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February 8th, 2016:

EU Commission Resisting Tobacco Lobbying Transparency, Watchdog Says

BRUSSELS (Alliance News) – The European Commission has ignored calls for more transparency in its dealings with the tobacco industry, a watchdog said Monday, ratcheting up criticism sparked by a 2012 lobbying scandal that ended the career of the bloc’s then health commissioner.

“This is a missed opportunity … to show global leadership in the vital area of tobacco lobbying,” European ombudsman Emily O’Reilly said in a statement. “It appears that the sophistication of global lobbying efforts by big tobacco continues to be underestimated.”

Health commissioner John Dalli left his post in late 2012 after being accused of staging confidential meetings with tobacco lobbyists and of knowing that an acquaintance was using Dalli’s name to solicit bribes from a tobacco company.

The commission – the EU’s executive – has an important role in setting EU legislation on smoking and tobacco products. Its clampdown on the harmful effects of smoking have led to intense lobbying efforts by the tobacco industry.

In November, O’Reilly said the entire commission – with the exception of Dalli’s former department – was not being proactive enough about publishing information on meetings with the tobacco industry.

This was in breach of World Health Organization (WHO) rules and guidelines on tobacco lobbying, she said at the time, recommending that details of all commission meetings with tobacco lobbyists or their legal representatives should be published.

The EU’s executive responded in January, rejecting O’Reilly’s findings and stating that it “complies in full” with WHO obligations. Its overriding principles regarding lobby groups are “transparency, integrity and equality of treatment,” the letter said.

Meetings with tobacco industry representatives are “very few,” and there is “no evidence that meetings have been kept ‘secret’,” the EU executive argued, in the response submitted by President Jean-Claude Juncker.

But O’Reilly said Monday that it was not enough to meet the minimum legal standards. “Public health demands the highest standard,” she added.

Corporate Europe Observatory, a campaign group that seeks to challenge big business, threw its weight behind the ombudsman.

“If the commission does not even take the risks of undue lobbying influence seriously for this most controversial sector, then how can the public have any trust in its overall ability to protect the public interest?” Olivier Hoedeman said.

35 super funds divested from tobacco

A more sophisticated understanding of fiduciary duty has contributed to 35 super funds running tobacco-free investment mandates.

The first large fund to quit tobacco was First State Super in 2012, with StatePlus the most recent to make an announcement. QSuper, with $60 billion funds under management, is the largest super fund to divest from tobacco.

There has been a shift towards a greater level of comfort with divestment, indicating super funds believe they can maintain fiduciary obligation and make a decision on more than just investment returns, according to Clare Payne, chief operating officer of Tobacco Free Portfolios, who will be presenting on changes to fiduciary responsibility at the FEAL forum.

“While historically there has been a narrow definition of fiduciary duty, there are a number of lawyers from respected firms who are on the record saying it shouldn’t be interpreted like that,” said Payne who has previously worked as a solicitor.

“The important thing is trustees have to act in the best interests of members. It is not one ‘interest’, it’s plural. That implies there is more than one thing that is of interest, so the actual wording indicates it is more than a narrow financial return.”

She added case law shows it is the process trustees and directors go through that matters, not so much the outcome. What is looked at in court is whether the trustees have gone through the process of gathering information, understanding it and asking the questions to make an informed decision.

It is not just trustees’ actions which can get the courts attention – it is inaction too.

“They’ve really come down and decided inaction can be considered a breach of the due care and diligence of the trustees,” Payne said.

“I had a conversation with a lawyer who made a very interesting point about if funds or firms promote they are responsible investors but don’t actually live up to the frameworks they have, that may be misleading to the market, and to members.”

According to Payne, the best way to test a framework was to run tobacco through it, because if it got through, the framework was not robust enough. One reason for it being the litmus test was the “unique” characteristics of tobacco which makes positive engagement impossible, because there is no safe limit and the scale of harm was enormous (smoking kills an estimated 15,000 Australians a year, 6 million worldwide each year and will kill 1 billion people this century).* Another reason was because of how Australian society viewed the product.

“The health sector is doing something on it, the education sector is working on it, the government sector is working on it; and then we have the finance sector funding it, and the values are not aligned with the rest of the measures.”

She added that while the concept of attaching the human characteristic of a “social conscience” to a non-human entity might seem strange, a lot of qualities had already been attached in corporation law.

“What you need to acknowledge at the end of the day is that the social conscience is made up by people in the organisation, and in this case it’s also people in the funds. So should super funds have a social conscience? In a way they do, they’ve just got to reflect it.”

Clare Payne will be speaking at the FEAL forum Addressing challenges to create opportunities on March 3 in Melbourne. Click here for more information.

*This article was updated on February 10, 2016, to expand on Payne’s reasons of why tobacco provides a good test on whether a super fund’s framework is robust enough.

EU watchdog raises alarm on tobacco lobbying

The European Commission is refusing to curb lobbying by tobacco firms in its ranks by not fully applying UN transparency rules, says an EU watchdog.

The EU ombudsman Emily O’Reilly said on Monday (8 February) that the Brussels-executive ditched her recommendations to publish online all details – including the minutes – of meetings with tobacco lobbyists or their legal representatives.

“This is a missed opportunity by the Juncker Commission to show global leadership in the vital area of tobacco lobbying,” she said in a statement, referring to commission chief, Jean-Claude Juncker.

The UN’s World Health Organisation bans public policy makers from fraternising in secret with tobacco firms under the so-called framework convention on tobacco control (FCTC).

The EU commission’s directorate for health publishes all its meetings and minutes online.

Other directorates do not.

It means tobacco lobbyists can exert pressure or influence in other areas of the commission where the FCTC is not being applied.

“It cannot be enough to adopt a restrictive view of what is expected from the UN FCTC or to justify lack of proactivity on the grounds that it has met the minimum legal requirements,” said O’Reilly.

Commission rebuffs claims

Her recommendations highlighted the commission’s legal services, which had dealings with tobacco industry insiders in the lead up to an overhaul of the EU tobacco products directive.

Michel Petite, a corporate lawyer for big tobacco firms at Clifford Chance, held talks with the commission’s legal services in September 2011 and September 2012.

Before landing a job with the London-based lawyers, Petite headed the commission’s legal service in 2008. A year later, he was appointed to the commission’s ethics committee on lobbying, a position he held until December 2013.

Transparency activists criticised his role on the ethics committee, as Philip Morris International is among the clients of Clifford Chance.

Petite also played a minor but crucial role in the events that saw John Dalli lose his job as the EU commissioner for health over tobacco-related bribery allegations.

The commission says it fully complies with the FCTC.

It says Petite is a legal expert and not an industry representative.

It says staff regulations, code of conduct rules, access to documents and other internal guidelines are good enough to ensure the integrity of policy and law making.

O’Reilly launched her inquiry in June 2014 after receiving a complaint from the Brussels-based pro-transparency NGO Corporate Europe Transparency.

Commission still hiding details of dealings with tobacco industry: the Ombudsman

The European Ombudsman, Emily O’Reilly, strongly regrets that the European Commission has chosen not to make its dealings with the tobacco industry more transparent in line with UN guidelines.

The Commission was responding to the Ombudsman’s recommendation to extend the transparency policy of DG Health to all DGs through proactive online publication of all meetings of all Commission staff with tobacco lobbyists.

Heavy suspicions have always been hanging above the Barroso Commission. As the Green/Ecolo Belgian MEP Bart Staes told New Europe, “in 2010, the secretary general of the Commission Cathrine Day met at least three times with representatives from the big tobacco companies Philip Morris and Swedish Match /…/ The same companies and representatives of tobacco lobbies held three other meetings with Barroso‘s personal cabinet.”

The tobacco industry actively lobbies even today across multiple DGs in order to advance its commercial interests.

The Commission, in its opinion on the Ombudsman’s recommendation, still says it meets its obligations under the World Health Organisation’s Framework Convention on Tobacco Control (FCTC).

However the WHO guidelines clearly state that ‘all branches of government’ come within the scope of the FCTC.

Emily O’Reilly stated: “I appreciate the significant work that the Juncker Commission has done to improve lobbying transparency, and its intentions to make further improvements.

“However this is a missed opportunity by the Juncker Commission to show global leadership in the vital area of tobacco lobbying. The Prodi Commission took a lead role in the development of this important UN Convention.

“Maintaining the status quo effectively means that future meetings of Commission officials with tobacco lobbyists may create distrust. It appears that the sophistication of global lobbying efforts by big tobacco continues to be underestimated.”

The complaint was brought by an NGO which claimed the Commission was not meeting its obligations under the WHO’s Framework Convention on Tobacco Control. The Ombudsman agreed, finding that the Commission’s approach to publicising meetings with tobacco lobbyists was, with the exception of DG Health, inadequate, unreliable and unsatisfactory. The Ombudsman was also concerned to find that certain meetings with lawyers representing the tobacco industry were not considered as meetings for the purpose of lobbying.

In her recommendation published in October 2015, the Ombudsman called on the Commission proactively to publish online all meetings with tobacco lobbyists, or their legal representatives, as well as the minutes of those meetings.

Transparency remains a permanent problem for the Commission’s dealings with the tobacco industry, and in the previous Commission Jose Manuel Barroso himself was accused by MEPs of playing for the tobacco lobby.

Economic slowdown and financial shocks: Can tobacco tax increases help?

A Financial Times article this past week focused on IMF Managing Director Christine Lagarde’s call on policymakers to reform the global economy’s system for coping with financial shocks. She said the world must prepare for looming crises in emerging and low-income economies, and their negative spillover impact on the rest of the world, caused by tumbling commodity prices.

We would like to argue that this is the time to seriously re-examine the role of corrective taxation, such as taxes on tobacco, which can generate positive social benefits while raising much-needed fiscal revenue. Let us make the case.

Tobacco use is a leading global disease risk factor and underlying cause of ill health, preventable death, and disability. With around 6 million lives lost annually, tobacco-related diseases claim more lives than HIV/AIDS, malaria, and tuberculosis combined.

It is a widely accepted fact that raising taxes on tobacco products is one of the most cost-effective measures to reduce their consumption and save lives. Indeed, research from high-income countries finds that a 10% price increase will reduce overall tobacco use by between 2.5% and 5%. International experience, however, indicates that tax rate increases should be high enough to reduce the affordability of tobacco products, offsetting growth in real incomes.

Tobacco taxes can also generate substantial domestic revenue which could then be allocated to fund essential services that benefit the entire population. To this end, strong tax administration is critical to minimize tax avoidance and tax evasion (mainly in the form of illicit trade). Regional agreements on tobacco tax harmonization can also be effective in reducing cross-border tax and price differentials, and in minimizing opportunities for individual tax avoidance and larger scale illicit trade.

Equally important, governments must resist interference with tobacco control from the tobacco industry, which continues to expand its business in poorer countries with less educated and younger populations, to compensate for lower consumption in high-income countries.

There are positive trends on this front across the world. According to the 2015 WHO Global Tobacco Report, 106 countries have increased their tobacco taxes in various ways. In the United States, for example, cigarette prices rose 350% between 1990 and 2014, due to a five-fold increase in average state cigarette taxes and a six-fold increase in the federal cigarette tax. The 156% increase in the federal excise tax on tobacco over a four-year period adopted by the U.S. government in 2009 (taking it from 39 cents per pack to $1, not counting state taxes which average over $1 a pack) helps pay for the coverage of millions of low-income children under the State Children’s Health Insurance Program.

The 2012 Sin Tax Reform Law in Philippines simplified the excise tax system on alcohol and tobacco, made the tax system more buoyant by indexing tax rates to inflation, and funded increased enrollment of the poor to the national health insurance program using tobacco and alcohol tax revenue. Excise taxes as a percentage of the price of the most-sold cigarette brand in some Latin American and Southern African countries have increased to levels that vary from 52% to 68%. In 2015, albeit still at a relatively low tax rate level, China increased tobacco excise taxes as a percentage of cigarette retail price, from about 33% to 38%.

Although several low- and middle-income countries have increased tobacco excise tax rates, overall they remain substantially below tax rates in high-income countries, even when adjusting for differences in purchasing power. This shows that low- and middle-income countries can increase their excise taxes further to effectively make cigarettes more expensive, reduce consumption, and mobilize fiscal revenue.

Over the past decade, a “call to arms” to accelerate the implementation of the Framework Convention on Tobacco Control, including tobacco taxation, has consistently being made by WHO, former New York City Mayor Michael Bloomberg, Bill and Melinda Gates, and yes, the World Bank Group. The international community has now a window of opportunity to advance the tobacco tax policy agenda within the broader framework offered by the Financing for Development Addis Ababa Action Agenda adopted in 2015. Indeed, as stated in clause 32 of this agenda, price and tax measures on tobacco should be seen as effective and important means to reduce tobacco consumption and health care costs, and as a revenue stream for financing for development in many countries.

Under the World Bank Group’s Tobacco Control Program, a multisectoral initiative funded with the support of the Bill & Melinda Gates Foundation and the Bloomberg Philanthropies, work is under way in several countries across regions combining public health, macroeconomics, tax policy, and tax administration expertise, as well as know-how on reforming the customs systems, to assist in the design and implementation of tobacco tax policy and administration reforms.

In times of crises, unconventional measures help. So, let’s make sure to include tobacco taxation as part of the policy arsenal for countries to use to deal with the stark new reality of budget shortfalls and faltering economic growth, while contributing to keeping the population healthy by controlling a preventable disease risk factor.

Big tobacco, child labour and the International Labour Organization

“The aim is to inhibit incorporation of ILO into WHO Anti-Smoking Program”

So states a Philip Morris memo from December 1988, available through the Truth Tobacco Industry Documents (see page 8).

Nearly 30 years on, the tobacco industry appears to be doing very well at nurturing its alliance with the International Labour Organization (ILO). In a May 2015 press release on its website, the ILO announced an agreement to “develop global guidance on hazardous child labour and occupational safety and health in tobacco growing” (a somewhat ironic goal for a product that kills 6 million people a year).

The agreement is with the august-sounding ‘Eliminating Child Labour in Tobacco-growing Foundation’ (ECLT). The ILO press release has a paragraph about the ECLT Foundation:

‘The Eliminating Child Labour in Tobacco Growing Foundation is a global leader in preventing child labour in tobacco agriculture and protecting and improving the lives of children in tobacco-growing areas. ECLT strengthens communities, improves policies, and advances research so that tobacco-growing communities can benefit from agriculture while ensuring that their children are healthy, educated, and safe.’

In reality, ECLT is an alliance of tobacco companies and growers – a front group for the industry. ECLT’s stated intention may be to ensure tobacco-growing communities can ensure that their children are healthy, educated and safe, but the reality is that it is an industry that profits from people who overwhelmingly become addicted to its products as children, and which inflicts enormous hardship and poverty.

According to the ILO website, the agreement with ECLT “will promote tripartite action to ensure children do not perform this work”, and “its development will be facilitated by the ILO with advice from experts from the tobacco sector, academia, and others, and will include tripartite consultations.” It also states that the “results of efforts supporting social dialogue on combating child labour in agriculture in the three target countries will feed into the IV Global Child Labour Conference, to be held in Argentina in 2017.” Initiatives such as this provide the industry with the opportunity to have a seat at the policy table, among respected organisations and sometimes Member State Delegations, an effective counter to its status as a pariah industry.

The ECLT has been a key tobacco industry strategy in the wake of several damaging revelations about the extent of child labour within the industry in recent years. While the ILO website gives little away about the real nature of the ECLT, there is no such coyness on the Philip Morris (PMI) homepage, which displays the ILO logo as part of a promotion about Philip Morris’ child labour corporate social responsibility initiatives.

PMI’s ILO logo prompted the Pascal Diethelm, president of the Swiss health organisation OxyRomandie to write in January to the Director General of the International Labour Organization to draw attention to possible illegal use of the logo. He noted the importance of Article 5.3 of the WHO Framework Convention on Tobacco Control (FCTC) to prevent tobacco industry interference in the policies of international organisations of the United Nations. Allowing the use of the ILO logo on the homepage of a tobacco multinational would appear to violate Article 5.3, and is particularly surprising given the ILO logo is legally protected and ‘may not be used without express permission, which will only be granted when appropriate in very limited circumstances’. At the time of publication, the ILO has yet to respond.

The OxyRomandie letter is not the first time the ILO has been alerted to the issues of collaborating with the tobacco industry. In August 2013, Dr Mary Assunta of the Southeast Asia Tobacco Control Alliance wrote to then director of the International Program on Child Labour at the ILO to inform the agency of its obligations under the FCTC. She raised concerns about ILO endorsement of the ECLT, noting that it was likely in violation of FCTC Articles 5.3 and 13, and outlined the problem of the tobacco industry being given a platform to gain access to policy makers through its corporate social responsibility initiatives. She called on the ILO to dissociate itself from the ECLT and set a definitive deadline to completely halt child labour in tobacco farming. She also received no response.


Victorians expect to be able to eat and drink outside without being exposed to secondhand smoke and nearly three-quarters of a million of them will visit cafes and restaurants more often every year if smokefree outdoor areas are created, according to new research from the Cancer Council Victoria.

However, public expectations and the benefits for businesses won’t be met unless comprehensive laws to protect patrons and staff are implemented.

The large research study by the Cancer Council Victoria’s Centre for Behavioural Research in Cancer shows that:

  • 22% of Victorians said they would visit cafes and restaurants more often if an outdoor smoking ban was introduced
  • Only 5% of Victorians said they would visit cafes and restaurants less often.
  • This means that more than 700,000 Victorians would visit these venues more often each year if outdoor areas were smokefree.

In addition, the study tested public opinion on Queensland’s smokefree model, in which smoking is only allowed in designated outdoor smoking areas of licensed venues.

There was high support for this approach, with 71% of Victorians agreeing that smoking should be restricted to “outdoor areas of bars, pubs and clubs with a designated area separated from patrons by at least two metres”.

Even 88% of current Victorian smokers also supported this model.

More than half of all Victorians, including 52% of former smokers and 15% of current smokers, report they have avoided sitting outside at cafes or restaurants in the past year due to people smoking.

Quit Victoria Director Dr Sarah White says the findings demonstrated overwhelming public support for comprehensive protection from tobacco smoke when both dining and drinking in outdoor areas.

“The state government has announced that smokefree outdoor dining will be the norm across Victoria by August 2017, but it’s clear that most Victorians want this protection to also cover outdoor drinking areas,” she says.

“Victorians expect to be able socialise outside without being subjected to secondhand smoke, irrespective of whether they are having a sandwich or a coffee.

“It’s terrific that the Andrews Government is consulting with public health experts, businesses and other authorities such as liquor licensing regulators on new smokefree dining and drinking laws.

“This new data will give the Government confidence that smokefree laws in drinking and dining areas will not only be good for health, they will also be good for business,” says Dr White.

The alternative to the Queensland model is the NSW model, where smokefree protection applies only to outdoor dining areas. This has created a perverse incentive for some NSW venues to stop serving food outside altogether, and instead devote their outdoor area to smoking and drinking.

Dr White says Quit is aware of a case in Sydney where a woman was berated at length by staff at a well-known coffee chain for eating a piece of toast in an outside area while another customer was smoking. This created a situation in which the venue was breaching smokefree dining laws.

“Most Victorians support outdoor smokefree laws for good reason – they protect staff and patrons from dangerous and unpleasant secondhand smoke, and they support smokers trying to quit,’’ Dr White says.

“We don’t want Victoria to fall into the trap that has occurred in NSW, where smokefree laws that apply only to outdoor dining areas have created widespread confusion for patrons and an enforcement nightmare for venues.’