British American Tobacco: Lobbying
Contents
Lobbying
The ways in which companies influence governments is allegedly part of legitimate political process. The village of East Budleigh in Devon has been given funding from British American Tobacco (BAT) to erect a monument to Sir Walter Raleigh, who was born there. The funding from BAT for the statue has been secured by East Devon Tory MP Hugo Swire. Although this looks harmless enough, it could be argued that this deal leaves Mr. Swire politically indebted to the big tobacco firm and hence more open to being influenced further by them, perhaps in less innocuous ways. [1]
Early evidence of Blair sleaze
Allegations of sleaze and corruption become less easy to dismiss when evidence emerges that the lobbying process is corrupt and based on who has the greater ability to pay the greater sum. The Tony Blair government took power with a promise of getting tough on sleaze, making it all the more notable that only months into the Blair era the first evidence of cash being exchanged for a sympathetic ear emerged.
The Bernie Ecclestone Affair, as it became known, exposed the trail of political interference used by tobacco companies through sponsorship in sport and their links to government. It followed an EU directive that no tobacco advertising should be used in connection with sport. The Labour Party had already accepted £1 million from Mr. Ecclestone to help with their successful election campaign, and were promised more in the future. Blair, after a meeting requested by the Formula One owner Ecclestone, wrote a letter to the Health Secretary the next day suggesting they look at a compromise for F1 Racing. Subsequently it was announced that Formula One would have an exemption overriding the EU directive. To Iain Duncan Smith, the media and the British public this was unacceptable although Blair stated, "there was no appearance of a conflict of interest." [2]
BAT and Burma
British American Tobacco were in breach of OECD (Organisation for Economic Co-operation and Development) guidelines for multi-national social corporate responsibility as a result of their joint venture with the ruthless military government in Burma. The International Union of Foodworkers (IUF) state that by being in a joint venture with the Burmese dictatorship, "BAT is in breach of Article II of the Guidelines, specifically sections stating that enterprises should contribute to economic, social and environmental progress, respect human rights of those affected by their activities, and encourage business partners, including suppliers and sub-contractors, to apply principles of corporate conduct compatible with the Guidelines." [3] In July 2003 the British government called on BAT to pull out of Burma. The BAT response was only that it would consider the request.
John Jackson, director of the Burma Campaign UK, stated that "BAT are collaborating with a military dictatorship." [4] Workers are allegedly being paid "pennies" whilst helping to line the pockets of both the military dictatorship and BAT shareholders. After Burmese campaigners demanded that the company shut down the factory which BAT jointly owns with the Burmese government, a BAT spokeswoman responded: "We understand and greatly respect concerns about human rights. While we are willing to discuss these issues open-mindedly with stakeholders, we do not believe businesses should take on the role of international diplomacy and that companies do not and should not have a mandate to step into areas of political authority." [5]
Hypocritically BAT are happy to provide funding to promote their ethical reputation. The University of Nottingham has agreed to establish an international centre for corporate social responsibility at its Business School in return for a £3.8 million sponsorship from British American Tobacco. [6]
Black markets and BAT
As nations try to discourage smoking by increasing tax and restricting imports, BAT subvert controls by turning a blind eye to the growing Black Market in cigarettes that are sold to wholesalers and end up on alternative markets in South and North America and across Asia.
From 1997 there have been several court cases and investigations in various parts of the world which have accused the tobacco industry of illegal supply and the smuggling of cigarettes, or at least being aware of the unlawful destination of their tobacco products. A former BAT executive was found guilty by the Hong Kong High Court for his involvement in operations that smuggled cigarettes into China. [7]
BAT face DTI investigation
BAT supplied huge numbers of cigarettes around the world knowing they would end up in the hands of smugglers. In early 2000, BAT came under fire from Stephen Byers, UK Trade and Industry secretary, who threatened to use his powers under the Companies Act to instruct Department of Trade and Industry (DTI) inspectors to investigate allegations that BAT have colluded in cigarette smuggling on an unprecedented scale. The move was made in response to a Commons Health Select Committee report on the tobacco industry which was highly critical of the activities of BAT.
Martin Broughton, £1.4m-a-year chairman of BAT, first ran into problems over smuggling allegations after The Guardian published documents exposing how BAT condoned tax evasion on a global scale in order to boost sales:
- "According to the documents, BAT arranged to supply massive numbers of cigarettes to wholesalers and distributors, expecting that they would find their way into crooked hands and on to the black markets of developing countries after being smuggled across national borders, without duty being paid." [8]
A BAT spokesman said at the time: "If [a DTI investigation] is among the recommendations [made by the Select Commitee] then we do not believe it is either necessary nor appropriate." [9] Tory ex-chancellor and ex-health secretary Kenneth Clarke also defended the company. Although the MP for Rushcliffe has acknowledged the dangers of smoking to health, he is actively involved in BAT's work. Mr. Clarke, on the BAT website, describes the firm as "one of the most advanced and responsible British companies I have come across." [10] This is what you might expect from Clarke, who happens to be a non-executive deputy chairman at BAT, a role for which he is paid £150,000 a year plus £21,000 of benefits in kind. [11]
But Clive Bates, director of Action on Smoking and Health (ASH), was happy with the proposed inquiry, stating that: "The great thing about a DTI inquiry is they can question employees, former employees and associates of BAT under oath. They will have no choice but to answer the allegations in detail." [12]
Byers announced that he planned to instigate an inquiry under Section 432 of the 1985 Companies Act, which would allow files to be seized and BAT employees to be questioned under oath, followed by the publication of a comprehensive report. But after an intensive lobbying campaign by BAT the investigation was watered-down until Byers agreed to use Section 447 of the Act which -- crucially for BAT -- prohibits publication of a report.
Chairman of BAT, Martin Broughton, was given access to Blair at a private breakfast, closely followed by a private meeting with secretary Byers himself. It was also revealed that two former senior DTI officials on BAT's payroll -- Nicola Shears and Ray Mingay -- were used to approach their former departmental colleagues to gain influence. Because of this dubious and perhaps fraudulent lobbying, Byers' plans for a rigorous inquiry were subverted, stopping the publication of a possibly highly damaging report. And so the DTI report was "buried" for close to four years, during which time Byers left his position. Finally, under the new Trade Secretary, Patricia Hewitt, and because of new Freedom of Information Act guidelines, officials were forced to make the watered-down report public, announcing that there was "insufficient evidence" for legal action against BAT.
Ray Mingay was also mentioned in memo confirming actions points from a BAT meeting. Indeed, "M[artin] S[ummers] will ensure Ray Mingay speaks to DTI on day of announcement (if Inquiry launched) as to the protocols surrounding companies under investigation."[1]
As if further evidence of BAT hypocrisy was necessary, consider finally this quote from the company's own website:
- "Globalisation has ... given rise to intense debate about power, responsibility, the role of governments and the role of companies ... We believe that multinational businesses must demonstrate they are operating responsibly and to be more accountable about their roles and responsibilities." [13]
External Links
References
- ^ BBC website, 22 Feb 2005, http://www.bbc.co.uk/devon/news_features/2005/ralegh_statue.shtml
- ^ Tony Blair interviewed by John Humphrys for BBC's On The Record, 16 Nov 1997, http://www.bbc.co.uk/otr/intext/Blair16.11.97.html
- ^ 'BAT face DTI Investigation into Burma Factory', The Burma Campaign UK website, 01 Oct 2003, http://www.burmacampaign.org.uk/pm/more.php?id=103_0_1_0_M
- ^ 'Masks highlight Burma's plight', BBC website, 26 Mar 2003, http://news.bbc.co.uk/1/hi/england/2889275.stm
- ^ ibid.
- ^ 'University in ethics row over tobacco money', BBC website, 05 Dec 2000, http://www.bbc.co.uk/nottingham/news/2000_12/05/tobacco.shtml
- ^ see http://factsheets.globalink.org/en/smuggling.shtml
- ^ 'Tobacco firm gained secret access to Blair', The Guardian, 27 Oct 2004, http://www.guardian.co.uk/uk_news/story/0,3604,1336810,00.html
- ^ 'Tobacco firm faces DTI inquiry', The Guardian, 12 June 2000, http://www.guardian.co.uk/bat/article/0,,330990,00.html
- ^ 'Clarke rejects tobacco charges', BBC website, 27 Jun 2001, http://news.bbc.co.uk/1/hi/uk_politics/1409823.stm
- ^ 'Clarke pulls out of speech on tobacco', The Telegraph, 03 Sep 2005, http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2005/09/03/ntory03.xml
- ^ 'Tobacco firm faces DTI inquiry', The Guardian, 12 June 2000, http://www.guardian.co.uk/bat/article/0,,330990,00.html
- ^ British American Tobacco website, 'Corporate Social Responsibility: Globalisation and Human Rights' section, http://www.bat.com/OneWeb/sites/uk__3mnfen.nsf/vwPagesWebLive/DO52AQH8?opendocument&SID=&DTC=&TMP=1
Notes
- ↑ British American Tabacco, Action on Possible Announcement of DTI Inquiry , 26 Sept 2000, accessed 19 Feb 2010
