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The Guardian view on big tobacco: stop the spread

Companies like British American Tobacco are using the same tactics they used in the global north to delay legislation in the global south

https://www.theguardian.com/commentisfree/2017/jul/12/the-guardian-view-on-big-tobacco-stop-the-spread

Global corporations work hard to persuade the public of their commitment to corporate social responsibility. British American Tobacco, for example, declares on its website that “as the world’s most international tobacco group, we are in a position to take the lead in defining and demonstrating what a socially responsible tobacco company should be”. It goes on to set out five core beliefs that underpin its “high standards of behaviour and integrity”. The evidence that the Guardian is publishing this week – at the start of a two-year project intended to show just how the global tobacco industry works – suggests that the distance between the words and the deeds of this huge and powerful company is about the size of the distance from the developed to the developing world.

A generation of campaigners in western Europe and north America are familiar with the devious tactics that are now in play in Africa and Asia. The wickedly slow pace of change from 1949, when the link between smoking and cancer was first established, to the introduction of plain packaging in the UK nearly 70 years later, owes everything to the sustained campaign the industry fought against regulation that would limit the harm of smoking. It was fought in the public domain, in carefully placed reports that undermined medical research or questioned the impact of proposals like plain packaging. And it was fought privately, in privileged access to politicians, sometimes indirectly by other interested parties. The most notorious example was the Ecclestone affair in 1997, when a Labour pledge to ban tobacco advertising at all sports events was suddenly and inexplicably withdrawn. It soon emerged that the Formula One boss, Bernie Ecclestone, had donated £1m to Labour, and that there were hopes of more to come.

In the course of those 70 years of delay, millions of people will have taken up smoking and a significant number will have suffered and died because of it. Now the tobacco companies are fast exporting the insidious tactics that worked for so long in the markets of the global north to new ones in the global south. More than half of BAT’s sales are now in emerging markets.

Take the increasingly prosperous East African country of Kenya: its government signed the World Health Organisation’s Framework Convention on Tobacco Control in 2004, before it was officially adopted. Yet nearly 15 years later, multinational tobacco firms are still fighting to delay the introduction of anti-smoking laws. As one recent study found, the slower the process of legislation, the greater the scope for tobacco company influence. The WHO reports how companies sponsor sporting events for children, for example, and hand out cigarettes in shopping centres regardless of people’s age. Already, proportionately more Kenyan children are smoking than adults.

It’s not all about the companies. Part of the story is the low priority given to public health: in a country of 45 million people like Kenya, the anti-smoking budget is $45,000. But these are places where tobacco can do business. Tobacco taxes are vital revenue, so the tobacco companies claim that regulation will erode the tax base and provide new opportunities for the black market. And part of it is corruption, the purchase of influence.

As Bath University’s Tobacco Tactics website details, big tobacco’s attempts to delay the introduction of laws to limit the harm of tobacco across Africa follow a familiar pattern: the companies influence politicians, they intimidate tobacco farmers, and they use unrestrained advertising to promote smoking. The companies insist they are only ensuring that legislation is proportionate. These are weasel words. Their tactics are well-funded, well-rehearsed and slick. They worked for years in the old markets. But if tactics can be exported, so can campaigns. BAT is about to become one of the FTSE 100’s top three companies. Reputation matters. Shareholders have leverage – and they should prepare to use it.

Nairobi’s smoking culture – in pictures

In east Africa, the tobacco industry, including British American Tobacco, has been putting pressure on local governments over some of the regulations attempting to curb smoking.

https://www.theguardian.com/world/gallery/2017/jul/12/on-the-tobacco-road-david-levene-in-kenya

BAT says it is not against all regulation, but from ‘time to time’ needs to challenge it. BAT Kenya is currently taking a legal case to the country’s supreme court over some regulations.

Every year, more than 6,000 Kenyans are killed by tobacco-linked diseases, part of what the WHO calls the ‘biggest public health threats the world has ever faced’.

Campaigners say the industry is developing its African market and sees new potential customers as populations and prosperity grow there.

David Levene spent some time documenting the country’s smoking culture in Nairobi, noticing the prevalence of cigarette brands in daily life. This collection is gathered from his walks through the city

Facts from Tobacco Atlas

Smoking in public areas in highly restricted in Kenya. These two men sit back in one of central Nairobi’s smoking zones, as designated by the country’s ministry of health. Photograph: David Levene for the Guardian

Smoking in public areas in highly restricted in Kenya. These two men sit back in one of central Nairobi’s smoking zones, as designated by the country’s ministry of health.
Photograph: David Levene for the Guardian

Meru, Kenya - Over the past 50 years, Africa has seen a significant increase in tobacco farming. Many farmers suffer from green tobacco sickness, which shares symptoms with nicotine addiction and withdrawal. It’s simply caused by being in consistent contact with the plant, as nicotine can be absorbed through the skin especially when wet. Tanzania, Kenya’s southern neighbor, earns $50 million per year from tobacco but spends $40 million for tobacco- related cancers alone. Photograph: David Levene for the Guardian

Meru, Kenya – Over the past 50 years, Africa has seen a significant increase in tobacco farming. Many farmers suffer from green tobacco sickness, which shares symptoms with nicotine addiction and withdrawal. It’s simply caused by being in consistent contact with the plant, as nicotine can be absorbed through the skin especially when wet. Tanzania, Kenya’s southern neighbor, earns $50 million per year from tobacco but spends $40 million for tobacco- related cancers alone.
Photograph: David Levene for the Guardian

Approximately 176 million adult women worldwide are daily smokers and 37 women die every week in Kenya due to tobacco related complications. Photograph: David Levene for the Guardian

Approximately 176 million adult women worldwide are daily smokers and 37 women die every week in Kenya due to tobacco related complications.
Photograph: David Levene for the Guardian

A vendor sells single sticks in central Nairobi’s Uhuru Park. Most Kenyan smokers prefer this to buying whole packs, given the cost.Manufacturers are not allowed to produce cigarettes in packs of less than 10, and they say they want customers to purchase full packs, and that they work with vendors to encourage them to sell them this way.The World Health Organization estimates that people in low-income countries can spend as much as 10% of household income on tobacco products.Uhuru Park is also a key spot for Nairobi’s bourgeoning skate scene. Photograph: David Levene for the Guardian

A vendor sells single sticks in central Nairobi’s Uhuru Park. Most Kenyan smokers prefer this to buying whole packs, given the cost.Manufacturers are not allowed to produce cigarettes in packs of less than 10, and they say they want customers to purchase full packs, and that they work with vendors to encourage them to sell them this way.The World Health Organization estimates that people in low-income countries can spend as much as 10% of household income on tobacco products.Uhuru Park is also a key spot for Nairobi’s bourgeoning skate scene.
Photograph: David Levene for the Guardian

Excises taxes are still the most effective controls against tobacco. In Kenya, they make up 35% of retail price, similar to the US’s 38%. One of the elements of government plans that BAT Kenya is fighting in the court is a new tobacco industry tax.Clear adverts may be outlawed, but still, Kenyans know what is being sold. These red boxes are instantly recognizable. Photograph: David Levene for the Guardian

Excises taxes are still the most effective controls against tobacco. In Kenya, they make up 35% of retail price, similar to the US’s 38%. One of the elements of government plans that BAT Kenya is fighting in the court is a new tobacco industry tax.Clear adverts may be outlawed, but still, Kenyans know what is being sold. These red boxes are instantly recognizable.
Photograph: David Levene for the Guardian

The afternoon sets on Enterprise Road in Nairobi’s industrial zone. Photograph: David Levene for the Guardian

The afternoon sets on Enterprise Road in Nairobi’s industrial zone.
Photograph: David Levene for the Guardian

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A smoker in a Nairobi smoking zone Photograph: David Levene for the Guardian

A Nairobi smoking zone Photograph: David Levene for the Guardian

A Nairobi smoking zone
Photograph: David Levene for the Guardian

Nairobi, Kenya Photograph: David Levene for the Guardian

Nairobi, Kenya
Photograph: David Levene for the Guardian

The combined revenues of the world’s 6 largest tobacco companies in 2013 was USD342 Billion, 85% larger than the Gross National Income of Kenya Photograph: David Levene for the Guardian

The combined revenues of the world’s 6 largest tobacco companies in 2013 was USD342 Billion, 85% larger than the Gross National Income of Kenya
Photograph: David Levene for the Guardian

Big tobacco still sees big business in America’s poor

The US is pegged as an ‘exciting’ market, but this growth disproportionately affects the poor – including the industry’s growers and laborers

https://www.theguardian.com/world/2017/jul/13/tobacco-industry-america-poor-west-virginia-north-carolina

Wheeling his oxygen tank in behind him, Leslie E Adams shuffled into the lung doctor’s exam room and let out a long string of rattling coughs. He tried to catch his breath, and coughed some more. He is 63, but looks a decade older.

“I got stage three black lung. There ain’t no stage four. I’m on my way out,” said Adams. “Now, I am slowly going down the mountain.”

The American smoking rate has plummeted since the mid-20th century. Yet somehow the US remains a growth market. That is partly because the proportion of smokers has fallen, but the overall population is rising.

Add a nation bedeviled by inequality and those public health gains, while significant, have simply not reached every corner of the country.

With low taxes on cigarettes, intermittent regulations and tobacco-friendly politicians, many US states still mirror conditions around the developing world where tobacco companies see potential.

West Virginia arguably has the highest smoking rate in the nation. In places such as Logan County, where Adams, a retired coal miner, is from, the smoking rate was 37% in 2015. The last time the national average matched that was 1974.

“I smoked Winston, I smoked Viceroy. I don’t know what I was smoking last, I couldn’t tell you,” said Adams, about brands that once belonged to the tobacco giants Reynolds and British American Tobacco (BAT). “I just smoked anything. If it blowed smoke, I smoked it.” Adams is disabled with stage three pneumoconiosis, better known as black lung.

Adams will tell you he quit, but the truth is, after seven days in the hospital on a ventilator, he still tried to smoke three times. “I smoked about a half a one, and it just – I mean your lungs – it just takes all the oxygen out of them.”

Despite smoking bans, hundred-billion-dollar settlements and a smaller proportion of the American public smoking, Reynolds’ longtime ally BAT sees the US as “an exciting opportunity for long-term growth”.

Through the years, as the population rose, the proportion of Americans who smoke shrank, but their raw numbers stayed the same, at around 45 million smokers. Further, since the 1990s, the threat of tobacco litigation diminished and regulations proved less costly than feared, leaving tobacco companies room to increase the price of a pack. In America, where cigarettes are still relatively cheap, BAT only needs to sell two packs of cigarettes to make the same profit as it would selling six in other markets.

America is “highly attractive” and the “world’s largest tobacco profit pool” outside of China, BAT’s chief executive, Nicandro Durante, said, as he described a $49bn deal to buy Reynolds American in January. The deal will make BAT the largest listed tobacco company in the world.

It also means revenue from eight out of 10 cigarettes sold in the US will be pocketed by BAT and a rival group of companies – Altria Group, a US Philip Morris company. Not since Theodore Roosevelt’s presidency has tobacco been so consolidated.

Mergers and acquisitions have allowed tobacco companies to squeeze profits from customers and the supply chain. Companies charge more for cigarettes, while union organizers say “poverty wages” keep families on the ropes. Both are trends seen worldwide.

At the same time, the typical profile of smokers has changed radically. In 50 years, smoking moved from glamorous to commonplace. Wealthy Americans have the lowest smoking rates, and the middle class has increasingly quit; instead, smoking has become a burden of the poor, less educated and marginalized.

The $49bn merger between BAT and Reynolds, expected within weeks, is the most recent act of faith by tobacco companies that selling cigarettes to Americans will remain profitable long into the future, even if the Americans who buy them can’t afford it.

***

As a young man, Adams worked in mines so tight he lay on his belly to dig. He dug his own hole for urination. When he learned mine owners handed out dust masks that didn’t work, he sued.

Adams lives in the Appalachian mountains, in a valley between two green hills affectionately called a “holler”. He and his wife had two daughters and a son, and those children had eight of their own.

He started smoking at eight, sneaking beside the creek to puff corn silk. He smoked cigarettes for 40 years. Now, after one son died of a drug overdose, unable to chase after his grandkids and still craving cigarettes, Adams questions whether cigarettes should be legal at all.

“They got so many drugs in there you couldn’t quit if you wanted to. I still crave them. If I had one right now, and I’d go to sleep, you’d hold it, I’d smoke it in my sleep,” he said. “That’s how bad you crave them.”

Dr Tom Takubo sees more than 30 patients like Adams each day at his clinic in Charleston. His is the largest pulmonology office in West Virginia. Set in the capital of a rural state in a rural region, Takubo sees patients from as far away as northern Kentucky and southern Ohio.

“Even if smoking dropped off today, I would probably be going for the rest of my career,” said Takubo.

No one is allowed to smoke in his office, but even so, the air smells faintly of cigarettes. Takubo’s patients carry the scent of the smokes they prefer. Former miners, shop owners and factory workers waiting for their appointments named L&Ms (by Altria) or Salems (by Reynolds) as their go-to brands. One woman said she smoked whatever cigarettes were cheapest, and called them “floor sweepings”.

Takubo estimates 80% of his patients see him for smoking-related diseases. “Cancer, acute bronchitis, flare-ups of their asthma,” he said, naming a few.

The national adult smoking rate dropped from 42.4% in 1965 to 16.8% in 2014, according to the Centers for Disease Control. But in West Virginia, the smoking rate in 2014 was still 26%, according to the Robert Wood Johnson Foundation. One researcher with RWJF called the rate “extraordinarily high”.

When he is not seeing patients, Takubo has another role. He is also a Republican state senator in West Virginia, putting him in the unique position of treating the same people whose cigarette taxes he hopes to raise. He is occasionally told by a patient: “Now, doc, don’t raise the price of my cigarettes.”

“It’s really hard for me, because you hear people argue for financial reasons, for freedom of choice,” Takubo said about his fellow legislators, shaking his head. This year, inspired by a patient, Takubo introduced a bill that would have fined adults for smoking in the car with a child.

“I have a patient that’s lost about half of her lung function. She’s never smoked a day in her life,” he said. Instead, her father smoked in the car. “If she complained about it, he would roll the window up to teach her a lesson. She remembers even getting in the floorboard of the car because she couldn’t breath.”

But the bill was not successful. Takubo’s fellow Republicans voted it down.

West Virginia is also the epicenter of America’s drug overdose epidemic, but lung and throat cancer have proven far deadlier than opioids.

Drug overdoses killed 41 people for every 100,000 in West Virginia in 2015. The same year, lung and throat cancer killed tripled that number in south-western counties, such as Calhoun. There, those two diseases alone killed 123 people for every 100,000, according to the state’s health department.

The same year, 46% of adults in Calhoun smoked, RWJF found. The West Virginia department of health estimates that one in five deaths of people over 35 are due to smoking.

West Virginia scores badly on every imaginable indicator of poverty and inequality. Takubo has also argued increased tobacco taxes could bring the state significant financial relief. A $1 tax would have generated $100m in revenue for a state that had a $380m shortfall in 2016, and which spends $277m annually on smoking-related diseases. That too failed, although Takubo did help get a 65-cent tobacco tax passed.

Now, fearing Republicans in Washington will pass a healthcare reform bill that could severely cut Medicaid, a public health program for the poor, Takubo said simply: “That would kill us.”

State of the nation
In Washington DC, things have also changed in the halls of Congress. People who still smoke stand out, and perhaps for a good reason – Congress is mostly well educated and wealthy. Every single US senator has a college degree, and just 5% of the House of Representatives lack one. Most members of Congress are millionaires.

Today, someone with a high school equivalency diploma is nine times more likely to smoke (34.1%) than someone with a graduate degree (3.6%). A poll found Americans who earn between $6,000 and $11,999 are more than twice as likely to smoke as someone who earns more than $90,000.

Even 10 years ago, the “offensive and very strong” odor of a cigar prompted an aide in the Democratic representative Keith Ellison’s office to call the Capitol police on a congressman. Last year, the Republican House speaker, Paul Ryan, took pains to “detoxify” his predecessor’s office, a suite held by former speaker John Boehner. Boehner is a Camel smoker. He now sits on Reynolds’ board.

Tobacco companies don’t spend as much money lobbying Congress as they once did. They spent $72m trying to persuade lawmakers to see their perspective in 1998, compared to $19m in 2016, according to the Center for Responsive Politics.

But they have not abandoned political spending. They have shifted strategies.

Last year, Altria and RJ Reynolds spent $71.3m in California trying beat back a cigarette tax hike referendum. They failed there, but succeeded elsewhere. In North Dakota, tobacco companies spent more than $5 for every man, woman and child in the state, $4m altogether, and convinced voters to reject the tax. They also succeeded in Colorado, where they spent $7m.

States were awarded billions in damages from tobacco companies in recognition of the public health consequences. Yet they largely fail to spend the money they were awarded to prevent smoking. States collected $26.6bn from tobacco settlements in 2016, but spent only 1.8% on smoking prevention, according to the Campaign for Tobacco-Free Kids. Tobacco companies, by comparison, spend $9.1bn a year on marketing, or $1m an hour, according to an analysis of Federal Trade Commission data.

North Carolina, America’s dominant tobacco-producing state, receives $139m annually from such tobacco settlements. Initially, the state set up three trust funds to spend that money: one to prevent smoking, one to help rural communities hit by a decline in smoking and one to help tobacco farmers.

The fund to prevent smoking was dismantled in 2011; all of that money was sucked into the state’s general fund. However, lawmakers allowed the settlement to continue to fund tobacco growing efforts.

Between 2000 and 2004, another $41m of North Carolina’s tobacco settlement went to retrofit tobacco curing barns, a move that researchers called “arguably counter-productive to tobacco control”, and which some farmers believed was at the behest of tobacco manufacturers.

“From our very first day, there was a constant struggle with the legislature,” said Vandana Shah, the first policy director of the tobacco use prevention fund in North Carolina. She now works for the Campaign for Tobacco-Free Kids. “I’d be doing the rounds of begging and pleading that they don’t take our money away, and explaining the value of the program.”

Winston-Salem, AKA ‘Camel City’
Reynolds American’s hometown of Winston-Salem, North Carolina, has developed a relatively strict tobacco policy. An after-dinner cigarette in “Camel City” must be smoked outside, and finding a hotel room to smoke in is a significant task.

The regulations are reflective of how cities have handled smoking in recent years. Even Reynolds employees who smoke must use smoking lounges away from their colleagues.

Tobacco companies, said Gayle Anderson, the head of the Winston-Salem chamber of commerce, “really didn’t fight these laws at all … There just didn’t seem to be that kind of pushback.” She worked for Reynolds from 1976 to 1987.

Once North Carolina’s largest city, Winston-Salem enjoyed a golden era on Reynolds’ wealth. “The moneyed families that ran the factories and mills shared their wealth with the community, endowing it with high schools, auditoriums, hospitals, stadiums, parks and recreational facilities bearing their names,” the local history From Tobacco to Technology said about the 1930s. “Their executives chaired the charities and the capital campaigns to raise money needed to achieve the community’s objections, be it a new terminal at the airport, an arts council for the city or assistance in relocating a college to the city.”

Reynolds still employs about 5,000 people in Winston-Salem, according to Anderson. For many years the notion was: “If you could get in at Reynolds, you were set for life,” she said.

Reynolds recently donated a 70,000 sq ft, immaculately maintained research facility to the town for redevelopment. Reynolds, Anderson said, “is still probably the single largest philanthropic company”.

“I can’t imagine how many hundreds of millions of dollars that’s worth,” said Anderson. “They’re benevolent and care a lot about the community, but it’s more like a partnership.” If Reynolds were to ever leave, “it would be a real blow to our ego, for sure”.

‘We’re down here getting sick, going hungry’

If the company is seen by some as benevolent, that does not necessarily translate to automatic financial security for farmers and their workers. One twentysomething farmer stood by a running tractor as he described the start of each tobacco season in eastern North Carolina. It begins, he said, “with a loan from the bank that you don’t know if you’re gonna pay back”.

He started cutting tobacco in a friend’s field when he was about eight years old, the farmer said. As he smoked a Camel menthol, he acknowledged: “I shouldn’t, as much shit as I spray on it.”

For farmers, the tobacco system has changed considerably since the 1990s. Auctions are obsolete. Now, farmers contract directly with cigarette manufacturers or leaf buyers. This farmer’s entire crop is contracted to Alliance One, one of two major leaf companies.

Labor disputes are common here. Farmers can face cash shortfalls mid-season, making it difficult to pay workers on time. Farm laborers have no collective bargaining rights in the US, and child labor is legal on farms. Children as young as 12 can start working unlimited hours outside of school, and children of any age can work on a family-owned tobacco farm.

With only a handful of companies left to sell to – Philip Morris International, Altria, BAT, Japan Tobacco International and two leaf buyers who serve the same companies – farmers feel at the behest of tobacco companies, those interviewed by the Guardian said. This year, some tobacco buyers didn’t offer farmers formal contracts until spring, when tobacco was already growing in greenhouses.

Nevertheless, after a long fight with the Mount Olive Pickle Company, the Farm Labor Organizing Committee (Floc) secured a collective bargaining agreement with farmers in the North Carolina Growers Association. Several tobacco companies used farmers in the association, thus some tobacco workers were also covered. Last year alone, Floc handled around 500 total labor complaints, often for wage violations. But their influence is small: the union represents just 7% of North Carolina’s 100,000 workers.

The group has asked BAT to recognize a right to organize for all farm workers worldwide, and blames low pay for frequent disputes.

“I think they should pay more,” said Sintia Castillo, a labor organizer for Floc, whose accent reflects her heritage. Some words come out North Carolina country, others with a snap of second-generation Spanish. “You’re rolling in money at the top, and we’re down here getting sick, going hungry.”

Castillo has six brothers and sisters, and started working in the fields with her family at age seven. She moved to tobacco around 13 and into packing houses at 18. Now she’s 24, a woman whose work has acquainted her with the paradox of organizing people without rights.

“There’s been times I fire people up, and then they get fired,” she said.

She tells a story about Brent Jackson, a state senator and tobacco farmer. Jackson was forced to repay several thousand dollars in back wages after he was sued in federal court by migrant workers. The union then alleged he “blacklisted” the seven farmworkers. Jackson pulled out of the growers association.

Last week, he sponsored a bill to make it illegal for farmers to deduct union dues from paychecks, or for growers to end a dispute with farmworkers by signing a union contract. The bill is currently on the governor’s desk. Campaign finance records show Jackson received $9,400 in donations from tobacco companies.

“Child labor exists because of poverty wages. There’s no way that a family can live off of $7.25 per hour,” said Catherine Crowe, an organizer with Floc. Forcing children not to work without increasing wages, the union contends, would only leave struggling families worse off.

Philip Morris International and Alliance One have said they do not buy tobacco from farms that employ children under 18 for most tasks and, in general, tobacco companies have said growers are “not our employees”. Nevertheless, tobacco company audits have identified many instances of child labor in the supply chain.

In the past, Crowe and Castillo said, BAT has shown more willingness to work with the organizing committee, promising to encourage Reynolds to listen to union demands. As for how the unified company will act in the future: “That,” said Crowe, “is the question.”

This article was amended on 13 July 2017 to clarify Vandana Shah’s position with the North Carolina tobacco use prevention fund.

Inside Philip Morris’ campaign to subvert the global anti-smoking treaty

The world’s largest publicly traded tobacco company is deploying its vast resources against international efforts to reduce smoking. Internal documents uncovered by Reuters reveal details of the secret operation.

http://www.reuters.com/investigates/special-report/pmi-who-fctc/

A group of cigarette company executives stood in the lobby of a drab convention center near New Delhi last November. They were waiting for credentials to enter the World Health Organization’s global tobacco treaty conference, one designed to curb smoking and combat the influence of the cigarette industry.

Treaty officials didn’t want them there. But still, among those lined up hoping to get in were executives from Japan Tobacco International and British American Tobacco Plc.

There was a big name missing from the group: Philip Morris International Inc. A Philip Morris representative later told Reuters its employees didn’t turn up because the company knew it wasn’t welcome.

In fact, executives from the largest publicly traded tobacco firm had flown in from around the world to New Delhi for the anti-tobacco meeting. Unknown to treaty organizers, they were staying at a hotel an hour from the convention center, working from an operations room there. Philip Morris International would soon be holding secret meetings with delegates from the government of Vietnam and other treaty members.

The object of these clandestine activities: the WHO’s Framework Convention on Tobacco Control, or FCTC, a treaty aimed at reducing smoking globally. Reuters has found that Philip Morris International is running a secretive campaign to block or weaken treaty provisions that save millions of lives by curbing tobacco use.

In an internal document, the company says it supported the enactment of the treaty. But Philip Morris has come to view it as a “regulatory runaway train” driven by “anti-tobacco extremists” – a description contained in the document, a 2014 PowerPoint presentation.

Confidential company documents and interviews with current and former Philip Morris employees reveal an offensive that stretches from the Americas to Africa to Asia, from hardscrabble tobacco fields to the halls of political power, in what may be one of the broadest corporate lobbying efforts in existence.

Details of those plans are laid bare in a cache of Philip Morris documents reviewed by Reuters, one of the largest tobacco industry leaks ever. Reuters is publishing a selection of those papers in a searchable repository, The Philip Morris Files.

Dating from 2009 to 2016, the thousands of pages include emails between executives, PowerPoint presentations, planning papers, policy toolkits, national lobbying plans and market analyses. Taken as a whole, they present a company that has focused its vast global resources on bringing to heel the world’s tobacco control treaty.

Philip Morris works to subvert the treaty on multiple levels. It targets the FCTC conferences where delegates gather to decide on anti-smoking guidelines. It also lobbies at the country level, where the makeup of FCTC delegations is determined and treaty decisions are turned into legislation.

Excerpts from the Philip Morris Files

Reuters uncovered thousands of pages of internal Philip Morris International documents. These excerpts show the company’s tactics for combating the Framework Convention on Tobacco Control, or FCTC, a treaty aimed at reducing smoking worldwide. (Some documents include highlighting by Reuters; some names have been redacted.)

01

A slide from a 2014 Philip Morris corporate affairs presentation about the FCTC, the global anti-smoking treaty. CoP5 and CoP6 refer to the biennial meetings of treaty nations in 2012 and 2014. “ENDS” refers to e-cigarettes.

Another slide from the 2014 PowerPoint presentation. “Paradigm shift” refers to an expected boom in what the company calls “reduced-risk products.”

Another slide from the 2014 PowerPoint presentation. “Paradigm shift” refers to an expected boom in what the company calls “reduced-risk products.”

A slide from the 2014 presentation shows Philip Morris plans for tracking anti-smoking groups, which the company calls anti-tobacco organizations, or ATOs.

A slide from the 2014 presentation shows Philip Morris plans for tracking anti-smoking groups, which the company calls anti-tobacco organizations, or ATOs.

The same 2014 document shows objectives for corporate affairs executives. “Roadblocks” refers to delays in implementing anti-smoking steps. “MoH” refers to ministries of health.

The same 2014 document shows objectives for corporate affairs executives. “Roadblocks” refers to delays in implementing anti-smoking steps. “MoH” refers to ministries of health.

Another slide from the 2014 document shows the characteristics that a Philip Morris corporate affairs (“CA”) person should possess.

Another slide from the 2014 document shows the characteristics that a Philip Morris corporate affairs (“CA”) person should possess.

A more detailed account of Philip Morris’ corporate affairs tactics from the same 2014 presentation.

A more detailed account of Philip Morris’ corporate affairs tactics from the same 2014 presentation.

A list of methods the company has devised for opposing the implementation of plain packaging, a measure advocated by the FCTC that bars the use of logos and distinctive coloring on cigarette packs.

A list of methods the company has devised for opposing the implementation of plain packaging, a measure advocated by the FCTC that bars the use of logos and distinctive coloring on cigarette packs.

This slide from the 2014 presentation shows some of the resources Philip Morris deployed at the FCTC treaty meeting in Moscow that year (CoP6), as the company looked ahead to the 2016 session in New Delhi (CoP7). ITGA = the International Tobacco Growers’ Association.

This slide from the 2014 presentation shows some of the resources Philip Morris deployed at the FCTC treaty meeting in Moscow that year (CoP6), as the company looked ahead to the 2016 session in New Delhi (CoP7). ITGA = the International Tobacco Growers’ Association.

Philip Morris pushes for more delegates to FCTC treaty meetings from government agencies that deal with economic and trade issues. This slide from the 2014 presentation shows the company’s plan to lobby for more delegates from outside of public health on India’s delegation at the treaty meeting last year.

Philip Morris pushes for more delegates to FCTC treaty meetings from government agencies that deal with economic and trade issues. This slide from the 2014 presentation shows the company’s plan to lobby for more delegates from outside of public health on India’s delegation at the treaty meeting last year.

Excerpt from an October 18, 2014, email from Chris Koddermann, who led the Philip Morris team at the treaty meeting in Moscow that year.

Excerpt from an October 18, 2014, email from Chris Koddermann, who led the Philip Morris team at the treaty meeting in Moscow that year.

An October 18, 2014, email from Nguyen Thanh Ky, a Philip Morris corporate affairs executive, about his meeting with the Vietnamese delegation to the 2014 Moscow treaty conference.

An October 18, 2014, email from Nguyen Thanh Ky, a Philip Morris corporate affairs executive, about his meeting with the Vietnamese delegation to the 2014 Moscow treaty conference.

Excerpt from an October 2014 email from Gustavo Bosio, then Philip Morris manager for international trade, a few days after the end of the Moscow meeting.

Excerpt from an October 2014 email from Gustavo Bosio, then Philip Morris manager for international trade, a few days after the end of the Moscow meeting.

Excerpt from a Philip Morris briefing paper on trade arguments, ahead of the treaty meeting in India last year. The company has long argued that the biennial Conference of the Parties (COP) should leave trade issues to the World Trade Organization (WTO).

Excerpt from a Philip Morris briefing paper on trade arguments, ahead of the treaty meeting in India last year. The company has long argued that the biennial Conference of the Parties (COP) should leave trade issues to the World Trade Organization (WTO).

Excerpt from a Philip Morris briefing paper on potential risks ahead of the treaty meeting last year, “COP7” in India. ENDS, or Electronic Nicotine Delivery Systems, refers to electronic cigarettes.

Excerpt from a Philip Morris briefing paper on potential risks ahead of the treaty meeting last year, “COP7” in India. ENDS, or Electronic Nicotine Delivery Systems, refers to electronic cigarettes.

Excerpt from a 2011 draft Philip Morris plan for responding to moves in Israel to pass new anti-smoking measures.

Excerpt from a 2011 draft Philip Morris plan for responding to moves in Israel to pass new anti-smoking measures.

 In this slide from a Japan corporate affairs presentation, some ministers in the Japanese cabinet are identified according to their positions on tobacco. The two ministers designated “Pro-tobacco” did not respond to questions from Reuters.

In this slide from a Japan corporate affairs presentation, some ministers in the Japanese cabinet are identified according to their positions on tobacco. The two ministers designated “Pro-tobacco” did not respond to questions from Reuters.

This slide, also from the Japan presentation, talks about Philip Morris Japan maintaining good relations with members of Japan’s FCTC delegation, and a Philip Morris executive meeting with members of the country’s FCTC delegation. (MOF = Ministry of Finance; MOFA = Ministry of Foreign Affairs; JT = Japan Tobacco.)

This slide, also from the Japan presentation, talks about Philip Morris Japan maintaining good relations with members of Japan’s FCTC delegation, and a Philip Morris executive meeting with members of the country’s FCTC delegation. (MOF = Ministry of Finance; MOFA = Ministry of Foreign Affairs; JT = Japan Tobacco.)

This slide, also from the Japan presentation, reveals the company’s plans for opposing moves in Australia to bar the use of logos or distinctive coloring on cigarette packs. The measure is known as plain packaging, or PP. The Tobacco Institute of Japan, or TIOJ, declined to comment.

This slide, also from the Japan presentation, reveals the company’s plans for opposing moves in Australia to bar the use of logos or distinctive coloring on cigarette packs. The measure is known as plain packaging, or PP. The Tobacco Institute of Japan, or TIOJ, declined to comment.

A slide from a Philip Morris training document.

A slide from a Philip Morris training document.

“Our everyday business”

Philip Morris International’s full response to Reuters findings:

“As a company in a highly regulated industry, speaking with governments is part of our everyday business. We publicly supported the creation of the framework convention on tobacco control, were involved in the consultation process prior to its establishment, but have not since been invited to contribute to any discussions on tobacco control measures. With our product knowledge, technical expertise and our vision to replace cigarettes with less harmful alternatives, we believe we have something to contribute and we look for a range of legitimate opportunities to express our views to decision-makers. The fact that Reuters has seen internal emails discussing our engagement with governments does not make those interactions inappropriate. We believe that the active participation of public health experts, policy-makers, scientists, and the industry is the best way to effectively address tobacco regulations in the genuine interest of today’s billion smokers. It is our hope that moving forward, all tobacco policy makers will invite open dialogue, and in the meantime we will continue to speak with governments about policies that can address the impact of smoking on health.”

– Tony Snyder, Vice President of Communications, Philip Morris International

The documents, combined with reporting in 14 countries from Brazil to Uganda to Vietnam, reveal that a goal of Philip Morris is to increase the number of delegates at the treaty conventions who are not from health ministries or involved in public health. That’s happening: A Reuters analysis of delegates to the FCTC’s biennial conference shows a rise since the first convention in 2006 in the number of officials from ministries like trade, finance and agriculture for whom tobacco revenues can be a higher priority than health concerns.

Philip Morris International says there is nothing improper about its executives engaging with government officials. “As a company in a highly regulated industry, speaking with governments is part of our everyday business,” Tony Snyder, vice president of communications, said in a statement in response to Reuters’ findings. “The fact that Reuters has seen internal emails discussing our engagement with governments does not make those interactions inappropriate.”

In a series of interviews in Europe and Asia, Philip Morris executive Andrew Cave said company employees are under strict instructions to obey both the company’s own conduct policies and local law in the countries where they operate. Cave, a director of corporate affairs, said that while Philip Morris disagrees with some aspects of the FCTC treaty and consults with delegates offsite during its conferences, ultimately the delegations “make their own decisions.”

“We’re respectful of the fact that this is their week and their event,” said Cave in an interview in New Delhi, as the parties to the treaty met last November. Asked in an earlier interview whether Philip Morris conducts a formal campaign targeting the treaty’s biennial conferences, Cave gave a flat “no.”

When the FCTC delegates gather, lives hang in the balance. Decisions taken at the conferences over the past decade, including a ban on smoking in public places, are saving millions of lives, according to researchers at Georgetown University Medical Center.

Between 2007 and 2014, more than 53 million people in 88 countries stopped smoking because those nations imposed stringent anti-smoking measures recommended by the WHO, according to their December 2016 study. Because of the treaty, an estimated 22 million smoking-related deaths will be averted, the researchers found.

According to the WHO, though, tobacco use remains the leading preventable cause of death – and by 2030 will be responsible for eight million deaths a year, up from six million now.

There was jubilation among anti-smoking advocates when the treaty was adopted in 2003. The treaty, which took effect in 2005, made it possible to push for measures that once seemed radical, such as smoke-free bars. About 90 percent of all nations eventually joined. A big holdout is the United States, which signed the treaty but has yet to ratify it.

Since the FCTC came into force, it has persuaded dozens of nations to boost taxes on tobacco products, pass laws banning smoking in public places and increase the size of health warnings on cigarette packs. Treaty members gather every two years to consider new provisions or strengthen old ones at a meeting called the Conference of the Parties, or COP, which first convened in 2006 in Geneva.

But an FCTC report shows that implementation of important sections of the treaty is stalling. There has been no further progress in the implementation of 7 out of 16 “substantive” treaty articles since 2014, according to a report by the FCTC Secretariat in June last year.

A key reason: “The tobacco industry continues to be the most important barrier in implementation of the Convention.”

Indeed, the tobacco industry has weathered the tighter regulation. There has been only a slight 1.9 percent decline in global cigarette sales since the treaty took effect in 2005, and more people smoked daily in 2015 than a decade earlier, studies show. The Thomson Reuters Global Tobacco Index, which tracks tobacco stocks, has risen more than 100 percent in the past decade, largely due to price increases.

“Some people think that with tobacco, you’ve won the battle,” said former Finnish Health Minister Pekka Puska, who chaired an FCTC committee last year. “No way,” he said. “The tobacco industry is more powerful than ever.”

With 600 corporate affairs executives, according to a November 2015 internal email, Philip Morris has one of the world’s biggest corporate lobbying arms. That army, and $7 billion-plus in annual net profit, gives Philip Morris the resources to overwhelm the FCTC.

The treaty is overseen by 19 staff at a Secretariat office hosted by the WHO in Geneva. The Secretariat spends on average less than $6 million a year. Even when buttressed by anti-smoking groups, the Secretariat is outgunned. Its budget for this year and last year for supporting the treaty clause on combating tobacco company influence is less than $460,000.

Vera Luiza da Costa e Silva, head of the FCTC treaty Secretariat, is the person tasked with preventing the industry from neutering the agreement.

In two interviews at her Geneva office, da Costa e Silva, a medical doctor who holds a PhD in public health and has a dyed pink streak in her hair, explained why the FCTC banned attendance by any member of the public at the 2014 biennial conference in Moscow. The ban came in response to efforts by tobacco executives to use public badges to get inside the venue, she said, adding that industry representatives then started borrowing badges from delegates they knew to gain entry.

“It’s a real war,” said da Costa e Silva.

tobacco

“Some people think that with tobacco, you’ve won the battle. No way… The tobacco industry is more powerful than ever.”

Former Finnish Health Minister Pekka Puska, who chaired an FCTC committee last year

But she had only a partial picture of the forces ranged against her. She wasn’t aware of the fact that Philip Morris had a large team operating throughout the convention in Moscow, or the details of its activities in New Delhi last November.

“This is so disgusting. These are the forces against which we have to work,” da Costa e Silva said in May after being told about the Philip Morris documents. “I think they want to implode the treaty.”

The idea of a global tobacco treaty had been discussed among health advocates since at least 1979, when a WHO committee suggested the possibility. Gro Harlem Brundtland, a former prime minister of Norway who became director-general of the WHO in 1998, made it happen.

She was aided by outrage over documents that surfaced as part of the landmark 1998 Master Settlement Agreement, in which the four largest U.S. tobacco companies agreed to pay more than $200 billion to 46 U.S. states. The internal communications showed that tobacco executives lied for years about their knowledge of the deadly nature of cigarettes.

A 1989 document revealed one company’s plan to fight threats to the industry. “WHO’s impact and influence is indisputable,” the document said. It went on to contemplate “countermeasures designed to contain/neutralize/re-orient the WHO.”

That company was Philip Morris.

In 2008, Altria Group Inc split up its Philip Morris business. Philip Morris USA, which remains a subsidiary of Altria, sells Marlboro and other brands in the United States. Philip Morris International was spun off, and handles business abroad. Since the split, Philip Morris International shares have more than doubled and Altria’s have more than tripled.

Philip Morris International’s operational headquarters are in Lausanne, Switzerland, down the street from a patch of Gallo-Roman ruins, in a sleek building with a cafeteria, gym and a patio facing Lake Geneva. From there, the company is working to hobble the treaty.

Internal company communications reveal the scope of Philip Morris’ operation during the 2014 FCTC treaty meeting in Moscow. The company set up a “Coordinating Room” that could seat 42 people, according to the 2014 PowerPoint presentation, titled “Corporate affairs approach and issues.”

Leading the operation was executive Chris Koddermann. Formerly a lawyer and lobbyist in Canada, Koddermann joined Philip Morris in 2010. He is now a director of regulatory affairs in Lausanne. The PowerPoint describes the ideal corporate affairs executive as someone who is able to “play the political game.” Koddermann previously worked for federal and provincial cabinet ministers in Canada, according to his LinkedIn profile.

Reached on his cell phone in March, Koddermann said he wouldn’t be able to meet and that any questions should be directed to Philip Morris International.

At the end of the Moscow meeting, on Oct. 18, 2014, Koddermann sent an email congratulating a 33-person Philip Morris team on their success in diluting or blocking measures intended to strengthen tobacco controls and reduce cigarette sales. The gains he touted at the end of the week-long conference were the culmination of a two-year effort, his email said.

The documents shed light on one key objective in Philip Morris’ FCTC campaign: Keep tobacco within the ambit of international trade deals, so that the company has a way to mount legal campaigns against tobacco regulations.

In Moscow, one proposal initially called for carving out tobacco from trade pacts. International trade treaties often include provisions, such as the protection of trademarks, that Philip Morris has used to challenge anti-smoking measures. If tobacco were taken out of the treaties, as suggested by the proposal, Philip Morris could be deprived of many such legal arguments.

An early draft asked parties to support efforts to exclude tobacco from trade pacts and to prevent the industry from “abusing” trade and investment rules. In the end, the proposal was watered down. The final decision only reminded parties of “the possibility to take into account their public health objectives in their negotiation of trade and investment agreements.” There was no mention of excluding tobacco.

Koddermann, in his email to colleagues on the last day of the conference, declared victory, describing the change as “a tremendous outcome.” Overall, the company achieved its “trade related campaign objectives,” including “avoiding a declaration of health over trade” and “avoiding the recognition of the FCTC as an international standard,” he wrote.

The win was significant. A former Philip Morris employee said the company has routinely used trade treaties to challenge tobacco control laws. The aim, he said, was “to scare governments away from doing regulatory changes.” Even though the tobacco industry has lost a series of major legal battles, its suits have served to discourage the implementation of regulations that curb smoking. Those delays can yield years of unimpeded sales.

As the Philip Morris PowerPoint presentation from 2014 put it: “Roadblocks are as important as solutions.”

One roadblock was a campaign to stop the 2011 introduction of rules in Australia banning logos and distinctive coloring on cigarette packs. The company’s litigation and arbitration against the measure ultimately were dismissed – but not before five countries filed complaints against Australia on the same subject at the World Trade Organization. The global trade body has yet to announce a decision in the matter.

The attempt to undo Australia’s regulations has had a chilling effect elsewhere. It slowed the introduction of plain-packaging rules in New Zealand. Citing the risk that tobacco companies may “mount legal challenges,” the government announced in 2013 that it was postponing the move and waiting to “see what happens with Australia’s legal cases.” The legislation is now scheduled to go into effect next year.

In his Moscow conference email, Koddermann also expressed pleasure at the fate of a proposal on farmers. Initial language would have recommended that countries restrict support for tobacco growers. The proposal was “significantly watered down,” he wrote. “This is a very positive result.”

Gustavo Bosio, at the time a manager for international trade, chimed in a few days after the conference in an email: “These excellent results are a direct consequence of the remarkable efforts of all PMI regions and markets during the past two years and throughout the intense week in Moscow.”

Philip Morris isn’t alone in seeking to weaken the treaty. Ahead of the 2012 FCTC conference, in Seoul, four cigarette giants – Philip Morris, British American Tobacco (BAT), Japan Tobacco International and Imperial Brands Plc – formed an “informal industry Working Group” to oppose various proposals on tobacco taxation, according to an internal BAT document reviewed by Reuters.

The 45-page paper, whose existence hasn’t been previously reported, noted that the group would coordinate “to the extent that these issues do not raise any anti-competitive concerns.” The paper outlined a global campaign planned by BAT to counter the FCTC, which was “increasingly going beyond” its mandate. And it listed objectives, including a bid to block discussions around the introduction of a minimum 70 percent tax on tobacco.

BAT declined to answer questions about the industry working group. Both Imperial and Japan Tobacco International said they didn’t want to comment on a document from a competitor. Japan Tobacco International said its tax experts met with counterparts from other tobacco companies to discuss treaty guidelines on taxation ahead of the 2012 conference. Philip Morris did not comment on the document.

The Philip Morris emails and documents don’t explicitly detail how the company pulled off the victories in Moscow. But they provide insight into the importance it places on wooing delegates.

The FCTC traditionally makes decisions by consensus, and so influencing a single national delegation can have an outsized impact. The treaty has a key clause meant to keep the industry from unduly influencing delegations. Article 5.3, as it’s known, says nations should protect their public health policies from tobacco interests. Guidelines that accompany Article 5.3 recommend that countries interact with the industry only when “strictly necessary.”

But the article – a single sentence – contains a loophole Philip Morris has exploited. The sentence ends with the words “in accordance with national law,” opening the door to arguments by pro-tobacco forces that any lobbying that’s legal in a certain country is permissible when interacting with that country’s representatives. They also argue that a sentence in a related document, the guidelines for Article 5.3, allows for such interactions to take place as long as they are conducted transparently.

Philip Morris International: Facts & figures

• Has its roots in a small tobacconist shop in London in 1847.
• Now operates in more than 180 markets.
• Famous for its iconic Marlboro Man advertising.
• Has six of the world’s top 15 cigarette brands, including Marlboro, L&M and Chesterfield.
• Spun off from the Richmond, Va.-headquartered Altria Group in March 2008.
• Operational headquarters are in Switzerland.
• Produces over 800 billion cigarettes a year.
• Share price has more than doubled since the 2008 spin-off from Altria.

Sources: Philip Morris International website; Reuters reporting

Lobbying strategy

The Philip Morris International documents uncovered by Reuters include guidelines and country-specific lobbying plans aimed at hobbling the WHO’s global tobacco control treaty and national anti-smoking measures. Strategies include:
• Lobbying lawmakers, bureaucrats and other government officials
• Trying to move tobacco issues away from health departments
• Deploying third parties, including retail groups, to make its case and exert pressure on decision-makers
• Engaging the media on tobacco issues and generating public debate to influence decision-makers

The tabs below show the company’s strategy in action in three countries in recent years, according to internal company documents. The extent to which Philip Morris’ actions affected the outcome in each case is unclear.

In September 2011, Israel’s health ministry proposed new measures to regulate flavoring and advertising of tobacco products. In a draft company strategy document from October 2011, Philip Morris said the proposals included “a few excessive and disproportionate measures” such as restricting the use of fruit or chocolate flavorings in tobacco products, and broadly prohibiting advertising and marketing of tobacco. Elements of the campaign: 1: Leverage established relationships with different government ministries, mobilize retailers to advocate against “excessive” provisions, and lobby the health ministry. 2: Lobby the government through third parties such as an Israel-based supplier of licorice. 3: Use Philip Morris’ database of more than 60,000 adult smokers to reach consumers and create a public debate through the media “to influence MPs,” or members of parliament. OUTCOME: The bans on advertising and ingredients did not go through.

In September 2011, Israel’s health ministry proposed new measures to regulate flavoring and advertising of tobacco products. In a draft company strategy document from October 2011, Philip Morris said the proposals included “a few excessive and disproportionate measures” such as restricting the use of fruit or chocolate flavorings in tobacco products, and broadly prohibiting advertising and marketing of tobacco. Elements of the campaign:
1: Leverage established relationships with different government ministries, mobilize retailers to advocate against “excessive” provisions, and lobby the health ministry.
2: Lobby the government through third parties such as an Israel-based supplier of licorice.
3: Use Philip Morris’ database of more than 60,000 adult smokers to reach consumers and create a public debate through the media “to influence MPs,” or members of parliament.
OUTCOME: The bans on advertising and ingredients did not go through.

A 2010 Philip Morris document shows the company drawing up plans to lobby Sweden in an effort to influence the European Commission’s new tobacco regulations for member states, known as the Tobacco Products Directive (TPD). Elements of the campaign: 1: Engage the justice ministry to “put pressure” on the health ministry so that the Swedish representative on the European Commission committee opposes plain packaging and “excessive” health warning labels, and supports lifting the ban on snus, a smokeless tobacco product. 2: Build a “broad coalition” of “third-party stakeholders,” such as the Stockholm Chamber of Commerce, and get them to pressure the government. (The chamber told Reuters that it does not lobby on behalf of individual companies.) 3: Establish a retailer network and contact bloggers and journalists to voice concerns about issues, including plain packaging and point-of-sale display bans. OUTCOME: Plain packaging and point-of-sale display ban were not included in the directive, which came into force in May 2014.

A 2010 Philip Morris document shows the company drawing up plans to lobby Sweden in an effort to influence the European Commission’s new tobacco regulations for member states, known as the Tobacco Products Directive (TPD). Elements of the campaign:
1: Engage the justice ministry to “put pressure” on the health ministry so that the Swedish representative on the European Commission committee opposes plain packaging and “excessive” health warning labels, and supports lifting the ban on snus, a smokeless tobacco product.
2: Build a “broad coalition” of “third-party stakeholders,” such as the Stockholm Chamber of Commerce, and get them to pressure the government. (The chamber told Reuters that it does not lobby on behalf of individual companies.)
3: Establish a retailer network and contact bloggers and journalists to voice concerns about issues, including plain packaging and point-of-sale display bans.
OUTCOME: Plain packaging and point-of-sale display ban were not included in the directive, which came into force in May 2014.

In January 2013, Osaka Prefecture in Japan held a public consultation on a proposal to abolish existing smoking rooms, with a “roadmap towards total smoking prohibition in all public places,” according to a February 2014 Japan corporate affairs presentation. The Philip Morris document describes it as an “extreme proposal.” Elements of the campaign: 1: Ensure that “relevant stakeholders” oppose the move. Philip Morris field sales staff engaged retailers and others. 2: Engage local politicians and work with the industry in pushing back against the proposal. OUTCOME: The proposal was withdrawn.

In January 2013, Osaka Prefecture in Japan held a public consultation on a proposal to abolish existing smoking rooms, with a “roadmap towards total smoking prohibition in all public places,” according to a February 2014 Japan corporate affairs presentation. The Philip Morris document describes it as an “extreme proposal.” Elements of the campaign:
1: Ensure that “relevant stakeholders” oppose the move. Philip Morris field sales staff engaged retailers and others.
2: Engage local politicians and work with the industry in pushing back against the proposal.
OUTCOME: The proposal was withdrawn.

One of the company’s targets has been Vietnam.

The day the Moscow meeting ended, Koddermann received an email from his colleague Nguyen Thanh Ky, a leading corporate affairs executive for Vietnam. Ky said he had a “debrief lunch” with the Vietnamese delegation and had a good outcome to report: The delegation was in favor of “moderate and reasonable measures” to be implemented over a “practical timeline,” he wrote. He did not specify which measures they discussed.

The Vietnamese delegation spoke up often during the Moscow meeting. A review of notes compiled by tobacco-control groups accredited as observers showed Vietnam’s interjections frequently mirrored Philip Morris’ positions on tobacco-control regulations. Just like the tobacco giant, the Vietnamese said a higher tax on cigarettes would lead to more illicit sales. Like Philip Morris, they said the FCTC should stay out of trade disputes. And like Philip Morris, they opposed proposals to set uniform parameters for the legal liability of tobacco companies.

The FCTC guidelines on taxation did ultimately include a WHO recommendation for a minimum tax of 70 percent – something Philip Morris opposed. But the proposal to give the treaty more sway over trade disputes was weakened, and measures to strengthen the legal liability of cigarette companies were delayed.

Vietnam’s foreign ministry did not respond to questions from Reuters.

As soon as the conference ended, the documents show, Philip Morris turned to the next one: the 2016 meeting in India.

The 2014 PowerPoint presentation outlined the need to identify ways to gather intelligence during the Delhi conference. In a separate 2015 planning document, the company talks about the arrangement of farmer protests in the run-up to the meeting. Such protests did take place – including one in front of WHO offices in New Delhi. Reuters couldn’t determine whether Philip Morris was behind those demonstrations.

While other major tobacco companies also sent people to Delhi in November, Philip Morris was distinguished by its stealth. Executives from the company did not sign in with their tobacco industry colleagues at the FCTC convention center and stayed at a hotel about an hour’s drive away.

The anonymity and distance helped Philip Morris approach delegates covertly. On the second day of the conference, a white Toyota van pulled away from the front of the Hyatt Regency hotel – where Philip Morris had its operations room – and headed for the FCTC treaty venue. The van was carrying Ky, its corporate affairs executive from Vietnam.

OFFSITE MEETING: During the treaty conference on the outskirts of New Delhi last year, a Philip Morris representative met privately with a member of the Vietnamese delegation, Nguyen Vinh Quoc. In the first picture (left to right), Quoc can be seen emerging from a session at the treaty conference on Nov. 8. In the second picture, a van that left a Delhi hotel carrying a Philip Morris representative heads for the convention center. In the third picture, Quoc can be seen exiting the convention center moments before climbing into the van. REUTERS/Duff Wilson; Tom Lasseter

OFFSITE MEETING: During the treaty conference on the outskirts of New Delhi last year, a Philip Morris representative met privately with a member of the Vietnamese delegation, Nguyen Vinh Quoc. In the first picture (left to right), Quoc can be seen emerging from a session at the treaty conference on Nov. 8. In the second picture, a van that left a Delhi hotel carrying a Philip Morris representative heads for the convention center. In the third picture, Quoc can be seen exiting the convention center moments before climbing into the van. REUTERS/Duff Wilson; Tom Lasseter

Ky’s driver talked his way past police at the barricade outside the conference center, where FCTC-issued credentials were checked, explaining that he was driving “VIPs,” the driver later told Reuters.

A few minutes later, a man in a dark suit walked out of the conference center, passed the van and stopped at a street corner. The van did a U-turn, and a Reuters reporter saw the man in the suit quickly climb in. He was a senior member of Vietnam’s delegation to the FCTC conference: Nguyen Vinh Quoc, a Vietnamese government official.

The driver, Kishore Kumar, said in an interview that he dropped the two men off at a local hotel. Kumar said that on several other occasions that week, he took Ky to pick up people from the Hotel Formule1, a budget lodging where Vietnam’s delegation was staying during the conference.

Ky and Quoc did not respond to requests for comment.

Asked by Reuters about the interaction between Ky and the Vietnam representatives, Philip Morris executive Andrew Cave thumped on the table in a bar at the hotel where company representatives were staying. Reuters should focus, he said, on efforts by the industry to develop so-called reduced-risk products – those that deliver nicotine without the burning of tobacco and which the company says reduce harm.

When pressed about the meetings with Vietnam, Cave thumped the table again: “I’m angry that you’re focusing on that, rather than the real issues that matter to real people.”

In a subsequent email, Cave said: “Representatives from Philip Morris International met with delegates from Vietnam” during the Delhi conference “to discuss policy issues and this complied fully with PMI’s internal procedures and the laws and regulations of Vietnam.”

Delegates, Cave said in separate interviews, are reluctant to meet openly with Philip Morris because they are afraid of being “named and shamed” by anti-smoking groups.

Some delegates questioned the extent to which Philip Morris shaped the decisions made at the Moscow conference, saying attendees genuinely disagreed on certain issues. Nuntavarn Vichit-Vadakan, a Thai delegate, oversaw many discussions as the chair of an FCTC committee at the Moscow conference. She said delegates differed over the regulation of e-cigarettes, for instance, and any lobbying the company carried out would not have determined the outcome.

The Philip Morris documents leave questions unanswered. In some cases, the documents show the company hatching plans to change an anti-smoking regulation or to monitor activists, but don’t always make clear to what extent or how the plans were executed, if at all. The 2014 PowerPoint presentation called for “achieving scrutiny” of tobacco control advocates and said a “global project team” had been established for this purpose. It did not list what means would be used.

In some instances, Philip Morris’ lobbying plainly failed. In July 2015, the Ugandan parliament passed sweeping new anti-tobacco laws inspired by the treaty. All that was needed was President Yoweri Museveni’s signature, and the small African nation would become a leader on the continent in implementing a strict interpretation of the FCTC.

Philip Morris sent an executive, a younger white man, to tell the septuagenarian president, who long ago had helped topple dictator Idi Amin, why the tobacco act was a bad idea. Sheila Ndyanabangi, Uganda’s lead health official for tobacco issues who was present at the meeting, described the executive’s approach as lecturing the statesman.

“He said, ‘Ugandan tobacco will be too expensive’ and ‘it will not be competitive,’” Ndyanabangi said. Her account was confirmed by a senior Ugandan government official who was also present.

Museveni stared for a moment at the Philip Morris executive and a representative from a major tobacco buyer who’d come with him. The president then declared: “Slavery ended a long time ago.” There was a long silence in the room, recalled Ndyanabangi. Museveni said Uganda didn’t need tobacco, and the meeting was over. The president signed the bill that September.

Museveni’s office did not respond to requests for comment.

Over time, however, the industry’s lobbying has slowed the treaty’s progress. At the biennial conferences, the discussions have changed. In Moscow, for instance, there was a strong focus on trade and taxes. “You could see from the floor that interventions were very, very, very much focusing on the trade aspects, many times even putting trade over health,” the FCTC’s da Costa e Silva said in an interview last year.

The composition of FCTC delegations sent by governments has changed to include more members who aren’t involved in health policy. That’s in line with what Philip Morris and other tobacco companies want: Philip Morris, as well as British American Tobacco, has sought to move the balance of the membership away from public health officials and toward ministries like finance and trade. Such agencies, said the former Philip Morris executive, benefit from tobacco tax revenues and attach less weight to health concerns.

“The health department would just want tobacco to be banned, while for the finance ministry it’s more like how can we leverage or get as much money as we can,” he said.

The object of Philip Morris’ efforts, according to the 2014 PowerPoint on corporate affairs, is to “move tobacco issues away” from health ministries and demonstrate there are broader public interests at play – that “it’s not about tobacco.”

Cave, the Philip Morris corporate affairs executive, confirmed the company tries to persuade governments to change the composition of delegations. Health officials, he said, aren’t equipped to handle the intricacies of issues such as taxation.

“You’re looking at illicit trade, you’re looking at tax regimes, you’re looking at international law,” he said. “Now each of these areas, it’s logical, if you want to really tackle the trade and tobacco smuggling, illicit trade, who would you go to? You wouldn’t go to the health ministry.”

TOBACCO FARMERS: A worker tends to a tobacco crop in the farming community of Beatrice, Zimbabwe. At the treaty meeting in Moscow in 2014, a proposal calling for countries to limit support for tobacco growers was weakened. “This is a very positive result,” wrote Chris Koddermann, a Philip Morris executive, in an email. REUTERS/Philimon Bulawayo

TOBACCO FARMERS: A worker tends to a tobacco crop in the farming community of Beatrice, Zimbabwe. At the treaty meeting in Moscow in 2014, a proposal calling for countries to limit support for tobacco growers was weakened. “This is a very positive result,” wrote Chris Koddermann, a Philip Morris executive, in an email. REUTERS/Philimon Bulawayo

“I’m angry that you’re focusing on that, rather than the real issues that matter to real people.”

Philip Morris executive Andrew Cave, when asked about the company’s interaction with FCTC delegates

Reuters analyzed the rosters of the almost 3,500 accredited delegation members who have attended the seven FCTC conferences since 2006. The analysis found that there were more than six health delegates for every finance-related delegate in 2006. In Delhi last year, that ratio had fallen to just over three health delegates for every finance delegate. The number of delegates from finance, agriculture and trade fields has risen from a few dozen in 2006 to more than 100 in recent years.

Vietnam’s delegation, for example, has changed markedly. At the first FCTC conference in 2006, none of its four delegates were from finance or trade ministries. By 2014, in Moscow, there were 13 delegates, with at least four from finance-related ministries, including the chief delegate. Vietnam’s foreign ministry did not respond to questions about the delegation.

Da Costa e Silva isn’t opposed to having delegates from trade ministries, but she says their primary focus needs to be on health. And she was concerned by the makeup of the Vietnamese delegation. In a letter to the Vietnamese prime minister in late 2015, she asked that tobacco industry employees be excluded from the delegation. If they weren’t, she wrote, Vietnam might be “unable to play a full part in discussions.”

In 2016, Vietnam brought 11 delegates to the conference, of whom six were from health agencies, including the chief representative.

Some tobacco-control activists who attended the Delhi meeting in November say it was the worst so far in terms of passing new anti-smoking provisions.

Matthew Myers, who heads the Campaign for Tobacco-Free Kids, said multiple countries came prepared to consciously block action. He said he heard delegates making arguments “I haven’t heard in 25 years.”

A Nigerian delegate, for instance, asked to remove a reference to “the tobacco epidemic” from a draft proposal on liability for tobacco-related harm, according to notes taken by anti-smoking groups.

Asked for comment, Christiana Ukoli, head of the delegation in Delhi, said the “Nigerian delegation strongly dissociates itself from [that] statement.”

The Delhi conference ended as it began, with treaty Secretariat officials not knowing where Philip Morris had been or what it had done. The company had flown in a team of executives, used a squad of identical vans to ferry officials in New Delhi, and then left town without a trace.

Watering down

Just days after the FCTC conference in Moscow ended in October 2014, Philip Morris executive Gustavo Bosio sent an email to colleagues highlighting what he said was the company’s success in pushing back on three treaty proposals related to trade issues. “These excellent results are a direct consequence of the remarkable efforts of all PMI regions and markets during the past two years and throughout the intense week in Moscow,” wrote Bosio, then manager for international trade. The first two columns in each tab below show the initial proposal and the final outcome, and are from an analysis Bosio attached to his email. The third column contains extracts from his email explaining what happened in each case.

fctc1

fctc2

fctc3

 

Source: Internal Philip Morris documents; emphasis added by Philip Morris. Note: “AMRO” refers to the Americas regional office of the World Health Organization.

Additional reporting by Joe Brock in Johannesburg, Ami Miyazaki in Tokyo, Mai Nguyen, My Pham and Minh B. Ho in Hanoi, Elias Biryabarema in Kampala, Enrico Dela Cruz in Manila, Stephen Eisenhammer and Anthony Boadle in Brasilia, Alexis Akwagyiram and Ulf Laessing in Lagos, and Patturaja Murugaboopathy in Bengaluru.

The Philip Morris Files
By Aditya Kalra, Paritosh Bansal, Duff Wilson and Tom Lasseter
Graphics: Jin Wu
Design: Troy Dunkley
Photo editing: Tom White and Altaf Bhat
Edited by Peter Hirschberg

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Top White House figures – including the vice-president and health secretary – have deep ties to an industry whose donations began pouring in on day one

https://www.theguardian.com/world/2017/jul/13/tobacco-industry-trump-administration-ties

Tobacco companies have moved swiftly to strengthen their grip on Washington politics, ramping up lobbying efforts and securing significant regulatory wins in the first six months of the Trump era.

Day one of Donald Trump’s presidency started with tobacco donations, senior figures have been put in place within the Trump administration who have deep ties to tobacco, and lobbying activity has increased significantly.

“As in so many areas, the promise to drain the swamp has been an extraordinary hypocrisy,” said Senator Richard Blumenthal, who supported anti-tobacco legislation and was one of the US attorneys general to broker a hundred-billion-dollar settlement with tobacco companies in the 1990s. “Many of his appointees have deep commitments to the tobacco industry,” he said.

“Tobacco industry influence in Washington is pervasive, in many different ways,” Blumenthal said. “They have an active presence on the Hill, they meet frequently with administrative agencies, on hugely significant issues such as regulation of e-cigarettes, tobacco packaging and warnings.”

America’s largest cigarette manufacturers, Reynolds American and Altria Group, donated $1.5m to help the new president celebrate his inauguration. The donations allowed executives to dine and mingle with top administration officials and their families.

Not long after Trump promised to transfer power from Washington to the American people, a wave of spending in pursuit of influence was unleashed. In the first quarter of 2017, tobacco companies and trade associations spent $4.7m lobbying federal officials. Altria, the company behind Marlboro, hired 17 lobbying firms. Reynolds, makers of the Camel brand, hired 13, according to the Campaign for Tobacco Free Kids.

Since then, tobacco companies have been putting points on the scoreboard. Politicians and officials with deep ties to the tobacco industry now head the US health department, the top attorney’s office and the Senate, even as tobacco use remains the leading preventable cause of death.

Agencies in charge of reviewing large mergers let a window slip by in which they might have requested information about a $49bn merger between Reynolds and British American Tobacco (BAT). That merger, expected to be voted through by shareholders next week, will make BAT the biggest listed tobacco company in the world, and puts proceeds from eight out of 10 cigarettes sold in the US into the pockets of two companies: Altria and BAT.

Advocates and opposition politicians fear public health wins in curbing smoking could be vulnerable to a more emboldened industry.

There are also concerns that most at risk are poorer and more vulnerable citizens whose health insurance coverage could be weakened by Republican reforms.

“With the new Trump administration and Congress trying to roll back health and safety regulations, generally the tobacco industry is seizing the opportunity to mount its own assault on the programs and policies that have reduced smoking in this country,” said Vince Willmore, a spokesperson for the Campaign for Tobacco-Free Kids.

The Food and Drug Administration has twice delayed legal briefs to defend regulations of e-cigarettes, products cigarette makers say are the future. Summer deadlines for cigar and e-cigarette makers to file applications with the FDA, which regulates the products, have all been delayed by the Trump administration.

And the high-profile attorney Noel Francisco, who once argued for Reynolds that including a quit-line phone number on cigarette packs amounted to government advocacy against smoking, has been nominated for the post of solicitor general, the government’s top attorney.

In the past two decades, the tobacco industry has increasingly steered donations to Republicans. The past two election cycles, 2014 and 2016, were the most partisan ever. Tobacco companies made 84% of their donations each cycle to Republican candidates, according to the Center for Responsive Politics. Since 1990, $57m has been donated exclusively to Republicans, 74% of the industry’s total donations.

Proposals from Republican lawmakers for health reform, which the president has attempted to broker, have threatened to cut $126m that the Centers for Disease Control uses to educate Americans about the harms of tobacco use. Cuts Republicans proposed to Medicaid, a public health program for the poor, could imperil smoking cessation coverage for people already far more likely to smoke than middle- and upper-class Americans.

Trump himself, notoriously secretive about his personal wealth, has revealed that he had investments in tobacco companies, including Philip Morris International, its American spinoff Altria Group, and Reynolds American Inc.

In the past three years, Trump’s financial disclosures show he earned up to $2.1m from tobacco holdings in diversified portfolios. Trump said he sold his stocks this spring (although he did not provide proof).

For Trump’s inaugural celebration, Reynolds American gave $1m. Altria Group gave $500,000. The US Chamber of Commerce, which has been fiercely pro-tobacco in recent years, gave $25,000.

Vice-President Mike Pence was already well acquainted with the tobacco lobby. In 2001, Pence argued that “smoking doesn’t kill”. Two months later, Pence met with tobacco lobbyists who steered donations his way.

Tobacco lobbyists discussed donating to Mike Pence in a 2001 email. Photograph: University of California San Francisco Truth Tobacco Industry Documents

Tobacco lobbyists discussed donating to Mike Pence in a 2001 email. Photograph: University of California San Francisco Truth Tobacco Industry Documents

Over his career, Pence received $39,000 in donations from RJ Reynolds, a Reynolds American subsidiary, and more than $60,000 from the tobacco company-aligned National Association of Convenience Stores, both among his top donors. Pence owned up to $250,000 in stock in a family business, a chain of 210 convenience stores doing business as Tobacco Road. The company later went bankrupt.

The Senate majority leader, Mitch McConnell, who has had a high-profile role in developing health reform proposals, has long cast votes that favor tobacco interests. McConnell once threatened to derail negotiations on the Trans-Pacific Partnership trade deal in support of tobacco. McConnell is from Kentucky, one of the top tobacco-growing states in the country. In January, his former chief of staff was hired by Altria.

Trump’s health appointments also have deep links to tobacco companies. The health secretary, Tom Price, in 2009 voted against a 62-cent cigarette tax hike that would have helped pay for public health insurance for poor children. He called the law a blow to “hard-working Americans” meant “to feed [Obama’s] reckless agenda”. Until 2012, Price owned at least $37,000 in shares in Philip Morris International and Altria, Mother Jones reported, and during his career as a state legislator and Georgia congressman he received more than $37,000 in donations from tobacco companies and related political action committees. In March, Price’s former deputy chief of staff was hired as a lobbyist for Reynolds.

In addition to his vote against the cigarette tax, Price also voted against allowing the FDA to regulate tobacco, a vote that would have a large impact on e-cigarettes. Price now leads the department in charge of enforcing those regulations.

Reporting to Price, as the head of the FDA, is Scott Gottlieb. Before he headed the FDA, Gottlieb worked primarily for the investment bank Winston & Company, which helped raise $4.7m for the e-cigarette company Kure in 2016, according to Bloomberg News.

Gottlieb then became a director at Kure the same year. Writing about the FDA, he argued in Forbes that anti-tobacco “activists have managed to infiltrate the middle ranks of the agency’s center”, and suggested e-cigarettes could be an alternative for smokers.

Attorneys appointed to defend the FDA’s authority to regulate tobacco products have, in some cases, come directly from the law firm that once fought them – Jones Day. The firm’s attorneys represented Trump during the campaign as well as RJ Reynolds in suits against the US government. Now, 11 lawyers from the firm have been appointed to various government agencies, American Lawyer reported.

Until Francisco’s nomination for solicitor general, he represented both RJ Reynolds and its parent company, Reynolds American Inc. The companies were two of just 16 sources of income, including his law firm Jones Day, from whom Francisco reported earning more than $5,000 a year.

Francisco has had “a profoundly important involvement with the tobacco industry”, said Blumenthal.

Francisco argued on behalf of Reynolds in a continuing case. In one instance, he successfully argued against a graphic warning design on cigarette packs, which are common in other developed nations, because the warnings included a phone number where people could seek help to quit.

Francisco argued the message veered into advocacy because it told people to “live a certain way”, according to the Seattle Times.

“The government is trying to send a powerful message: quit smoking now,” Francisco reportedly said.

Even the dark “American carnage” speech Trump gave at his inauguration was written by a one-time tobacco advocate: his speechwriter Stephen Miller argued against a cigarette sales ban while he attended Duke University in 2007.

“Smoking, while risky and potentially lethal, is not nearly as dangerous as special interest groups and their cohorts in government have made it out to be,” Miller wrote. “The real risks are the fascistic tendencies that prohibit smoking in even private establishments.”

Inside the murky world of Nairobi’s smoking zones

The Kenyan government has cracked down on cigarettes with a ban on advertising and smoking in public, driving the habit into the shadows

https://www.theguardian.com/world/2017/jul/12/nairobi-kenya-smoking-zones-cigarette-crackdown

There is a wooden shed in the middle of Nairobi city centre, dark, full of fumes, crowded and deliberately built beside the public toilets. It feels like a place of shame.

Jairus Masumba, Nairobi County’s deputy director of public health, calls it in jest the gazebo. It’s the public smoking place, created by his department. It is claustrophobic and filled with smoke, some of which drifts out through slats, but most of which hangs heavily in the fugged air inside.

Those who enter have to be desperate – and they’re usually men. A 27-year-old woman, who comes from the south of Kenya, is a rarity. She is heavily made-up and stands in the doorway. She smokes seven to 10 cigarettes a day. “It’s bad for you, no?” she says several times, though she knows the answer.

The men inside, barely visible as you enter because of the darkness and the fug, are smoking hard, standing up like a football crowd, all facing the same way though there is nothing to look at except the wooden slats of the far side of the shed. Music blares but nobody is dancing. They are grim faced, doing what they have to do. A young man, high probably on khat and cigarette in hand, chases some of the butts and the ash out with a broom, seeking money from the other smokers for cleaning up. He says he has a diploma in business marketing and another diploma in substance abuse counselling.

At the door are two cigarette sellers, doing a busy trade. It’s rare for anyone to buy whole packets. Packs of cigarettes in Kenya are broken up and sold by vendors as single sticks. That makes them cheap for women, children and the poor, despite manufacturers being banned from producing packets of less than 10. One of the two sellers sitting passively inhaling smoke is a woman who taps a packet of 20 and shakes them deftly out, one at a time, exchanging them for small coins. Men buy one, sometimes a couple, sometimes three. They will not all be smoked here. The sellers sit at the large red wooden boxes, with open lids that become the display cabinet. Most popular and cheapest is Sportsman at 100 shillings a pack (75p, 97 cents) or 5 shillings (less than 4p, 5 cents) for a single. Smokers buy sweets too, to take away the smell of tobacco when the worker goes back to the office.

The shed is vile, but few dare smoke even on the pavement outside in the cleaner air in the knowledge that the plain clothed official public health enforcers will be circling, ready to impose fines on anyone they catch. Nairobi city has got tough on smoking. The Kenyan government has banned advertising and marketing and smoking in public places, but it is up to the individual counties to interpret and enforce that and they all do it differently. Nairobi County has cracked down hard. Lighting up on the open street in the city centre can result in a stiff fine of 50,000 shillings (£374, $485) or even arrest. But it’s not so everywhere, or even outside of the city centre.

WHO-africa-deaths

Yusef, 58 and from Kenya’s second city, Mombasa, on the Indian Ocean coast, says people smoke openly in Mombasa. He has been smoking since the 1970s. His 28-year-old daughter died recently from colon cancer. That gives him a different perspective. “I’m more worried about GM foods,” he says.

Nairobi’s Uhuru Park is just under the nose of the ministry of health and has two small designated open-air smoking areas. On a Saturday, young women who are not smoking are there laughing and chatting with the young men who are. It’s somewhere to hang out. Elsewhere in the park, the same snack stalls proliferate. After 5pm, when the official public health enforcement officers go home, vendors and smokers relax. Cigarettes are sold and smoked openly.

Outside of the city centre, the restrictions do not appear to be enforced at all. In the High Ridge residential area, a predominantly Indian community, stall holders are grilling corn and frying cassava crisps on the street. Others run the small stalls selling sweets, biscuits, fizzy drinks and cigarettes, openly smoking themselves. People wander along the road with a cigarette between their fingers. A large lorry stops and a man jumps down to buy two sticks, lighting both and passing one to his fellow labourer before they unload.

These stalls are common near schools. A recent report compiled by the Consumer Information Network, a campaigning Kenyan anti-tobacco organisation, with Johns Hopkins University in the US, found such stalls selling sweets and single cigarettes within yards of primary schools across the country.

You won’t see an advert for Dunhill or Rothmans in Kenya. At least, nothing that looks like an advert. Advertising and promoting cigarettes has been banned. But everybody knows what the large red wooden boxes and red wooden display trays at stalls at the side of roads contain. Red is the colour of British American Tobacco (BAT). The words have been stripped off the red umbrellas that protect street vendors from the sun or patched over, but the colour is a tacit reminder of what they used to say and what is still sold there.

BAT said its products were for adult smokers only and that it would much prefer that stalls sold whole packets rather than single sticks, “given our investment in the brands and the fact there are clear health warnings on the packs.

“Across the world, we have very strict rules regarding not selling our products to retailers located near schools. BAT Kenya provides support to many of these independent vendors, including providing stalls painted in non-corporate colours, and providing youth smoking prevention and health warnings messages. We also educate vendors to ensure they do not sell tobacco products near schools.

“We are a company that takes its responsibilities very seriously, and we are naturally keen to look further into any instances that are brought to our attention, so we can take action if necessary.”

Pictures and video by David Levene. Multimedia editing by Ekaterina Ochagavia.

Threats, bullying, lawsuits: tobacco industry’s dirty war for the African market

Revealed: In pursuit of growth in Africa, British American Tobacco and others use intimidatory tactics to attempt to suppress health warnings and regulation

https://www.theguardian.com/world/2017/jul/12/big-tobacco-dirty-war-africa-market

British American Tobacco (BAT) and other multinational tobacco firms have threatened governments in at least eight countries in Africa demanding they axe or dilute the kind of protections that have saved millions of lives in the west, a Guardian investigation has found.

BAT, one of the world’s leading cigarette manufacturers, is fighting through the courts to try to block the Kenyan and Ugandan governments’ attempts to bring in regulations to limit the harm caused by smoking. The giant tobacco firms hope to boost their markets in Africa, which has a fast-growing young and increasingly prosperous population.

In one undisclosed court document in Kenya, seen by the Guardian, BAT’s lawyers demand the country’s high court “quash in its entirety” a package of anti-smoking regulations and rails against what it calls a “capricious” tax plan. The case is now before the supreme court after BAT Kenya lost in the high court and the appeal court. A ruling is expected as early as next month.

BAT in Uganda asserts in another document that the government’s Tobacco Control Act is “inconsistent with and in contravention of the constitution”.

The Guardian has also seen letters, including three by BAT, sent to the governments of Uganda, Namibia, Togo, Gabon, Democratic Republic of Congo, Ethiopia and Burkina Faso revealing the intimidatory tactics that tobacco companies are using, accusing governments of breaching their own laws and international trade agreements and warning of damage to the economy.

Extract – court document

“The Regulations are unlawful in their entirety as a result of procedural impropriety … The warning requirements [on cigarette packets] constitute an unjustifiable barrier to international trade.”

A petition by British American Tobacco Kenya to the country’s high court against aspects of the Kenyan government’s proposed tobacco regulations, 16 April 2015

BAT denies it is opposed to all tobacco regulation, but says it reserves the right to ask the courts to intervene where it believes regulations may not comply with the law.

Later this month, BAT is expected to become the world’s biggest listed tobacco firm as it completes its acquisition of the large US tobacco company Reynolds in a $49bn deal, and there are fears over the extent to which big tobacco can financially outmuscle health ministries in poorer nations. A vote on the deal by shareholders of both firms is due to take place next Wednesday, simultaneously in London at BAT and North Carolina at Reynolds.

Professor Peter Odhiambo, a former heart surgeon who is head of the government’s Tobacco Control Board in Kenya, told the Guardian: “BAT has done as much as they can to block us.”

Experts say Africa and southern Asia are urgent new battlegrounds in the global fight against smoking because of demographics and rising prosperity. Despite declining smoking and more controls in some richer countries, it still kills more than seven million people globally every year, according to the WHO, and there are fears the tactics of big tobacco will effectively succeed in “exporting the death and harm” to poorer nations.

There are an estimated 77 million smokers in Africa and those numbers are predicted to rise by nearly 40% from 2010 levels by 2030, which is the largest projected such increase in the world.

In Kenya, BAT has succeeded in delaying regulations to restrict the promotion and sale of cigarettes for 15 years, fighting through every level of the legal system. In February it launched a case in the supreme court that has already halted the imposition of tobacco controls until probably after the country’s general election in August, which are being contested by parliamentarians who have been linked to payments by the multinational company.

Extract – court document

“[A proposal for a new 2% tax on the industry in Kenya] … is arbitrary, capricious and inaccessible … it will have a significant effect on cigarette manufacturers and importers putting at risk further investment and direct and indirect employment opportunities in Kenya.”

A petition by British American Tobacco Kenya to the country’s high court against aspects of the Kenyan government’s proposed tobacco regulations, April 16th 2015

In Uganda, BAT launched legal action against the government in November, arguing that the Tobacco Control Act, which became law in 2015, contravenes the constitution. It is fighting restrictions that are now commonplace in richer countries, including the expansion of health warnings on packets and point-of-sale displays, arguing that they unfairly restrict its trade.

The court actions are brought by BAT’s local affiliates, BAT Kenya and BAT Uganda, but approved at Globe House, the London headquarters of the multinational, which receives most of the profits from the African trade. In its 2016 annual report, BAT outlined the “risk” that “unreasonable litigation” would be brought in to control tobacco around the world. Its response was an “engagement and litigation strategy coordinated and aligned across the Group”.

‘Focus on emerging markets’

At its annual meeting in March, chairman Richard Burrows toasted a “vintage year” for BAT, as profits rose 4% to £5.2bn after investors took their cut – their dividend had increased by 10%. When asked about the legal actions in Africa, he said tobacco was an industry that “should be regulated … but we want to see that regulation is serving the correct interests of the health mission and human mission which should lie behind it”.

Extract – court document

“Your Petitioner alleges and shall demonstrate that the Tobacco Control Act, read as a whole, has the effect of unjustifiably singling out the tobacco industry for discriminative treatment.”

A petition of British American Tobacco Uganda in the constitutional court against the Ugandan government’s Tobacco Control Act

So, “from time to time it’s necessary for us to take legal action to challenge new regulation” which he said was led by “the local board”.

BAT says it is “simply not true that we oppose all tobacco regulation, particularly in developing countries”. Tobacco should be appropriately regulated as a product that has risks to health, it said, but “where there are different interpretations of whether regulations comply with the law, we think it is entirely reasonable to ask the courts to assist in resolving it”. It was opposed to only a handful of the issues in Kenya’s regulations, not the entirety, it said in a statement.

Although most countries in Africa have signed the World Health Organisation (WHO) treaty on tobacco control, none has yet fully implemented the smoking restrictions it endorses.

The WHO predicts that by 2025, smoking rates will go up in 17 of the 30 Africa-region countries from their 2010 level. In some countries a massive hike is expected – in Congo-Brazzaville, from 13.9% to nearly half the population (47.1%) and in Cameroon from 13.7% to 42.7%. In Sierra Leone it will be 41.2% (74% among men) and in Lesotho 36.9%.

In contrast, research showed last year that just 16.9% of adults smoke in the UK; and last month new figures showed UK heart disease deaths had fallen 20% since that country’s indoor smoking ban.

“The tobacco industry is now turning its focus toward emerging markets in sub-Saharan Africa, seeking to exploit the continent’s patchwork tobacco control regulations and limited resources to combat industry marketing advances,” said Dr Emmanuela Gakidou and colleagues at the Institute for Health Metrics and Evaluation at the University of Washington in Seattle, publishing an analysis of smoking prevalence around the world in the Lancet in April.

Extract – letter

Uganda’s economy has “benefitted… significantly” from BAT’s tobacco business, employing 200 Ugandans and 1500 extra in the tobacco buying season. “This has helped to alleviate poverty and improve welfare in urban and rural areas …”

Extracts of a letter from Jonathan D’Souza, managing director of BAT Uganda to the chairperson of the Uganda Parliamentary committee on health, 14 April 2014

Africa’s growing numbers of children and young people, and its increasing wealth, represent a huge future market for the tobacco industry. The companies deny targeting children and cannot sell packs smaller than 10, but a new study carried out in Nairobi by the Johns Hopkins school of public health in the US and the Kenya-based Consumer Information Network found vendors selling cigarettes along the routes children take to walk to primary schools.

WHO-congo-smoke

Stalls sell single Dunhill, Embassy, Safari and other BAT cigarette sticks, costing around 4p (5 cents) each, alongside sweets, biscuits and fizzy drinks. The vendors split the packets of 20 manufactured by BAT. “They are targeting children,” said Samuel Ochieng, chief executive of the Consumer Information Network. “They mix cigarettes with candies and sell along the school paths.”

BAT said that its products were for adult smokers only and that it would much prefer that stalls sold whole packets rather than single sticks, “given our investment in the brands and the fact there are clear health warnings on the packs.

“Across the world, we have very strict rules regarding not selling our products to retailers located near schools. BAT Kenya provides support to many of these independent vendors, including providing stalls painted in non-corporate colours, and providing youth smoking prevention and health warnings messages. We also educate vendors to ensure they do not sell tobacco products near schools.”

Links with politicians

The Kenya case, expected to be heard after the elections on 8 August, is seen as critical for the continent. If the government loses, other countries will have less appetite for the long and expensive fight against the wealthy tobacco industry.

BAT has around 70% of the Kenyan market; its Kenyan competitor, Mastermind, has joined in the legal action against the government.

Extract – letter

“If these measures are brought into effect, the economic and social impact will be extremely negative. They could even threaten the continuation of our factory which has operated in Bobo Dioulasso for more than fifty years with more than 210 salaried employees.”

Excerpt from letter from Imperial Tobacco to the prime minister of Burkina Faso, 25 January 2016, concerning new regulations on plain cigarette packaging and large graphic health warnings.

Concerns have been raised about links between politicians and the tobacco companies. “There are allegations of some of them having been bribed in the past,” said Joel Gitali, chief executive of the Kenya Tobacco Control Alliance.

BAT whistleblower Paul Hopkins, who worked in Africa for BAT for 13 years, told a British newspaper he paid bribes on the company’s behalf to the Kenya Revenue Authority for access to information BAT could use against its Kenyan competitor, Mastermind. Hopkins has also alleged links between certain prominent opposition Kenyan politicians and two tobacco companies, BAT Kenya and Mastermind. Hopkins, who says he alerted BAT to the documents before the company made him redundant, claimed BAT Kenya paid bribes to government officials in Burundi, Rwanda and the Comoros Islands to undermine tobacco control regulations. Gitali is concerned about the outcome of the election: “If the opposition takes over government we shall be deeply in the hands of the tobacco companies.”

BAT denies any wrongdoing. A spokesperson said: “We will not tolerate improper conduct in our business anywhere in the world and take any allegations of misconduct extremely seriously. We are investigating, through external legal advisors, allegations of misconduct and are liaising with the Serious Fraud Office and other relevant authorities.”

Extract – letter

“Once the decision to smoke is taken by an adult smoker, the pack provides adult consumers with pertinent information”

British American Tobacco letter to the prime minister of Gabon, 1 January 2012

‘We grow up dreaming we can be one of them’

Tih Ntiabang, regional coordinator for Africa of the Framework Convention Alliance – NGOs that support the WHO treaty – said the tobacco companies had become bolder. “In the past it used to be invisible interference, but today it is so shameful that it is so visible and they are openly opposing public health treaties like the case in Kenya at the moment … Today they boldly go to court to oppose public health policy. Every single government is highly interested in economic growth. They [the tobacco companies] know they have this economic power. The budget of tobacco companies like BAT could be as much as the whole budget of the Africa region.

“Our health systems are not really well organised. Our policy makers can’t see clearly what are the health costs of inaction on tobacco control because our health system is not very good. It puts the tobacco industry at an advantage on public health.”

The sale across the whole of Africa of single cigarette sticks was a serious problem because it enabled children to buy them. “They are extremely affordable. Young teenagers are able to purchase a cigarette. You don’t need £1 for a pack of 20,” he said.

WHO-africa-deaths

BAT has a reputation in Africa as an employer offering steady and well-paid jobs, said Ntiabang, based in Cameroon. “When I was about 10, I was always dreaming I could work for BAT. They have always painted themselves as a responsible company – a dream company to work for. All the staff are well-off. The young people think ‘I want to work for BAT’. They promote a lot of events and make their name appear to young people. We grow up dreaming we can be one of them.”

In Uganda in 2014, BAT managing director, Jonathan D’Souza, sent a 13-page detailed attack on the tobacco control bill, then going through parliament, to the chair of the government’s health committee.

BAT was contracting with 18,000 farmers and paid them 61bn Ugandan shillings for 16.8m kg of tobacco in 2013, said the letter. The economy has “benefited significantly” from BAT Uganda’s investments, it said. “This has helped to alleviate poverty and improve welfare in urban and rural areas,” it says.

Extract – letter

“The draft regulations which you have published deal with a wide range of issues which will have a massive impact not only on the tobacco industry but also on a wider scale on the Namibian economy at large.”

Excerpt from a letter from the general manager of BAT in Namibia to the minister of health and social services, 17 November 2011

BAT Uganda (BATU) agreed tobacco should be regulated while “respecting the informed choices and rights of adults who choose to smoke and the legal rights of a legal industry”. But it cited 11 “areas of concern”, claiming there is no evidence to support a ban on tobacco displays in shops, that large graphic health warnings on packs are ineffective, that proposals on bans on smoking in public places were too broad and that prohibiting smoking under the age of 21 was unreasonable, since at 18 young people are adults and can make up their own mind.

Documents made public by the University of Bath show that BATU had another concern: the ban on the sale of cheap single cigarettes. Adults should be “free to purchase what they can afford”, says an internal leaked paper. BATU also took action against the MP who sponsored the bill. A letter informed him that the company would no longer be contracting with the 709 tobacco farmers in his region. There is evidence that the company also lobbied other MPs with tobacco farmers in their constituencies.

The Tobacco Control Act became law in 2015, and in November last year, BAT sued. Many people choose to smoke, said an affidavit to the court from managing director Dadson Mwaura and it was important to ensure regulation did not lead to “unintended consequences that risk an untaxed and unrestrained illegitimate trade in tobacco products”. BATU’s legal product contributed to the Ugandan economy “in many dimensions”.

The Guardian has seen letters showing that at least six other African governments have faced challenges from the multinational tobacco companies over their attempts to control smoking.

Democratic Republic of Congo: Letter to the president sent in April 2017 by the Fédération des Entreprises du Congo (chamber of commerce) on behalf of the tobacco industry, listing 29 concerns with the proposed tobacco control regulations, which they claim violate the constitution, international agreements and domestic law.

Burkina Faso: Letter sent in January 2016 to the minister of health from Imperial Tobacco, warning that restrictions on labeling and packaging cigarettes risks economic and social damage to the country. Previous letter sent to the prime minister from the US Chambers of Commerce in December 2013 warning that large health warnings and plain packaging could put Burkina Faso in breach of its obligations to the World Trade Organisation.

Ethiopia: Letter sent in February 2015 to the ministers of health and science and technology by Philip Morris International, claiming that the government’s tobacco directive banning trademarks, brands and added ingredients to tobacco breached existing laws and would penalise all consumer retailers.

Togo: Letter to the minister of commerce in June 2012 from Philip Morris International opposing plain packaging, which “risks having damaging consequences on Togo’s economy and business environment”.

Gabon: Letter from BAT arguing that there is no evidence that plain packaging reduces smoking, citing the Deloitte report of 2011, alleging its introduction would put Gabon in breach of trade agreements and promote smuggling.

Namibia: Letter to the minister of health from BAT, warning that planned tobacco controls will have “a massive impact … on the Namibian economy at large”.

Extract – memo

“As a country whose economy heavily relies on exports, Togo can ill afford to anger its international partners by introducing plain packaging.”

Excerpt from memo on plain packaging from chief executive of Philip Morris West Africa to the minister of commerce of Togo, to reiterate its concerns following a meeting, 21 June 2013

Bintou Camara, director of Africa programs at Campaign for Tobacco-Free Kids, said: “British American Tobacco, Philip Morris International and other multinational tobacco companies have set their sights on Africa as a ‘growth market’ for their deadly products”. Throughout Africa, tobacco companies have tried to intimidate countries from taking effective action to reduce tobacco use, the world’s leading cause of preventable death, he added.

“Governments in Africa should know that they can and should move forward with measures aimed at preventing and reducing tobacco use – and that they do so with the support of the many governments and leaders around the world that have taken strong action to protect public health.”

Cloe Franko, senior international organizer at Corporate Accountability International, said: “In Kenya, as in other parts of the world, the industry has resorted to frivolous litigation, aggressive interference … to thwart, block, and delay lifesaving policies. BAT’s actions are emblematic of a desperate industry grasping to maintain its hold over countries and continue to peddle its deadly product.”

Philip Morris said it is regularly engaged in discussions with governments. “We are approached by or approach public authorities to discuss a range of issues that are important for them and for us, such as taxation, international trade, and tobacco control policies. Participating in discussions and sharing points of view is a basic principle of public policy making and does not stop governments from taking decisions and enacting the laws they deem best.” It said that it supports effective regulation, “including laws banning sales to minors, mandatory health warnings, and advertising restrictions”.

Imperial Tobacco said it sold its brands “where there’s a legitimate and existing demand for tobacco and take the same responsible approach in Africa as we do in any Western territory”. A spokesman said it supported “reasonable, proportionate and evidence-based regulation of tobacco”, including “health warnings that are consistent with global public health messages”. But, it said, Imperial would “continue to make our views known on excessive, unnecessary and often counter-productive regulatory proposals”.

How big tobacco has survived death and taxes

The world’s five major tobacco companies are thriving, profitable and increasing sales, despite many predictions of the industry’s decline

https://www.theguardian.com/world/2017/jul/11/how-big-tobacco-has-survived-death-and-taxes

A casual observer could be forgiven for believing that the tobacco industry – for so long a fixture as permanent as its two main by-products, death and taxes – is itself on its last legs.

In the US, health officials have predicted that smoking rates in America could drop to as low as 5% by 2050, well within the lifetime of someone born today.

Last year, shareholders of UK-based Imperial Tobacco approved a decision to change the company’s century-old name to Imperial Brands, hinting at a move away from traditional cigarettes.

Even globe-straddling colossus Philip Morris International (PMI), owner of brands including Marlboro, has set its stall out for a “smoke-free” future, where nicotine addicts get their fix from vaping and other non-tobacco products.

Yet, for all of these predictions, one thing has remained unchanged: Big Tobacco is thriving, profitable and increasing its sales.

Excluding China, where the market is monopolised by the state, five major companies dominate the global tobacco trade – Philip Morris International (PMI), British American Tobacco, Japan Tobacco, Imperial Brands and Altria (the former US assets of PMI).

Between them in 2016, they shipped 2.27tn cigarettes, more than 300 for every man, woman and child on the planet, racking up combined sales of $150bn (£115bn). Their combined profits reached $35bn (£27bn), allowing investors in those companies to receive dividends of $19bn (£14.5bn).

Of these giants, one of the most powerful is British American Tobacco (BAT), the London-based firm that can trace its history back to 1902.

Run from Globe House, its headquarters next to the Thames river, BAT sells its brands in 200 countries and is market leader in 55 of them.

Far from looking to a future beyond tobacco, BAT is doing perfectly well as it stands.

At its annual meeting in March, chairman Richard Burrows toasted a “vintage year”, as profits rose to £5.2bn ($6.7bn) allowing the company’s shareholders to take a dividend worth an additional 10%.

The rewards were so great because BAT’s sales show no signs of the industry’s much-vaunted decline. The company sold 665bn cigarettes in 2016, nearly 100 for every human on earth and 2bn more than it sold the year before.

Cigarette sales among its so-called Global Drive Brands – Dunhill, Kent, Lucky Strike, Pall Mall and Rothmans – jumped 7% to 346bn.

In the section of its accounts that details non-cigarette sales, which the company terms “next generation products”, there is nothing to see.

The numbers are so small that they are considered immaterial to its financial results and do not need to be disclosed under stock market rules.

Yet the company’s traditional business continues to generate big headlines and bigger numbers. By the end of the year, BAT is likely to have completed a landmark $49bn deal to buy the 57.8% of US tobacco giant Reynolds American that it does not already own. A simultaneous shareholder vote next Wednesday by both firms is expected to agree the deal at Reynolds HQ in Winston-Salem, North Carolina, and BAT in London.

If US tobacco sales really are set to fall off a cliff, that would be a monumental strategic misstep.

But while the percentage of Americans who smoke is on the wane, the US remains a market with huge potential.

That’s because the population is rising, meaning that even as smoking rates decline in percentage terms, the actual number of smokers is relatively static at about 45 million people.

US cigarettes are also relatively cheap compared with prices in the UK, leaving some scope for the company to raise prices without losing customers.

Reynolds and BAT will also look to the future by pooling research on smokeless products, hoping to capture that growing market, though that won’t be the big money-spinner any time soon.

And then there is the developing world, where the rate at which governments and public opinion are turning against tobacco differ dramatically from wealthier economies.

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A ‘defensive’ stock

BAT increased its revenues in every region bar Asia-Pacific last year, with the developing world doing more than its share of the heavy lifting.

Among the “key markets” listed in its annual report are Indonesia and Egypt – and for good reason.

The World Health Organisation projects smoking rates in Indonesia to increase by 2025, with the number of smokers growing from 73m to 97m based on current trends.

Egypt is another key market where smoking rates are projected to grow, with up to 21m Egyptians forecast to be smokers by 2025, compared to 14m in 2015.

One only has to look at BAT’s roster of investors for evidence of the confidence that well-informed institutions with deep pockets have in the future of cigarettes, even if that future is less bright in the West.

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It’s a list that features nearly every major investment company in the world, testament to the safe bet that tobacco giants such as BAT offer to investors.

Top of the share register is BlackRock, the all-powerful asset manager that has a stake in nearly every major listed company in the world, managing investors’ funds of approximately $5.4tn, more than the economy of Japan.

Some way further down the list is Woodford Investment Management, run by Neil Woodford, a figure held in awe in London for his uncanny ability to make money.

He famously invests a huge chunk of his portfolio in tobacco, explaining that he is not paid to make moral judgments but to make money for clients.

Tobacco is attractive to investors – including councils in the UK – because it is seen as a “defensive” stock, in other words a good place to invest money that you are not prepared to lose.

The shares rarely decline in value even when times are tough and also deliver a steady income from annual dividends.

The huge rewards on offer for investors mean that those who manage the great behemoths of tobacco are also handsomely rewarded.

BAT chief executive Nicandro Durante is no exception. He was handed a package of cash and shares worth $10m (£7.6m) last year, taking his earnings over six years to a cool $44m (£34m).

When fellow directors are included, the 14-strong BAT boardroom enjoyed a combined $18m (£14m) payday in 2016.

There are other perks. Durante gets free tax advice from the company, a personal driver and security for his homes, in London and Brazil.

Both executives and non-executives also have access to a walk-in GP clinic near BAT’s headquarters at Globe House in London, enjoying the benefits of a National Health Service that has been estimated to spend up to $6.5bn (£5bn) a year on smoking-related illnesses.

BAT’s board earn their corn as much for their network of connections as they do for their hard work.

Burrows is a former governor of Bank of Ireland, while senior independent director Kieran Poynter is a managing partner of Big Four accountancy PricewaterhouseCoopers and previously advised the UK’s Treasury.

Its non-executive directors boast a string of similar appointments at multinational companies. Savio Kwan, for instance, was chief operating officer of China’s largest internet business, Alibaba.

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Ann Godbehere ran the finances of Northern Rock after its bailout and also serves on the boards of mining giant Rio Tinto, Swiss bank UBS and insurer Prudential.

Nor does the company’s network of influence end there.

While it does not donate money directly to British political parties, it does funnel cash to influential right-leaning thinktank the Institute of Economic Affairs.

BAT gives the IEA around $52,000 (£40,000) a year, a sum equivalent to about 5% what the organisation pays its staff, some of whom appear frequently in the media to criticise tobacco control legislation such as plain packaging.

Chief among those staff is director-general Mark Littlewood, a former press spokesman for the Liberal Democrats and one-time adviser to David Cameron.

Littlewood has been a vocal critic of tobacco control legislation such as the ban on smoking in pubs, as well as plain packaging.

The IEA has also received funding from Philip Morris International and Japan Tobacco International.

The BAT bosses

Nicandro Durante – chief executive

Nicandro Durante joined Brazilian subsidiary Souza Cruz in 1981, and rose through the ranks over three decades until he was appointed chief executive in 2011.

He had impressed the company’s senior management during a two-year stint as regional director for Africa and the Middle East, key areas of future growth for tobacco companies facing up to declining smoking rates in more developed economies.

Born to Italian parents in 1956 in Sao Paulo, he played football for the city’s Corinthians team in his teens before going into business.

Married with two children, Durante stopped smoking cigarettes in favour of cigars, but has no qualms about tobacco, which he described as a “very ethical” industry in a 2012 interview with the Financial Times.

In 2015, he fielded allegations from a former employee in Kenya that BAT bribed officials for various purposes, including the undermining of tobacco control laws.

BAT denies any wrongdoing. A spokesperson said: “We will not tolerate improper conduct in our business anywhere in the world and take any allegations of misconduct extremely seriously. We are investigating, through external legal advisors, allegations of misconduct and are liaising with the Serious Fraud Office and other relevant authorities.”

In 2016, Durante was handed a package of cash and shares worth $10m (£7.6m), taking his earnings over the past six years to a cool ($44m) £34m.

Richard Burrows – chairman

Addressing BAT’s shareholders earlier in 2017, Burrows toasted a “vintage year”, in which the company shrugged off bribery allegations in late 2015 to record rising profits.

Some investors were less keen on Burrows when he was named chairman in 2009.

Burrows had resigned as governor of Bank of Ireland, leaving the lender in dire straits, with big losses and mounting debt threatening its very survival.

Tens of thousands of the bank’s mortgage customers were plunged into negative equity and the lender eventually needed a state bailout that enraged many Irish people.

As the bosses of rival lenders faced public opprobrium for their stewardship of the country’s banking sector, Burrows got out just in time, landing the chairmanship of BAT in 2010.

But BAT wasn’t concerned by his record in banking, looking instead to his 22 years with Irish Distillers, during which time he was credited with turning Jameson whiskey into an internationally-recognised brand.

The Dubliner, 71, is a non-smoker who is married with four children and enjoys sailing and rugby.

He is also chairman of investment company Craven House Capital, whose assets includes beachfront land in Brazil. He is a non-executive director of Rentokil and Carlsberg.

Kieran Poynter – senior independent director

After a near 40-year career with global accounting giant PwC, which put him among the ranks of the UK’s best-paid accountants, Kieran Poynter joined BAT’s board as senior independent director.

He brought with him valuable connections, having served as an adviser to former UK chancellor of the exchequer Alistair Darling.

Poynter, a Chelsea FC season ticket holder, is a former director of the salubrious Royal Automobile Club, the gentleman’s club on London’s Pall Mall.

He also sits on the board of F&C Asset Management and IAG, the parent company of British Airways.

Ben Stevens – finance director

Ben Stevens looks after BAT’s money, and has spoken about how the company is growing market share and looking for acquisitions in Asia and North Africa.

Part of his role is trying to convince governments not to raise excise duty on cigarettes too quickly, according to an interview he gave with financialdirector.co.uk.

In the same interview, he referred to the need to have a “thick skin” because of the number of people “bashing tobacco companies”.

Stevens gave up smoking nearly 30 years ago, two years before joining the company. But said in 2013 that profits would come from “combustible tobacco” for the near future.

Philip Morris to pay millions to Australia on failed plain packaging case

Big tobacco battle: Final costs figure kept secret but reported as being up to €33.36m

https://www.irishtimes.com/news/world/asia-pacific/philip-morris-to-pay-millions-to-australia-on-failed-plain-packaging-case-1.3149956

Tobacco manufacturer Philip Morris will be forced to pay millions of dollars in legal fees to Australia after its failed case against plain packaging laws.

Big tobacco companies have fought vigorously against the Australian government’s plain packaging laws since they were introduced in 2011.

By banning logos and distinctive-coloured cigarette packaging, Australia’s laws went further than the advertising bans and graphic health warnings introduced in many other countries.

Philip Morris, Imperial Tobacco and Japan Tobacco quickly attempted to have the laws overturned through a constitutional challenge in the high court, which they lost in 2012.

Philip Morris Asia then took a case to the permanent court of arbitration in 2012. It tried to use the conditions of a 1993 trade agreement between Australia and Hong Kong to argue a ban on trademarks breached foreign investment provisions.

Corporate giant

The corporate giant not only lost but was criticised by the court, which found the case to be “an abuse of rights”.

The court published a decision on the payment of costs at the weekend, which it made in March. The decision, which brought five years of proceedings to a close, found Philip Morris Asia liable to pay Australia’s multimillion-dollar claim for legal costs.

The final costs figure was kept secret but Fairfax Media reported it as being up to AUS $50 million (€33.36 million).

Australia successfully argued Philip Morris must pay its court fees and expenses, the cost of expert witnesses, travel, and solicitors and counsel. It also claimed interest.

Australia had told the court its claim was modest and was a small proportion of what the tobacco giant had sought in damages.

Critical importance

It said Philip Morris had sought to challenge a public health measure of critical importance to Australia, making it important to “mount a robust and comprehensive response to all aspects of the claim”.

Philip Morris had tried to argue the government’s costs were unreasonable for a “legal team that consisted primarily of public servants”.

The company argued that two similar countries, Canada and the US, had never claimed more than US$4.5m and US$3m respectively in costs and fees. Australia’s claim was much more than that.

“The claimant emphasises that, even excluding the fees of four outside counsel, the respondent’s government lawyers claim over [REDACTED]in fees, even though Australia itself pays them ‘very modest government salaries’,” the court’s decision read.

But the court found Australia’s claim was reasonable, rejecting Philip Morris’s arguments.

“Taking into account the complexity of issues of domestic and international law relevant in this procedure, particularly for a government team usually not engaged in such disputes, the Tribunal does not consider that any of these costs claimed by the Respondent were unreasonable and should not have been incurred,” it found.

“In making this assessment, the Tribunal also takes into consideration the significant stakes involved in this dispute in respect of Australia’s economic, legal and political framework, and in particular the relevance of the outcome in respect of Australia’s policies in matters of public health.”

Earlier this year big tobacco failed in a separate bid to have the laws overturned by the World Trade Organisation. The decision was widely seen as a green light for more countries to follow Australia’s lead.

World’s tobacco firms are on a roll even as China market shrinks

Tobacco industry is bucking the declining consumption trend, although experts expect China to lead a new wave of volume decline as Beijing steps up its anti-smoking campaign amid increasing health concerns

http://www.scmp.com/business/companies/article/2102055/worlds-tobacco-firms-are-roll-even-china-market-shrinks

Against the overall consumption slump, there are signs that the world’s tobacco giants stand a chance of returning to the heyday, after delivering a “stronger performance” in 2016, a recent study showed.

The study of the top 50 global consumer companies by OC&C Strategy Consultants found that active industry consolidation and a continued drive to increase margins have boosted profitability.

As such, global drives to discourage smoking and curb cigarette sales – from advertising bans to mandatory warnings on cigarette packaging featuring rotting lungs – have been inadequate to dent businesses of the big players like Philip Morris and British American.

“Tobacco prices have risen steeply in developed markets in the past 12 months,” said Will Hayllar, partner with OC&C Strategy Consultants.

“A continued drive to increase margins through pricing and cost cutting has boosted profitability.”

The industry sells 5.6 trillion cigarettes each year to the world’s one billion smokers, or triple the size of the US population.

The prevalent habit, or “epidemic,” as the World Health Organisation Director-General Margaret Chan called it, kills 6 million people through cancer and other preventable diseases every year and costs the world over US$1 trillion annually in health-care expenses and lost productivity.

The mounting casualties have prompted authorities to impose more stringent control over tobacco consumption.

In Britain, cigarettes were ordered to be sold in standardised packaging bearing graphic warnings of the harmful effects of smoking, while a 10 per cent tax hike in Japan on cigarettes has led to a substantial drop in smoking.

Shanghai is the latest city in China, a country with as many as 316 million smokers, that has implemented a smoking ban in public places earlier this year.

But multinational tobacco titans remain untouched by the headwinds.

Shares of New York-based Philip Morris have risen 29 per cent so far this year. Reynolds American, renowned for its Camel cigarettes, has enjoyed a 15 per cent rally this year, as it finished fiscal 2016 with a 31.6 per cent gain in adjusted net income.

Hayllar suggested the “addictive nature” of tobacco has made it easier for cigarette companies to lift prices without worrying about losing customers. A pack of cigarettes in the US costs an estimated US$6.42 in 2016, a 72 per cent surge from 2001, according to TMA, an industry group.

However, industry insiders expected China, where authorities have stepped up their anti-smoking campaign with a series of tax hikes and smoking bans in view of its ageing population and shrinking labour force, to lead a reversal of fortunes for the industry.

Beijing maintains a monopoly of China’s tobacco market through its state-owned China National Tobacco Corporation. The state firm contributes an astronomical 1.1 trillion yuan a year in tax revenue, an amount that exceeds the nation’s annual military budget.

While China accounts for about 20 per cent of the world’s population, it consumes 45 per cent of all cigarettes sold globally. Smoking, like drinking, is particularly common among mainland Chinese men, as offering and taking cigarettes are considered a routine in professional and personal encounters.

But 2015 was a turning point, when cigarette sales volume in China declined 2 per cent, the first drop in two decades, as a result of rising health consciousness and stricter anti-smoking regulations, according to a report by market researcher Euromonitor International.

“For once, perhaps in a generation, total worldwide cigarette volumes look more, not less, robust on the exclusion of the Chinese market,” said Shane MacGuill, head of tobacco with Euromomitor International, which projected the China market to further shrink in volume through 2020.

The lukewarm demand had already caused a wave of closures of tobacco retailers last year, China Tobacco noted in a recent report.

And it led the dominant cigarette behemoth to, for the first time, indicate that the volume of the world’s largest tobacco market had gone into a downward spiral.