited by others is just not acceptable..." (original emphasis) ********************************** This marketing plan shows that BAT actively sought to expand their share of illegal markets as an intrinsic part of their company strategy: 1995 BAT Interim Marketing Plan for State Express 555 in Vietnam[13] "Trade Marketing and Distribution: We must vigorously pursue strategies designed to achieve and sustain measurable competitive advantage. Accordingly, total in market volume, irrespective of source, channel presence, marketing, market intelligence and share of the international segment should be the primary measures of achievement."(original emphasis) ********************************** Similarly this Five Year Plan shows BAT's intention to actively manage illegal business: BATCo Global Five-year Plan 1994-1998[14] "1.1.1 Market trends: 1.1.1.4 (iii) Continued pressures on domestic market performance and profitability rising from border business and in some markets, from excise/ tax evasion. In 1993, it is estimated that nearly 6% of the total world cigarette sales of 5.4 trillion were DNP sales. Eastern Europe and the Asia-Pacific region (c85blln each) accounted for the majority of this volume. Though Western Europe (c50blln) was also significant. In relation to total market sales, DNP volumes are largest in Eastern Europe (c13%) and Africa/ M. East (c12%), but are also significant in Latin America (c9%) and Western Europe (c7%). A key issue for BAT is to ensure that the Group's system-wide objectives and performance are given the necessary priority through the active and effective management of such business." (emphasis added) 8.2 Documents showing BAT controlling the price and availability of products through illegal channels; The printed document illustrates the extent to which BAT controlled this illegal market =96 they had the power to stop exporting into specific channels. The marginalia shows that they were aware of the risks of continuing their illegal trade, but continued regardless: "RESPONSE TO J REMBISZEWSKI VISIT [02/09/92][15] 1.1=A0=A0=A0=A0 STOP DNP EXPORTS Agreed to continue. [K Dunt Marginalia: Agreed with Ulrich/Barry (despite risk) in July]" ********************************** This strategy paper shows BAT actively looking for 'alternative' routes to penetrate Chinese markets, as official exports to China are limited by a quota. It also shows the extent to which it can control pricing in end markets and through specific smuggling routes: Media Strategy Paper: China (555)[16] =2E. 4=A0=A0=A0=A0 To establish regular contact with other major industry member= s to consult on the duty paid business in China (CNTC), in areas of pricing, smoking and health issues, credit/consignment stocks. 5=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 To investigat= e alternative export routes/customers that will improve penetration of UK brands in northern and central provinces. 6=A0=A0=A0=A0 To continually monitor the Sino-Russian Border Trade business= during Q3/Q4 1991, to further test effectiveness of this route, and dependant on results to reappraise the route and pricing in Jan 1992. ********************************** This briefing paper shows that BAT takes pains to understand and to some extent control the pricing of illegal products in these markets, and that they are aware of the possibility that the GT [General Trade =96 illegal market] may be stopped by an enforced Government clampdown. Information sent on 21.10.93 by Paul McPhail, BAT Singapore, to Patrick O'Keeffe, BAT Millbank, re. McPhail's recent Vietnam visit:[17] "B: Key Issues Pricing Ex factory price should be such that retail price falls at parity with GT (not fully controllable). GT price structure is: (In US$ per case) BATUKE to SUTL: $245 SUTL to Importer (Cambodia): $290 Importer to Wholesaler (Cambodia): $348 Wholesaler to Trader (Cambodia border): $350 Therefore GT exiting Cambodia at US $350 (Laos route also appears to exit at US $350)" "We must accept the continued presence of GT (unless a complete Government clampdown takes place). Both versions will have a role to play in the further building of the brand and the 'system' profitability...We have the high ground [in negotiations with Vinataba] given the excellent quality of distribution, presence, and value of the GT product." ********************************** These briefing notes further demonstrate the degree of control exerted over pricing in illegal markets. Visit Notes =96 China 2/3/92-6/3/92: A.A.Chown[18] "Lucky Strike is far too low in its price positioning in the free market and is considered by the Group manager for B&W brands as not having the critical mass in the market yet to be able to take a significant price repositioning upwards. However, the conundrum is that should Lucky Strike grow at its low price positioning it will provide fertile feeding ground for Marlboro as smokers aspire to the "face" value of premium priced US international brands once they are affluent enough to uptrade. A price strategy for Lucky Strike needs to be developed. Some work has to be done to quantify the risks of a relative increase in price to Marlboro (over time) on forecast sales and, therefore, contributions." ********************************** This whole document describes plans for the Belmont Brand, demonstrating BAT's control over both the DP [Duty Paid] and GT [General Trade/illegal] markets: determining when and how Brands are launched in illegal markets, as well as the ability to remove specific brands from particular markets at will. Document dated February 1995, entitled Belmont Name Change: Project Maiden[19] "2. Options =B7 Maintain current Belmont in GT channel only =B7 Maintain current Belmont in GT channel and launch new brand in DP =B7 Launch new brand in GT and DP channel 1.=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 Key Issues =B7=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 Risk of name chan= ge vs. maintaining current Belmont in GT channel... 2.=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 Risk analysis 2.1=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 Name Change (DP/ GT) Pros: =B7=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 clean brand ow= nership for BATCo =B7=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 avoids relianc= e on GT channel... Cons: =B7=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 ...profit impa= ct vs. maintaining Belmont in GT channel only 2.2=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 Launch new brand in DP and= maintain Belmont in GT Pros: =B7=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 Maintains bran= d heritage via GT channel =B7=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 Logical that G= T product continues to be Belmont =B7=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 Minimises risk= given importance of GT business Cons: =B7=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 ...cannot supp= ort Belmont in GT via advertising 2.3=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 Maintain Belmont in GT onl= y Pros: =B7=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 Avoids risk of= consumer rejection =B7=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 Protects curre= nt position (to an extent) at lower risk than 4.1 above Cons: =B7=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 ...GT channel = closes... 10. Implementation plan Assumptions: =2E.Belmont only sold in GT until cancellation action outcome known 10.1 Plan summary =B7=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 ...Risk of goi= ng sooner greater than risk of GT only sales for 4 months =B7=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 new brand laun= ched in DP/ GT simultaneously 10.2 Key Actions C. Pre cancellation announcement: -=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 manage sto= ck levels in GT channel -=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 initiate p= roject Scorpio (Bogota distribution)... D. Cancellation announcement: -=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 ...Launch = new brand in DP/ GT channels..." - 8.3 Documents showing BAT exploiting relatively weak border controls; specifically the encouragement of storage warehouses and strong marketing close to strategic borders to stimulate illegal cross-border sales: A brief quote illustrating the BAT attitude to illegal sales over the Paraguay/Argentine border. Paraguay Trip Notes 12-14 July 1994[20] "2.21: Excellent work has been done in the border town, which is the main supply point of DNP product for the Argentinean market." ********************************** These notes were circulated to some of the most senior BAT executives, showing high levels of BAT support for and awareness of groups supplying product to various strategic borders and comprehensive knowledge of an illegal market. Paraguay Market Visit 24-25 January 1994[21] Notes dated 8.2.94, distributed to: KS Dunt J Rembiszewski C Figueiredo IG Hacking C Rodriguez "12. Border Trade 12.1 Sabah recruiting ex BAT personnel to dedicate himself to developing and managing the Derby border trade. =2E.15. Systems 15.3 Thought should be given to provide accounting and system backup from either Chiletabacos/ Nobleza for the Peruvian Paraguayan/ Bolivian operations with Bigott supporting the Colombian and Ecuadorian office. 16. Border Trade =96 Market Visit 16.1 Derby 84mm. Out of stock =96 heavy demand for the product, 100mm Derby in stock. Need to get the split 100mm/ 84mm right. 16.2=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 Need to get buffer stock availa= ble a.s.a.p. 16.3=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 Le Bouqueron's version of Ritz = selling through well. Trade know it as the counterfeit version. 16.4=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 Souza Cruz's Ritz has been out = of stock for two weeks, trade view for this was that it was more profitable to sell product into Brazil and not Argentina. Is this true or has product been shorted by Souza Cruz?" ********************************** These meeting minutes show BAT's main South East Asia distributors SUTL=A0 [Singapura United Tobacco Ltd] arranging for border warehousing to be established near a 'free trade zone' in Myanmar. Minutes of meeting with SUTL on Friday 1 March 1991[22] 1)=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 Burma transhipment =2E.In conjunction with the Yunnan Regional Government... Moosa (a town on the Burma China border) was to become a 'trading city'... Final ratification is due on 9th March... the indication is that Moosa is to become a 'free trade zone'. JH [Janet Ho of SUTL] intends to visit Moosa... and if positive, arrange for warehouse facilities... It is anticipated that the assessment value of cigarettes will fall on 9th March, returning Burma to a duty paid market." 8.4 Documents showing BAT's use of 'Umbrella Operations' a term denoting the use of limited legal or duty free sales to justify advertising campaigns which have the real purpose of stimulating demand for illegal cigarettes. These trip notes show that BAT are capable of tracking the movement of their tobacco products, despite their claims to the contrary to Customs and Excise. The notes also explain in detail the concept of Umbrella Operations and the possible risks associated with this sort of covert action. Internal document from Andrew O'Regan to ADG Pereira dated 7.12.93[23] Trip Notes =96 India 29 Nov to 2 Dec 93 "There was no evidence yet of any of the three separate shipments made to the Gulf and destined for this market. =2E.Issues, Recommendations and Action Official Imports: Achieving official importation of the brands should be a high priority because it will help legitimise our ATL activities and also enable some promotional work to be done directly with our target consumers. Our SEFK target group tend to socialise at 4 & 5 star hotels. The "Available in Duty Free" cover for extensive media coverage needs to be very carefully used, as it can easily become antagonistic and will draw attention to the source of market supply, which we would rather did not come under scrutiny. Legitimate imports through various hotel groups is defensible and provides another source of "cover" for our brand building plans, and a promotional platform." ********************************** A further document explaining 'Umbrella Operations', and BAT's long term aim to use cheap illegal channels to build demand for its brands in new markets. NOTE: Dunt (BAT) to Bramley (BAT) 6/9/92[24] "RECOMMENDATIONS 6.1.3=A0=A0=A0=A0=A0=A0=A0 It is recommended that BAT operate under "umbrel= la" operations. A small volume of Duty Paid exports would permit advertising and merchandising support in order to establish the brands for the medium/long term with the market being supplied initially primarily through the DNP channel." 8.5 Documents showing the complicated movements of cigarettes through several jurisdictions or multiple levels within an elaborate distribution chain =96 making illegal product tracing virtually impossible; This marketing plan discusses the complexity of BAT's Vietnamese market distribution, as well as the problems associated with marketing an illegal product. 1995 Interim Marketing Plan for State Express 555 in Vietnam[25] "The 'Vinataba Saigon' Wholesale Channel: =2E.Product is then sold on through a series of sub-distributors and it is at this level that 'imported product' enters the wholesale chain...It is not unusual for stock to pass through three or more 'wholesale layers' before ending up in retail." "Retail Channels: =2E.Product visibility however, outside the central commercial district where it is displayed openly is not good due to the requirement in those areas to conceal illegal product. =2E.Immediate challenges are therefore distribution of legal product, universe identification and classification, and presence marketing domination of target outlets =2E.1995 Trade Marketing Objectives and Strategies: =2E.Presence marketing within convenience and key sub distributors (the assumption being that distribution within these channels is not a problem)." ********************************** A report detailing various efforts by tobacco companies to make distribution within a market more complicated and thereby to facilitate the evasion of taxes. Report:=A0 Philippines =96 A Draft Overview and Recommendation, 1994[26] "2.3 Taxes: =2E.As cigarette taxes are levied at the first level of sale (i.e. to distributor), Fortune has established a number of dummy marketing companies, selling at below manufacturing cost, to avoid considerable taxes. "...2.5 Distribution: The Philippines distribution structure is a multilayered system, which passes through up to 7 levels prior to the consumer purchasing the product. The chain starts with the manufacturer who sells to the marketing/ distribution companies often lower than cost to minimise excise taxes..." 8.6 Documents showing BAT encouraging or developing new smuggling routes, particularly in areas where official controls were weak or corrupt. These meeting notes show that official exports to China were routed through BAT China, BATCo subsidiary in the state, while illegal sales are handled by SUTL. The document specifically notes BAT's encouragement for the development of new overland smuggling routes. MEETING NOTES: SUTL and BATCo 24/2/93[27] "CHINA; SUTL are encouraged to expand overland routes through Indochina. Enquiries for duty paid should be referred to BAT China. =2E.P.N. Adams agreed that SUTL should be able to pursue any enquiries from the USSR provided that goods were shipped through Eastern Siberia and not through Europe or the Baltic ports." ********************************** This Company Plan explains in detail the various methods of tobacco reaching a national market, and the financial and legal implications of each method. FAR EAST SOUTH COMPANY PLAN. 1992 =96 MYANMAR[28] "Product reaches the market by one of three methods:- i)=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 Duty Paid = =96 duty rates vary according to point of entry Yangon is the most expensive legitimate import for all stocks. Rates are constantly under review with a uniform rate being sought in order to eliminate transit. ii)=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 Partial Duty Paid= =96 Product arrives at ports less rigidly "policed" Duty is, therefore, paid on some of the amount imported. This will vary according to the compliance of the customs personnel =96 the usual point of entry being Moulmein. iii)=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 Transit=A0 - Produc= t arrives at various points on a creek to the north of Moulmein and at Kawthaung near Thailand. Shipment is met and transported to Yangon. The retail trade is supplied through the major wholesale markets in each of the cities =96 Mengala in Yangon; Xeygyo in Mandalay, etc. Product moves up-country with an appropriate cost for the transport, etc, being reflected in retail pricing. This varies from between 2.5% - 5% of case price from point of entry to destination, i.e. US$8.00 to US$15.00. =2E. Border trade fluctuates, dependent on such factors such as the weather (ie monsoon) and insurgent rebel activities. Established buyers positioned at each of the main border trade points in Bangladesh, China and Thailand maintain regular orders with Myanmar importers. =2E. PRICING MODEL =2E. 2)=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 Negotiations betwe= en the government and traders over the last year have failed to resolve the issue of duty levels. However, as at July 1991, the port of Moulmein has been closed to importers and traders have been ordered to route all shipments through Kawthaung where duty will be enforced in full. This is the firmest indication yet that the authorities 'blind eye' with regard to transited goods is beginning to open. In return, they promise a review to the duty levels by the end of July that should go some way in eliminating the necessity to transit." ********************************** A further quote from the same document gives details of illegal tobacco distribution in the Vietnamese market, and of BAT's intimate knowledge of the trade. FAR EAST SOUTH COMPANY PLAN. 1992 =96 VIETNAM[29] "DISTRIBUTION CHANNELS Following the ban in October 1990, imported cigarettes like JET, 555, HERO and RUBY QUEEN are sold into Vietnam through Cambodia wholesale market. The main route into Vietnam is by the river. Due to continued activity by the authorities, wholesalers in Vietnam do not hold large buffer stocks. On the retail level, 555 and JET are readily available in HCM city. However, the routes north are still hazardous. =2E. SWOT [Strengths, Weaknesses, Opportunities, Threats] analysis STRENGTH 1=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 555 with its = high level of awareness and demand has prompted wholesalers and retailers to stock the brand despite the ban and the risk. 2=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 SUTL with its= strong network of customers in Cambodia have been able to capitalise on the demand of the Vietnamese customer despite the ban. 3 Increased market knowledge through market visit." 8.7 Documents showing collusion with other companies over pricing and distribution This document refers briefly to an arrangement between Philip Morris, RJ Reynolds and BAT to introduce their brands into the Thai market at a set price. This constitutes cartel behaviour and is, as such, illegal under Thai law. General Comments/ Action Points Arising out of Market Visits 13-30 November, 1990[30] "4. Thailand =2E.PM/ RJR/ RPE are advocating market entry at 40 Baht in order to demonstrate that the legal business will be minimal, GT will continue and therefore revenue lost. The belief is that the Thais will then reduce the Duty." ********************************** This document demonstrates an extraordinary example of cartel behaviour, referring to 'share agreements' under which companies would divide market share to an agreed formula and so reduce the marketing cost of competing.=A0=A0 The document also refers to an 'industry agreement' which needed ratification from the BATCo Board =96indicating most senior awareness. The document mentions negotiations between Philip Morris and BAT over pricing levels in both legal and illegal channels =96 once again showing the level of control the companies exert over their illegal distribution networks. FILE NOTE: marked "Secret" 05/08/92[31] "MEETING WITH PHILIP MORRIS REPRESENTATIVES At Pennyhill Park, Bagshot In attendance: Peter Scheer&nsbp&nsbp&nsbp&nsbp President Latin America Region [PMI] Rafael Arguelles&nsbp&nsbp&nsbp&nsbp Vice President Latin America Region [PMI] Fred Hauser&nsbp&nsbp&nsbp&nsbp Vice President Central America, Peurto Rico, and Dominican Republic [PMI] K S Dunt&nsbp&nsbp&nsbp&nsbp ) D J Etchells)&nsbp&nsbp&nsbp&nsbp BATCo T M Wilson&nsbp&nsbp&nsbp&nsbp ) =2E. REGIONAL FOR C.A. [Central America] 1)=A0=A0=A0 PMI obviously anxious for increased profitability from C.A. and would like some agreement containing expensive market support practices such as bonusing, exclusivity and level of advertising support in certain territories should be considered so as to improve industry profitability of both companies. 2)=A0=A0=A0 They wanted an indication from BATCo of the possibility of a sh= are agreement in all four Countries where we compete and suggested we exchange concepts by the end of September 1992, for discussion at a meeting in October... =2E. ANDEAN PACK VENEZUELA 2)=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 Price Increases BATCo stated concern over the significant growth of the market segment emerging in DNP and cautioned that this would, if allowed to spread, destabilise the industry throughout the region. PMI agreed with this stance. BATCo suggested an aggressive price increase to be negotiated at a local level for DNP to be implemented if possible by the end of August. =2E. Following action on DNP PMI suggested we should pursue a DP price increase. PMI wanted linkage between the DNP increase. This was not supported by us. =2E. MERCOSUR ARGENTINA PMI rejected any joint move for domestic price increases or widening the market gaps. They also rejected any share agreement in Argentina unless this was linked with the Brazilian market. KSD [Keith Dunt] confirmed that this was outside his remit but he would refer back to Souza Cruz and the BATCo board." 8.8 Evidence which suggests that BAT knew the nature of this business and sought to hide their involvement in it: This document shows that BAT employees were aware of the legal implications of their activities, but took steps to avoid detection. Secret BATCo Singapore document entitled "Proposed re-definition of Market Responsibilities." December 1988[32] "Transit: the nature of this business brings paradoxical requirements of an arm's length approach and close supervision. Where BAT has legitimate interests in the end markets it must be able to disassociate itself from direct involvement in parallel imports. Nevertheless, indiscriminate sourcing can and does lead to potentially embarrassing problems. This conflict can be resolved by maintaining close control over the accredited export agent in the home market, backed up market intelligence garnered from end mar