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November 26th, 2012:

Complicity in contraband: British American Tobacco and cigarette smuggling in Asia

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BAT in smuggling, researchers claim

“The authors of the study said ‘ the industry documents have primarily provided evidence of complicity in smuggling by BAT.’”

“Cigarette smuggling, comprising around one quarter of exports undermines public health by making cheaper cigarettes more readily available and, in turn, encouraging increased consumption.”

This is the conclusion of a research “supported by the National Cancer Institute, US National Institute of Health”. The study covers Asia, Lebanon, China, Cambodia, Uzbekistan.

A research done by J. Collins, E. LeGresley, R. MacKensie, S. Lawrence and K. Lee entitled Complicity in Contraband: British American Tobacco and cigarette smuggling in Asia” concludes BAT documents demonstrate the strategic importance of smuggling across global, regional, national and local levels.

“Particularly important in Asia, contraband enabled access to closed markets, create pressure for market opening , and was highly profitable.”

The results of the research points out “documents demonstrates BAT’s detailed oversight of illicit trade, seeking to reconcile the conflicting demands of control and deniability.

The research admits that there are strong indications that other cigarette companies are similarly involved in illicit cigarette trade. However, the authors of the study said “the industry documents have primarily provided evidence of complicity in smuggling by BAT.”

The researchers noted “… the documents from BAT often seem more candid than those from its competitors.”

According to the researchers “this may be attributable to variations to corporate culture, a historically lower sense of vulnerability to litigation.” This is variously interpreted to mean that BAT may have mounted a huge and successful lobby that might have lulled BAT into the culture of feeling invulnerable or have a lower sense of it.

The researchers pointed out “many of the most dramatic disclosures of tobacco industry misconduct have been obtained from BAT documents including evidence of price fixing.”

What appears to be the preparedness of the Philippine government to give to BAT in the name of leveling the playing field the privilege of raising by higher than 700 per cent the tax on cigarettes for the poor fits squarely with the alleged involvement of the new player in illicit cigarette trade.

We have tirelessly explained the reality that when the price of cigarettes for the poor goes up beyond their means as a result of the proposed heavy tax burden, they switch to cheaper smuggled brands.

It is not exactly funny or strange that BAT has proposed a higher tax burden on the cigarettes for the poor although the brands it will export to the Philippines are premium, or cigarettes for the well-heeled.

The BAT cigarettes do not in any way compete with the poor man’s cigarette of the Filipino. How is the playing field leveled that way?

The record shows that demand for premium brands is a speck in the tobacco industry, less than two per cent in fact.

How does raising the price of low end cigarettes which do not at all compete with premium figure in the business interest of BAT in exporting cigarettes to the Philippines?

It hardly does. Low-end brands and premium have their own distinct identifiable markets. One does not cross the other. Therefore, British American Tobacco does not hope to compete with the low end brands of Philippine-made cigarettes which may succumb to smuggling after the proposed 700 per cent additional tax takes effect.

Therefore it has no interest in pushing for higher tax increase on cheap cigarettes. But it does so in the interest, it says, of leveling the playing field.

Given the fact that demand for premium brands hardly grows, why does British American Tobacco want to come back to the Philippines on condition that the playing field is leveled by making the price of the poor man’s cigarette beyond his reach?

A higher liability would not in any manner increase the demand for the premium brands of BAT. What is definite is the poor man’s cigarette will practically disappear after its demand is taken over by illicit cigarettes.

Again, how does BAT benefit from a situation such as this? It will not. But it can immensely if it joins the smugglers.

This is the whole purpose of the research study supported by the National Cancer Institute and the US National Institutes of Health. What the researchers found in the documents of BAT itself are far from flattering. On the contrary it is condemnable.

Now we ask, what gain will the country get passing the excise tax bill? We see none. What harm can happen? We see a lot. We surrender the tobacco industry to the smugglers. We may not collect the expected tax precisely because illicit goods do not pay a tax.

Smuggled or “blue seal” cigarettes will encourage more smoking on the youth because of cheaper prices.



NSW govt bans all tobacco investments

THE NSW government is stubbing out its tobacco investments across the state.

Treasurer Mike Baird says all NSW agencies will be instructed to ban indirect and direct tobacco-related financing following a review of the government’s investment strategy.

Mr Baird says the NSW government does not currently have any direct investments in tobacco, but some of its agencies do.

“A small proportion of NSW Treasury Corporation (TCorp) and other public-sector agencies do have tobacco investments in their investment portfolios, which have been made by fund managers on their behalf,” Mr Baird said.

Mr Baird said the independent State Super fund operator would be asked to exclude tobacco investments from its investment portfolio and mandates.

TCorp currently holds tobacco investments of around A$27 million, while WorkCover has around A$39 million and State Super has A$158 million, Mr Baird said.

Health Minister Jillian Skinner said the decision reinforced the NSW government’s strong anti-smoking stance.

“Today’s decision sends a further message to the community about the dangers of smoking and the huge burden that smoking puts on the NSW health system,” Mrs Skinner said.

The anti-smoking lobby group ASH said it welcomed the move by NSW to join the ACT and exclude tobacco companies from investment.

“Australian public money should not be invested in an industry that kills 15,000 Australians (a year and) drains $31 billion from our economy and undermines health policies,” ASH CEO Anne Jones said in a statement.

She said the federal government’s Future Fund, which currently invests around A$210 million in tobacco companies, was reviewing its policies.

Victoria had over A$100 million in tobacco investments and was being urged to do the same, Ms Jones said.

Big Tobacco loses bid to bar expert witness from testifying at class-action trial

Big Tobacco loses bid to bar expert witness from testifying at class-action trial

Monday, November 26, 2012 7:32 PM

A trial got underway in Montreal Monday against three leading tobacco companies;seeking $27 billion from them for allegedly failing to adequately warn smokers of the dangers of cigarettes. Plaintiffs filed two separate class actions that were combined into what is Canada’s biggest-ever civilian lawsuit against Imperial Tobacco Canada (a BAT subsidiary);JTI-Macdonald and Rothmans Benson & Hedges in the Superior Court of Quebec.

Photo Credit: Geoff Robins , AFP/Getty Images


MONTREAL – A Quebec judge has agreed to hear the testimony of a prominent witness in a massive class-action lawsuit against Big Tobacco, a man the industry has labelled as biased and ill-informed.

Robert Proctor is a historian from California’s Stanford University who has published extensively on the tobacco industry in books and academic papers. He’s also no stranger to tobacco litigation, having testified in some 30 trials.

He was called to testify on behalf of the plaintiffs behind a landmark $27 billion lawsuit in Quebec that pits an estimated 1.8 million Quebecers against three major tobacco manufacturers.

The defendants – Imperial Tobacco Canada Ltd.; Rothmans, Benson & Hedges; and JTI-Macdonald – have argued that the dangerous health effects of tobacco have been common knowledge for decades and there was no conspiracy to hide it.

Justice Brian Riordan decided late Monday that he wanted to hear from Proctor. He admitted as evidence part of his 100-plus page report, which critiques other reports done by three industry-paid historians on how much Quebecers knew about tobacco risks.

Lawyers for the tobacco firms spent the day attacking Proctor’s credibility. They tried to convince the judge that the professor had an agenda beyond critiquing historians’ reports.

The judge allowed about 30 pages into the record.

As for the rest of his report – which one tobacco lawyer described as 75 pages of anti-tobacco advocacy – Riordan said he would take it under advisement.

Proctor doesn’t couch his words when describing what conclusions he draws about the tobacco industry from his research. He has described tobacco companies in writings as liars, cockroaches and cancer-mongers and he says cigarettes should be abolished.

Proctor did not hide his opinions Monday.

“I believe it is wrong for an industry to kill millions of people,” said the author, researcher and self-described public health advocate, during a hearing to determine whether he should be granted expert status.

“I’m open to alternative views, but I’m not neutral about what your client has done to the lungs of the world.”

Proctor, who has more than a quarter-century of experience, has testified in dozens of trials in the United States. He admits that he has earned more than $1 million for doing so. He has never once been disqualified from testifying.

“I’m fair, but I do think bad things have been done by the tobacco industry,” Proctor said under questioning.

“I don’t think the tobacco industry wanted to kill people. I think it was more negligence,” he added. “I’m glad they are being brought to justice. That’s a good thing.”

His testimony is the latest in a case that is described as the biggest class-action lawsuit in Canadian history.

It’s not common for experts to be excluded from testifying, one of the tobacco lawyers said. But he argued that the court had an obligation to prevent Proctor’s testimony.

“The Supreme Court has said as recently as 2011 that the court has a gatekeeper function,” said Doug Mitchell, a lawyer representing JTI-Macdonald.

He and other tobacco company lawyers argued that not only is Proctor biased, he knows nothing about Canada or Quebec, and he cites documents not in the record in his report.

Another lawyer, Simon Potter, representing Rothmans, Benson & Hedges, questioned whether Proctor’s testimony was necessary.

“Is this person, this expert, going to help the court, as an expert should, with objective, helpful advice from a specialized field when the court is unable to decide without it?” Potter said.

“I think the answer is no.”

But the lawyers representing two plaintiffs dismissed the arguments from Big Tobacco and said it wasn’t Proctor’s mandate to know Canadian tobacco history.

“Based on a lifetime’s work, you have certain ideas, based on evidence,” said plaintiff lawyer Bruce Johnston. “Surely that cannot disqualify you from working on a file because that would result in the most qualified people being excluded.”

Plenty of witnesses have already appeared before the Quebec Superior Court since the trial began last March, including numerous former and current tobacco industry executives.

The case has already heard more than 80 days of testimony with thousands of pages of documents filed into evidence.

It has taken 13 years to reach the trial phase. It stems from two cases that were filed in 1998, certified and consolidated in 2005 by Quebec Superior Court, and there were motions, delays and appeals before it got underway in 2012.

Proctor’s testimony on his report begins Tuesday morning.

© The Canadian Press, 2012

Read it on Global News: Global Edmonton | Big Tobacco loses bid to bar expert witness from testifying at class-action trial