Читать книгу Dirty Tobacco - Telita Snyckers - Страница 13

‘It is the unspoken ethic of all magicians

to not reveal the secrets.’

– David Copperfield

In fairness to the tobacco industry, it is conceivable that some of the examples I’ve assembled could perhaps be attributable to vindictive whistle-blowers or to rogue employees. But it is entirely inconceivable that all of them are.

The industry – even licensed, bigger players – has a long and consistent history of fines, felonies and infringements, spanning decades, across the globe.

There is ample proof that the tobacco industry incorporated smuggling and other tax and duty evasion measures as an explicit part of its business strategy.1

BAT’s internal documents suggest that smuggling operations were almost certainly conducted with the knowledge and often the direct involvement of senior executives within the company, including regional directors, a former head of BAT’s marketing department, senior marketing managers, and BAT area managers. BAT executives appear to have expressly been put in charge of various smuggling and contraband operations.2

And indeed, despite being publicly called out, BAT declared that it would not sue over allegations that its senior staff had been involved in smuggling, with David Hinchcliffe, the Chairman of Britain’s House of Commons Select Committee on Health noting: ‘I personally pressed BAT whether they intended to take legal action and they said they did not. You will draw your own conclusions from that, as I did mine.’3

BAT’s apparent one-time plans to manufacture cigarettes in Andorra for smuggling to Spain in 1992 were not a secret – a document detailing the strategy was sent from a BAT marketing executive to the head of BAT’s marketing department and copied to a BAT lawyer.4

In Brazil the then-Chairman of BAT Industries is directly implicated in planned smuggling operations in a memo sent from the Territorial Director for Latin America to the Managing Director of BAT Industries, the CEO of BAT’s Brazilian subsidiary, the Chairman of BAT and others: ‘I am advised that the BAT Industries Chairman has endorsed the approach that the Brazilian Operating Group increase its share of the Argentinean market via DNP [duty not paid, i.e. contraband].’5

As a lawsuit against PMI noted: ‘Defendants created a circuitous and clandestine distribution chain for the sale of cigarettes in order to facilitate smuggling. The decision to establish and maintain this distribution chain was made at the highest executive level of PMI. Defendants have collaborated with smugglers, encouraged smugglers, and sold cigarettes to smugglers, either directly or through intermediaries, while at the same time supporting the smugglers’ sales through the establishment and maintenance of so-called umbrella [cover] operations.’6

And, so, it is hardly surprising that a Reynolds sales executive, interviewed on a CBS documentary, would note that, ‘… We were considered the most – single-most – profitable business unit in the RJR Nabisco family of companies. They knew exactly where the money was coming from. On an average of approximately every other Monday, an in-house lawyer from upstairs would come down and talk to us, “Yeah, it’s sensitive, but we’re here. We’re all in this together. And it’s – it’s a loophole. It’s grey. It’s legal, OK?” The company knows where they made the $100 million. They know the customers that produced the $100 million.’7

The same Reynolds executive goes on to explain how: ‘We were told to keep no paperwork in this business [by vice president of sales at RJ Reynolds]. He insisted … “You’re not keeping any documents, are you?” He reminded me on many occasions not to keep any hard copy on any correspondence with their offices.’8

In a statement, a spokesman told CBS that neither RJ Reynolds Tobacco nor the parent company have been implicated in any criminal investigation.

At least some had the sense to ask how ethical this was, with one fax query from BAT’s headquarters to its branch office in Venezuela asking ‘… whether the company could continue with duty paid and duty not paid [contraband] in parallel and be seen as a clean and ethical company at the same time’.9

At a meeting at BAT’s UK headquarters, a memorandum records executives discussing smuggling into Nigeria: ‘Discussion was held concerning direct imports to Nigeria through Mr. Adji who would disguise the cigarette importation by calling the shipment something else, e.g. matches.’ 10

And although I haven’t seen the accounts for myself, numerous sources have alleged that this part of their trade was accounted for against separate cost centres, in dedicated bank accounts, typically in offshore tax havens like Switzerland11 – a fully entrenched, formal part of big tobacco’s business practices.

My concession aside that some of the examples may perhaps be attributable to rogue employees, there are many examples of big tobacco very well knowing about their employees being involved in illicit trade and doing nothing about it.12

Big tobacco was articulately called out on their behaviour during the UK’s Parliamentary Committee hearings on tobacco smuggling: ‘When my four-year-old is standing in the kitchen with jam all over his face and I go in and say, “Have you been at the jam?” And he tells me, “No, daddy, I haven’t,” that is what you three have been doing here. It is unbelievable. It is called circumstantial evidence and you are simply sitting there saying, “No, no, it wasn’t us. We didn’t know the market. We had no idea this was going on.” I believe you have lied to this committee. I believe you are the least credible witnesses that I have ever seen come before the committee of public accounts. You have lied unashamedly. If you did not know all I can say is that you must have been totally incompetent. If I were one of your shareholders I would say, “these guys are incompetent”.’ 13 (While we have the comments from this committee on record, unfortunately their ultimate findings were never publicly released.)

This reticence is just as apparent with BAT in South Africa: in 2016 they told us that they had requested a law firm to investigate allegations of criminality by the staff of a security firm employed by BAT. Since then? Nothing. It’s been years. We don’t know what that investigation found, or what corrective steps have been taken to ensure that similar improprieties would not be repeated in the future.14

Of course, they do nothing. As a Rothmans manager so articulately explains, ‘It would be stupid to ignore a growing market. I can’t answer the moral dilemma. We are in the business of pleasing our shareholders.’15

Big tobacco washes its hands. They sell cigarettes ex-factory, and once the truck leaves their premises, argue that ownership is transferred to the buyer and the tobacco company has no legal liability for where the cigarettes go next. At best, they may explain, ‘In our work, you can’t ask what they do with the cigarettes’.16

They are really simply rational actors, acting rationally in pursuit of profit.

It’s this same reticence to confront criminality that arguably, at least in part, explains big tobacco’s consistent history of unlawful behaviour. As an Imperial spokesman, Michel Descoteaux, himself has noted: ‘The industry absolutely knew that most of the exports were being smuggled back. Imperial was simply shipping cigarettes in response to orders by American dealers. What would you have us do?’17

(I will get back to what we would have you do, Mr Descoteaux, in a bit.)

First, let me pause to say that there are some individuals in the industry who have tried to clean it up.

For instance, the IT consultant who had been contracted by JTI, and somehow got information on related individuals that were being investigated by European agencies for smuggling. The list included 13 JTI employees and distributors. (So we have reason to believe, for instance, that mobsters had financial stakes in some of JTI’s largest Russian distributorships,18 and in Montenegro, a JTI distributor was apparently retained despite being a convicted cigarette smuggler.19) The consultant passed the information on to JTI for them to investigate the allegations against their employees and contractors. The VP heading Global Brand Integrity Operations, David Reynolds, apparently wanted to take action against the individuals on the list; but instead says he was told in no uncertain terms to return the information to the consultant, to delete all copies of the data from JTI’s servers, and to refrain from using similar information in the future.20

Mr Reynolds went on to pen an extraordinary note explaining his concerns in some detail, including noting, ‘Shipments to unauthorized buyers have reached a massive scale exposing the company to fines potentially of around €30 million. We have repeatedly reported our findings to JTI management … but have yet to elicit any concerted effort to halt these diversions. In recent months members of my team have been directed not to investigate several instances of smuggling related to specific JTI distributors … and the possible involvement of JTI employees with known smugglers.’21 (The full text of his email is included in addendum 8 – it’s really worth a read.) Not surprisingly, he was fired days after sending the email, along with his assistant. JTI says he is an ex-employee spreading false information. You make up your own mind.

Another colleague in JTI subsequently commented: ‘You have to ask yourself how serious they are when they bring in people from Gallaher to take over. The culture in Gallaher was very much, “Let’s not get caught, but if we do get caught, be prepared to defend ourselves.” They didn’t take steps to stop smuggling, just to insulate themselves when it came out.’22 (Gallaher had been bought by JTI after having been implicated repeatedly in smuggling operations, and with court papers detailing how they helped smugglers evade more than $1,5 billion in customs duties in the UK.)23

Two things stand out for me: the first is that big tobacco must have known and did nothing. But the second is that there are a few good souls in the industry who are willing to take a stand. We need more of those.

Even in more recent Project Sun reports – published by KPMG, and dealing with the state of illicit tobacco, commissioned by the tobacco industry – it is noted how ‘… varying sanctions across member states currently influence decisions by big tobacco about where to conduct operations or which routes to take when transporting goods across the EU.’24 Where I come from, ‘sanctions’ generally tend only to worry those who have something to hide.

The question, of course, is what big tobacco’s position is on this today, and how their local in-country corporate strategy and profit considerations and risk appetite differ from their global counterparts.

What we’ve seen with big tobacco’s heavy involvement in supplying the contraband market is attributable to a permutation of only one of three possible explanations:

Firstly, perhaps it’s in their DNA and it simply forms part of their business strategy (and there certainly seems to be at least some evidence of this being the case).

Secondly, maybe they just turn a blind eye. Perhaps the existence of illicit activities within the company is known, albeit perhaps not explicitly endorsed, and are allowed to perpetuate, as the bottom-line benefits from it.

Or, thirdly, perhaps they simply employ countless rogue employees across the globe who perpetually perpetrate illicit activities without their knowledge or endorsement, and with the companies unable to establish internal controls and processes to offer any level of protection against such employees.

I can’t think of any other scenarios that explain the industry’s persistent history of and association with criminality. Whichever one of the three it is, it means that our governments can have no confidence – at the very least – in industry’s tax and duty declarations. In all three cases the solution is simple: the industry cannot be trusted to regulate itself and requires stronger regulatory oversight and more robust supply chain security measures across the tobacco value chain.

‘At best, tobacco companies are failing to control their supply chain, overproducing in some markets and oversupplying to others in the knowledge their products will end up on the illicit market,’ writes Prof. Anna Gilmore, Director of the Tobacco Control Research Group at the University of Bath. ‘At worst, ex-employees insist JTI remained actively involved, describing “rampant smuggling”. BAT staff suspected JTI was facilitating smuggling into the DRC but BAT also clandestinely moved millions of dollars in cash from Uganda to the DRC to buy tobacco leaf which was presumably then illegally exported. BAT cigarettes being distributed by a company implicated in tobacco smuggling were ending up in the illicit market with BAT staff agreeing not to discuss the problem by email.’25

Many other industries, with commodities that are far less hazardous, and that are far less vulnerable to criminal enterprise, and that are far less susceptible to tax evasion, have implemented far more robust supply chain security solutions than the tobacco industry has.

The number of examples where big tobacco is charged with some kind of fine, felony or infringement is staggering – not just in smaller, less-advanced economies, but in leading economies; not just in isolated instances, but globally over an extended period of time. Big tobacco is a serial repeat offender, and is repeatedly being sanctioned, and agreeing to pay massive fines (in the billions), with very little real, substantive change being evident in their behaviour over time.

What would the industry have us believe? What are they actually doing to fix the systemic issues that recur year after year? We simply don’t know. We certainly aren’t seeing any real change in either their behaviour or in the risks they pose.

At the very best, giving industry every conceivable benefit of the doubt, it is clearly highly vulnerable to criminality (even if you buy its occasional plea that this is not of its own making but the doings of countless rogue employees), making the case for far stronger regulation of the industry.

As Gilles Pargneaux, Member of European Parliament, puts it: ‘What are we witnessing when it comes to our dealings with the tobacco industry? It is illegal activities flirting with criminal organisations, duplicity in the fight against illicit trade of tobacco products and strategies of fiscal evasion which were unveiled by the special committee of the European Parliament on Tax Evasion. This is the worrying assessment we have to make in order to stop these practices and rein in the influence of the tobacco industry.’26

Why have they managed to get away with this on such a grand scale? Because our law enforcement agencies and policy makers have failed to put up a meaningful fight.