[Intl-tobacco] The tobacco papers: The insider

[Robert Weissman]

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.