[Intl-tobacco] Australia/US: BAT defies court over 'confidential' files

[Robert Weissman]

Don't miss the last paragraph of this story.

http://news.independent.co.uk/business/news/story.jsp?story=3D457312

BAT defies court over 'confidential' files

By Abigail Townsend

26 October 2003

Tobacco giant British American Tobacco, owner
of Lucky Strike and Dunhill cigarettes, is in a
bitter battle with the US Department of Justice
over whether it should hand over confidential
documents.

A judge ordered last Monday that BatCo, a US
subsidiary of the FTSE 100 group, be fined
$25,000 (=A314,800) for every day it fails to hand
over the documents; the total fine is now
$125,000. The DoJ believe the documents, held
by BAT's Australian subsidiary, might show the
company had hidden the health risks associated
with tobacco.

But BAT claims the documents are privileged and
refuses to hand them over. A spokeswoman said: "They are privileged and
confidential documents and we want to protect them." She declined to discus=
s
what they contained but added: "BatCo definitely doesn't agree with the rul=
ing
and thinks it's flawed and erroneous. It is exploring all possibilities
for appeal
and BAT Australia is to instruct its lawyers to intervene."

BatCo intends to ask the judge to allow its lawyers to review the documents
instead of handing them over to the DoJ. If that is not acceptable - and
it is
understood the DoJ will fight the suggestion - the case will go to the appe=
al
court. BatCo will ask for the fines to be suspended while it appeals.

The DoJ is investigating the tobacco industry over fraud and racketeering
claims. BAT's involvement stems from a lawsuit filed against its Australian
subsidiary in 2001 by Rolah McCabe, who has since died of lung cancer.
It lost
and was ordered to pay A$700,000 (=A3250,000) in compensation, although the
decision was overturned on appeal. However, during the trial it emerged BAT
had shredded documents that were "were likely to be of importance" in
litigation.

The tobacco industry is under increasing pressure in the US as smokers seek
compensation for smoking-related illnesses. Companies have been accused
of withholding information on the serious-ness of the health risk from toba=
cco,
while individual states have sought compensation to help pay for the
care of
terminally ill smokers.

The industry and the US authorities are locked in a cycle of lawsuits and
appeals. The word's largest tobacco company, Philip Morris, was in March
ordered to pay $10.1bn in damages in a class-action suit after it was
found to
have deceived smokers into believing light cigarettes were less dangerous
than regular ones. It is had lodged an appeal against the decision with the
Illinois Supreme Court.

The only UK court case is that of Margaret McTear, who is suing Imperial
Tobacco in Scotland for up to =A3500,000 on behalf of her husband, who
died in
1993 of lung cancer.

* The Turkish government was this weekend mulling over bids for the
state-owned Tekel tobacco company. BAT is one of seven interested parties;
others include Imperial Tobacco and Altria, owner of Philip Morris and the
front-runner to take control.