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November 30th, 2015:

The secret bribes of big tobacco paper trail

Nov 30th, 2015
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http://www.bbc.com/news/business-34944702

The BBC’s Panorama programme has spent five months investigating bribery at British American Tobacco.

BAT says it conducts its business with honesty, integrity and transparency, and has strict anti-bribery rules. But the BBC obtained hundreds of documents that reveal how BAT employees bribed politicians, public officials and even people working for a rival company in Africa. The documents appear to show:

  • Bribes to public officials
  • Bribes to MPs
  • Bribes to damage a rival company

BAT says it is committed to the “highest standards of corporate conduct and transparency” and its anti-bribery rules are “strictly enforced”.

It told Panorama: “The truth is that we do not and will not tolerate corruption, no matter where it takes place.”

Bribes to public officials

In 2012, BAT lobbyist Julie Adell-Owino arranged bribes totalling US$26,000 for three public officials in Rwanda, Burundi and the Comoros Islands. All three officials were connected to a United Nations effort to reduce the number of tobacco related deaths, the Framework Convention on Tobacco Control.

Adell-Owino used a pseudonym (Amanda) and a non-BAT email address (boda.XXX@aol.com). She sent the emails to a BAT manager, who was also using a pseudonym (John Smith) and a non-BAT email (spartan30063@gmail.com). The manager forwarded them to a contractor known as “Andrew” to facilitate the bribes.

In one document from a UK employment tribunal, BAT describes the payments to these officials as “unlawful bribes”.

Adell-Owino “categorically denied” involvement in bribery and said BAT “mistakenly believed” the payments were bribes.

In one email, Adell-Owino requests that US$3,000 be paid to Godefroid Kamwenubusa, an official at Burundi’s Ministry of Health and one of its representatives to the FCTC.

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Adell-Owino explains that the payment was because Kamwenubusa “supported us at the INB”- a reference to the FCTC’s Intergovernmental Negotiating Body. The fifth session of the INB met in Geneva between 29 March and 4 April 2012 to agree a draft protocol on illicit trade of tobacco products. Kamwenubusa attended it.

The email says the payment was also for “the draft TCB… that the minister has”. TCB stands for Tobacco Control Bill, so this is a bribe to undermine an anti-smoking law.

Eight days later, a contractor emails a BAT employee, saying: “The guy can accommodate any amendments before the president signs.”

The following month, Kamwenubusa emailed a copy of the draft tobacco bill to a BAT email address.

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Kamwenubusa denied taking $3000 from BAT and says the emails are “not official”.

But in documents submitted to an employment tribunal, BAT described the payment as one of a series of “unlawful bribes”.

Bribe to Rwanda

In May 2012, Adell-Owino requests US$10,000 be paid to Bonaventure Nzeyimana, an official at Rwanda’s Ministry of Health official and a former FCTC representative.

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Another email says the payment is in exchange for “draft regulations being prepared.” Although Adell-Owino is using a pseudonym and an anonymous email address, she signs this email “Julie”.

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A contractor working for BAT reports back that Nzeyimana asked for US$20,000 instead.

A bank transfer document shows the $20,000 being paid.

Bonaventure Nzeyimana said the payment was nothing to do with tobacco or BAT.

But in documents submitted to an employment tribunal, BAT described the payment as one of a series of “unlawful bribes”.

Bribe to Comoros Islands

One document shows that in May 2012, Adell-Owino requested a payment of $3,000 be made to Chaibou Bedja Abdou, an FCTC representative for the Comoros Islands. The documents do not detail precisely what this payment was for, but BAT has described the payment as one of a series of “unlawful bribes”.

Chaibou Bedja Abdou told Panorama: “I have never received any money from BAT and no-one can prove that I have signed any document in receipt of anything whatsoever.”

Bribes to MPs

In July 2012, Adell-Owino requests the purchase of a business class plane ticket to London for the use of the wife of Kenya’s former minister for trade, Moses Wetangula. The email says Wetangula will be “hosted at Globe House” – BAT’s London headquarters.

Adell-Owino’s email said the transaction should be “paperless” and there should be “no receipts if any in his name”.

When Panorama asked Mr Wetangula about the email, he said he was “shocked” and “upset” and would take legal action against anybody circulating “such a crude rumour” against him. He said: “I did not receive any ticket or any money… I never had dealings with BAT.”

But in documents submitted to an employment tribunal, BAT described the purchase of the plane ticket as a one of a series of “unlawful bribes”.

Former BAT lobbyist Solomon Muyita was fired by BAT in Uganda in 2013 after he was accused of giving cash gifts to 50 people, including seven MPs. He says he was following company orders and is suing BAT for wrongful dismissal. The company says Muyita is lying.

In court in August 2015, Muyita alleged that David Bahati, one of the MPs behind Uganda’s new tobacco control law, was being paid by BAT.

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Muyita’s witness statement says that Bahati was “… recruited by BAT Uganda to infiltrate, influence and spy on the cohort of anti-tobacco activists.”

This internal BAT report shows that in March 2011 BAT met with the MP. It suggests BAT was using him to gather intelligence on anti-smoking activists and influence the drafting of the Bill. It says the MP told BAT he supported “…having most of our views accommodated in the proposed tobacco law”.

BAT says: “Our accusers in this programme left us in acrimonious circumstances and have a vendetta against us, clearly demonstrated by the false picture they present of how we do business.”
Thanks to the University of Bath Tobacco Control Research Group.

Fake cigarettes remain big challenge in PH market

Nov 30th, 2015
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http://www.rappler.com/business/211-governance/114394-philip-morris-fake-cigarette

‘Nearly one in every 5 cigarettes consumed in the Philippines originated through illicit channels in 2014,’ says Oxford Economics

STILL OPTIMISTIC. Despite sin tax and illicit cigarettes eating into profits, the new head of the country’s largest cigarette manufacturer says that the industry has good potential for profitable growth in the Philippines.

MANILA, Philippines– The new president of cigarette manufacturer Philip Morris Fortune Tobacco Corporation Incorporated (PMFTC) said that local players and the government have more work to do to ensure a level playing field in an industry struggling with illicit or fake goods.

The presence of fake cigarettes in the country remains a big challenge for the industry, PMFTC President Roman Militsyn said on the sidelines of the 9th Bright Leaf Agriculture Journalism Awards late last week.

“We need to continue to work on the illicit trade and make sure that there is a level playing field, make sure there is no contraband and counterfeit which is definitely a growing concern for us,” Militsyn said.

“As long as we continue as an industry to work in that direction plus [with] the support and enforcement from government agencies, I think the conditions for this market are very good,” he added.

Part of the Lucio Tan Group, PMFTC is a joint venture between Philip Morris International and Fortune Tobacco Incorporated and is the country’s largest cigarette manufacturer.

Militsyn took over as president of the firm last September, replacing Paul Riley who moved to Philip Morris International in Japan.

Costing tax and profits

Research conducted by the UK-based Oxford Economics last September showed that illicit cigarette consumption in the Philippines cost the government an estimated P22.5 billion ($476.6 million) in lost tax revenue last year, representing a 44.1% increase from 2013.

Oliver Salmon, Senior Economist for Asia of Oxford Economics, said that illicit cigarettes, both local and non-domestic, accounted for 19.4% of total consumption in 2014, the highest level since 2012.

Domestic fake cigarettes, those that are manufactured by the trademark holder but are illegally sold and consumed in the same market, accounted for 19 billion of the estimated 102.3 billion cigarettes consumed in 2014, Salmon said.

The remaining 0.9 billion was accounted for by non-domestic illicit cigarettes.

“Nearly one in every 5 cigarettes consumed in the Philippines originated through illicit channels in 2014,” he said.

He added that legal domestic sales (or tax paid volumes) declined again last year, to only 82.3 billion cigarettes.

Following the implementation of the new sin tax law in 2013, legal domestic sales have fallen by nearly 20 billion cigarettes.

Despite this, Militsyn said that the sin tax law can actually be beneficial to the industry by providing predictability.

“We think that it is a good roadmap for the fiscal environment for the industry going forward. I think it’s important to believe that it is for predictability, and to level the playing field,” Militsyn said.

The PMFTC head also said that graphic health warnings on cigarettes can have an impact on the Philippines’ cigarette industry, as experienced by other countries.

“To quantify is difficult because different countries and different smoking population have different dynamics but yes it has an impact,” he said.

Milistyn did point out that the cigarette market will continue to exist despite the fact that people are becoming more health conscious as some adults still decide to smoke.

“We expect some decline but we also believe that the industry will continue to be there and that [it has] good potential in terms of the profitable growth of the industry going forward,” he added. – Rappler.com

Bulgaria Deputy PM: Counteracting smuggling of excise goods one of govt’s main priorities (ROUNDUP)

Nov 30th, 2015
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http://www.focus-fen.net/news/2015/11/30/390985/bulgaria-deputy-pm-counteracting-smuggling-of-excise-goods-one-of-govts-main-priorities-roundup.html

Sofia. Rumyana Bachvarova, Bulgarian Deputy Prime Minister for Coalition Policy and Public Administration and Minister of Interior, held a working meeting at the ministry building with representatives of the five leading tobacco companies in Bulgaria.

Market research ordered by the five companies was presented at the meeting, the press centre of the ministry announced.

“Counteracting the smuggling of excise goods is one of the main priorities of the government – the motives for that are both of fiscal and general nature,” said Minister Bachvarova, speaking at the event.

Smuggled cigarettes made up a 13.4% share in the second quarter of 2015.

“This has been the lowest level of illegal trade in cigarettes in the past 8 years, since the research was started in Bulgaria,” the companies said and laid emphasis on the results produced through determination, the government’s political will, and the stepped-up measures to fight the illegal trade in cigarettes implemented since the beginning of 2015.

The analysis of the research reveals a positive trend and the lowest level of the illegal trade in cigarettes in the past 8 years.

Rumyana Bachvarova noted an inter-establishment coordination centre for counteracting smuggling and control over the movement of risky goods and cargo had been established at the Directorate General for Fight against Organised Crime (GDBOP) in line with the priority the cabinet had set.

Representatives of all institutions related to the problem work in it and it already achieves results and proves its efficiency.

Minister Bachvarova thanked the ministry’s partners for the picture created due to the research.

In her view, such meetings are a good opportunity leading to mutual benefits and positive results.

In the words of Chief Commissioner Georgi Kostov, Secretary General of the Minister of Interior, due to the jointly taken approach and efforts made by the Ministry of Interior, the National Customs Office, and the National Revenue Agency (NRA) the smuggling of excise goods has been significantly reduced.

Kostov also stressed the role of the GDBOP-based centre in the coordination of teams, which has also reduced the organised smuggling activities.

GDBOP head Chief Commissioner Ivaylo Spiridonov pointed to the successful joint work between partner’s services, due to which 5 illegal cigarette factories in Europe were neutralised in international operations.

Vanyo Tanov, Director of Bulgaria’s National Customs Office, remarked the government, which had the political will to fight against the illegal trade in cigarettes, was to be mainly praised for the results achieved.

A set of methods worked out by the Customs Office administration on the basis of an analysis of the tobacco products excise tax revenues confirms the announced results.

A remarkable growth of 17% to 19% has been registered in the cigarette excise tax revenues in the past quarter.

According to Vanyo Tanov, this is BGN 220 to BGN 230 million more in cigarette excise tax revenues so far in 2015 and this sum is expected to go up to BGN 250 million.

Tanov commented the Customs Office was preparing, including technically, for the increase in excise taxes on cigarettes in 2016, which will make the illegal trade in tobacco products more appealing to organised crime.
Negotiations are underway on an X-ray system for checks on trains, Vanyo Tanov announced.

The latest market research done in the second quarter of 2015 shows the consumption of illegal cigarettes makes up a 13.4% share of the total cigarette consumption in Bulgaria.

The research has been annually done in the past 8 years by an independent agency using the method of analysis of empty packages of cigarettes collected in 14 big Bulgarian cities and towns.

The research has been done twice a year since 2010 – in the second and fourth quarter of each year.

It is ordered by the five tobacco companies that are part of the “Initiative for counteracting the illegal trade in cigarettes” – British American Tobacco EOOD, Bulgartabac Holding AD, Japan Tobacco International Bulgaria EOOD, Imperial Tobacco Bulgaria EOOD, and Imperial Tobacco Bulgaria EOOD.

The significant drop of 4.7 percentage points compared to the previous research conducted in the fourth quarter of 2014 (18.1%) is due to the government’s determination and political will and the stepped-up measures to fight the illegal trade in cigarettes taken since the beginning of the year.

The good results conform to the public data on an increase in excise tax revenues in 2015.

Irrespective of the improvement, the companies believe there is more potential to reduce further the illegal trade in tobacco products – cigarettes and cut tobacco

Video Exposé on a Deadly Consumer Product

Nov 30th, 2015
by Editor.
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Action on Smoking & Health (ASH) releases parody video exposing #1 cause of preventable death

http://www.prnewswire.com/news-releases/video-expose-on-a-deadly-consumer-product-300184633.html

ASH released a new video, Breaking News Broadcast, to draw attention to the ongoing disease and death caused by the tobacco epidemic.

Using a combination of humor and real facts, ASH provides a glimpse into the evening news report that would be streaming across every outlet if tobacco products were introduced to the market today. Society would be in an uproar. No other manufacturer can convince society to let them sell a product that will kill up to 50% of its consumers, consumers who are using the product exactly as intended.

No industry could market and legally sell a shirt, car, drink, or any other product that directly caused the societal damage that the tobacco industry’s products cause. $300 billion in economic costs for the US every year and 6 million people dying every year worldwide, from preventable diseases, cannot go unnoticed.

For example, a peanut butter executive recently received 28 years in prison for knowingly selling tainted products that killed 9 people and sickened up to 20,000. That pales in comparison to the death toll associated with tobacco products.

ASH intends this video to illustrate the often overlooked reality of tobacco products as addictive, deadly consumer products.

The Press Kit and video can be found here: http://ash.org/bnb.

ACTION ON SMOKING AND HEALTH
Action on Smoking and Health (ASH) is the nation’s oldest anti-tobacco organization dedicated to health for all. ASH was formed in 1967 in response to the U.S. Surgeon General Report in order to use legal action to fight tobacco and protect nonsmokers. Today, because tobacco is the leading cause of preventable death worldwide, ASH uses global tools to counter the global tobacco epidemic. Learn more about our programs at www.ash.org.

The secret bribes of big tobacco

Nov 30th, 2015
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British American Tobacco accused of bribing government officials

Nov 30th, 2015
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http://www.theguardian.com/business/2015/nov/30/british-american-tobacco-bribing-panorama-smoking

BBC Panorama alleges BAT paid officials from three African countries in effort to undermine UN anti-smoking treaty

British American Tobacco paid bribes to government officials in a bid to undermine the UN’s global anti-smoking treaty, an investigation by the BBC has alleged.

Documents obtained by the BBC’s Panorama programme show that representatives from three African countries connected to the World Health Organisation’s framework convention on tobacco control took bribes from the tobacco company.

One of them, Godefroid Kamwenubusa, an official at Burundi’s Ministry of Health, was paid $3,000 (£2,000) for supporting BAT during negotiations on the convention in 2013 concerning illicit tobacco products. Julie Adell-Owino, a BAT lobbyist who arranged the bribes, wrote in an email that the payment to the Burundian official was also for “the draft TCB” – tobacco control bill – “that the minister has”.

Panorama alleged that Kamwenubusa was being bribed to help undermine Burundi’s tobacco control bill, drafted in compliance with the framework convention. An email obtained by the programme from another contractor suggested he could “accommodate any amendments before the president signs”. Kamwenubusa later emailed a copy of the draft bill to BAT.

Kamwenubusa denied taking $3,000 from BAT and said the emails were “not official”, the BBC reported. Documents from an employment tribunal hearing, however, show that BAT itself regarded the payment as one of a series of “unlawful bribes”.

Panorama alleges that Chaibou Bedja Abdou, a representative of the framework convention on tobacco control from the Comoros, was also paid $3,000. A former representative from Rwanda, Bonaventure Nzeyimana, was paid $20,000. Both men deny taking bribes from BAT.

Dr Vera da Costa e Silva, head of the framework convention’s secretariat at the WHO, said BAT “is irresponsible to say the least”.

“It is using bribery to profit at the cost of people’s lives, simple as that,” she said. “BAT should be investigated by the government and should be punished accordingly.”

Panorama alleged that BAT had also bribed politicians. One of the whistleblowers who gave information to the BBC was Paul Hopkins, a former soldier with the Irish special forces who worked for BAT in Africa for 13 years and said he had paid bribes on behalf of the company. He fell out with BAT and was made redundant.

Bribery was the cost of doing business in Africa, he said he had been told. “BAT is bribing people, and I’m facilitating it,” he said. “The reality is if … they have to break the rules, they will break the rules.”

BAT categorically denied this was the way it conducted business in Africa. “We will not tolerate corruption in our business, no matter where it takes place,” the company said.

“We are disappointed that the BBC should decide to broadcast allegations made by former employees with a clear vendetta against us, whose employment was terminated in acrimonious circumstances and who present a completely false picture of the way BAT does business. We have made it clear to the BBC that their sources are unreliable and that we categorically deny the suggestion that this is how BAT operates around the world.”

However, industry critics called for an inquiry. “Given how Big Tobacco operates, these latest revelations are likely to be just the tip of the iceberg,” said Prof Anna Gilmore of the tobacco control research group at the University of Bath, which assisted the BBC in making the documentary. “That’s why there must be a full and public inquiry to expose the extent and nature of BAT’s illegal acts. No company should be allowed to put its profits before the health and economic wellbeing of sovereign nation states.”

The framework convention on tobacco control urges all governments to enact laws to restrict the marketing and availability of tobacco. It came into force in 2005 with the ambition of saving 200 million lives by 2050 if fully implemented. There have been delays to implementation among the 44 countries of the WHO’s African region.

Cancer Research UK called for an urgent inquiry into whether criminal offences have been committed under the Bribery Act 2010. Harpal Kumar, the charity’s chief executive, said: “We are appalled by the allegations presented in this programme. For any company to pay for access to government and officials to influence legislation is bad enough. But if that company is doing it so that it can more easily sell deadly products, it’s outrageous.”