There have been multiple instances of lobbying by ambassadors and other diplomats from the UK, as well as Japan and Switzerland. Much of this lobbying activity has taken place in low and middle-income countries (LMICs).² These countries are important sources of new customers for tobacco companies as markets in higher income countries where consumption is generally falling.³⁴⁵

Diplomats are also involved in activities which help promote the tobacco industry via local media, such as visiting tobacco farms or factories. Other engagement supports tobacco companies’ product promotions, or corporate social responsibility strategy. These activities help to raise the profile of tobacco companies, enhance their reputations, and support the ‘normalisation’ of the industry.¹⁶⁷

Background

Parties to the World Health Organization (WHO) Framework Convention on Tobacco Control (FCTC) have an obligation to protect public health policies from the “commercial and vested interests of the tobacco industry” and any contact with tobacco industry representatives, or others seeking to further their interests, must be “limited” and “transparent”.⁸ The implementation guidelines to Article 5.3 of the WHO FCTC recommend that Parties limit interactions with the tobacco industry to those that are absolutely necessary to regulating the industry, and ensure the transparency of those interactions that do occur.⁸  The guidelines also recommend parties treat state-owned tobacco companies in the same way as any other tobacco company, including avoiding any “preferential treatment”.⁸

In addition, the guidelines state that “… Whenever possible, interactions should be conducted in public, for example through public hearings, public notice of interactions, disclosure of records of such interactions to the public”.⁸

However even in countries with a high level of compliance with the WHO FCTC requirements, diplomatic missions rarely achieve this level of transparency. Information on tobacco industry engagement has largely been found through media investigations and Freedom of Information requests (FOIs).

In October 2014, the 6^th Conference of the Parties (COP) decided to urge parties: “to raise awareness and adopt measures to implement Article 5.3 and its implementing Guidelines among all parts of government including diplomatic missions.”⁹ Another decision required governments to “take into account their public health objectives in their negotiation of trade and investment agreements”.¹⁰

Nevertheless, diplomats continue to lobby for tobacco companies around the world.¹

Countries whose diplomatic representatives have lobbied on behalf of tobacco companies overseas  include the UK, Germany and Japan, who are all Parties to the WHO FCTC,¹¹ as well as the United States and Switzerland. BAT, PMI and Japan Tobacco all have offices in Geneva, Switzerland, the location of the World Health Organization and other key international bodies.

UK

There are specific guidelines covering the engagement of British (UK) officials working overseas designed to limit contact with tobacco companies, and support compliance with Article 5.3. After the UK Ambassador to Panama lobbied on behalf of British American Tobacco (BAT),¹² the guidelines were revised in 2013.¹³ These guidelines state that “Posts must not…Engage with local foreign governments on behalf of the tobacco industry, except in cases where local policies could be considered protectionist or discriminatory”.¹³

Engagement and lobbying

Despite having guidelines in place to support compliance with the WHO FCTC, FOI requests and media investigations have revealed that British diplomats continue to interact with the tobacco industry more than is necessary. UK diplomats have lobbied for BAT in Bangladesh,¹⁴¹⁵ Hungary,¹⁶ and Pakistan.^1217181920

UK officials have also disclosed contact with tobacco companies in Panama and Venezuela,²¹²² Laos,²³ Cuba,²⁴ and Burundi.²⁵

In 2018, UK advocacy organisation Action on Smoking & Health (ASH) called this a “global pattern of engagement” by British officials to defend BAT’s interests.²⁶

• For more details see UK Diplomats Lobbying on Behalf of BAT.

Tobacco industry events

UK government guidelines state that staff must not:

“Attend or otherwise support receptions or high-profile events, especially those where a tobacco company is the sole or main sponsor and/or which are overtly to promote tobacco products or the tobacco industry (such as the official opening of a UK tobacco factory overseas)”.¹³

However, UK staff have attended such events, generating considerable local media coverage.

For example, in 2019 the British ambassador to Yemen opened a cigarette factory in a free trade zone in Jordan, celebrating the expansion of the tobacco company Kamaran which is part-owned by BAT.^1272829

In 2020, staff from the UK high commission in Pakistan attended a promotional event for a BAT product in Pakistan.³⁰

• See UK Diplomats Lobbying for BAT for details.

Engaging with industry allies

The links between diplomatic missions and tobacco companies can be more indirect, via funding third party allies of the industry. The UK guidelines state that diplomats should not “endorse projects which are funded directly or indirectly by the tobacco industry”.  However, a 2019 investigation by The Guardian found that the British high commission in Malaysia had given funding to a Kuala Lumpur based think tank (IDEAS) for several years. At the same time the think tank was also receiving money from tobacco companies and was lobbying against plain packaging regulation and tobacco taxes.³¹  While the UK had already implemented plain packaging regulations, tobacco control was being undermined overseas.

Attending meetings with the tobacco industry

Tobacco companies attend meetings and events organised directly by UK government departments, such as the FCO (now FCDO) or the DIT (now Department for Business and Trade).²¹  They also attend those held by regional, national or local business organisations such as chambers of commerce.

Responses to FOI requests show that when the attendance of UK government officials at such events is disclosed, there is little detail about the specific purpose or content of these meetings,¹⁴¹⁶ It may simply be described as relating to ‘doing business’ in the country.²²

Business vs public health interests?

The UK guidelines for overseas staff (last updated in 2013) allow for the communication of “basic trade, investment and political information”, although this is not defined.¹³ One of the activities used to justify interaction by UK diplomats is “resolving business problems that are potentially discriminatory”.^1214163233 This has been criticised as running counter to the WHO FCTC guidelines.¹³⁴

While transparency is required for tobacco industry interactions in 2018, the UK government told Parliament that it “does not catalogue the representations it makes on behalf of companies”.³⁵³⁶³⁷  Research by the Tobacco Control Research Group (TCRG) concluded that the stated WHO FCTC goal of “maximum transparency” is not being achieved in the UK.¹²⁹

Japan

In 2021, the Ambassador of Japan to Bangladesh lobbied the government of Bangladesh on behalf of Japan Tobacco International (JTI).  In a letter to the Bangladesh Finance Minister the Ambassador criticised 2019 taxation changes for their impact on JTI. It also complained about the activities of competitors, and licensing demands.³⁸

• For details, including the lobbying letter, see Japanese Diplomats Lobbying for JTI

The Japanese Ambassador to Ethiopia was present at the signing of a deal between the Ethiopian government and JTI in 2016,  when the Ministry of Public Enterprise sold 40% of its National Tobacco Enterprise to the Japanese company.³⁹ Japanese diplomats have also toured tobacco farms and JTI factories in Tanzania and Zambia.⁴⁰⁴¹

Japan Tobacco International is the overseas subsidiary of Japan Tobacco (JT), which is one third-owned by the Japanese government.⁴²

Germany

In May 2022, the German ambassador to Beirut visited the offices of Regie, the Lebanese Tobacco and Tobacco Inventory Administration.¹⁴³

Denmark

The Imani Centre for Policy and Education, a Ghana-based think tank,  received money from the Danish embassy while lobbying against tobacco control.³¹⁴⁴

Switzerland

Switzerland is not Party to the WHO FCTC.

In 2019, Swiss diplomats approached the government of the Republic of Moldova on behalf of Philip Morris International (PMI) seeking an opportunity to discuss new tobacco legislation.⁴⁵⁴⁶⁴⁷  The proposed legislation included significant tax increases on heated tobacco products, in which PMI has invested.⁴⁵⁴⁸

The same year, PMI helped fund an inaugural event for the new Swiss Embassy in Moscow.⁴⁹⁵⁰

• For more details see Swiss Diplomats Lobbying for PMI

USA

Although the US is not Party to the WHO FCTC, it has specific laws and guidance that prohibit its diplomats from promoting the sale or export of tobacco, or influencing non-discriminatory restrictions on tobacco marketing.^51525354 However, US diplomats have enabled meetings between tobacco companies and government representatives.

The US ASEAN Business Council organises delegations of US businesses, including Philip Morris International (PMI), which meet high level officials in the ASEAN region.⁵¹  PMI was at the time a vice chair of its Customs & Trade Facilitation Committee and used this opportunity to meet with government officials from the Ministry of Industry and Trade of Vietnam.⁵¹⁵⁵

Why it matters

The examples above illustrate contraventions of the WHO FCTC, an international treaty, and in many cases breaches of national guidelines. As TCRG research points out, all of these activities also undermine the spirit of these laws, by apparently serving the commercial interests of transnational tobacco companies and helping to ‘normalise’ the industry in the eyes of policy makers and the public.¹

The implementation guidelines of Article 5.3 urge Parties to exclude the tobacco industry completely from the public health policy arena.  The guidelines also urge them not to participate in corporate social responsibility (CSR) activities which are used by the tobacco industry and as an alternative means to access policy makers, as well as for public relations and product promotion.¹

In August 2019, in direct response to the exposure of lobbying by Swiss diplomats, the WHO released a statement urging governments to comply with Article 5.3 and to “proactively aspire to reduce the number of people starting and continuing smoking, to promote health and preserve future generations”.⁵⁶

TobaccoTactics Resources

• UK Diplomats Lobbying for BAT
• UK Diplomats Lobbying for BAT: Bangladesh
• UK Diplomats Lobbying for Tobacco: Burundi
• Swiss Diplomats Lobbying for PMI
• Japanese Diplomats Lobbying for JTI
• Third Party Techniques

TCRG Research

A “willingness to be orchestrated”: Why are UK diplomats working with tobacco companies?, R. Alebshehy, K. Silver, P. Chamberlain, Frontiers in Public Health, 17 March 2023, Sec. Public Health Policy, Volume 11 – 2023, doi: 10.3389/fpubh.2023.977713

For a comprehensive list of all TCRG publications, including TCRG research that evaluates the impact of public health policy, go to the Bath TCRG’s list of publications.

References

The post Diplomats Lobbying for Tobacco Companies appeared first on TobaccoTactics.

• See International Tax and Investment Center for an overview of ITICs links to the tobacco industry as well as contemporary evidence of how ITIC has represented tobacco industry interests and lobbied governments on the industry’s behalf.

Significant Changes to Tax Code in Russia

In 1995, ITIC’s 1995 Annual report noted the following activities in Russia:

* Invited by the Russian Ministry of Finance to be the only private sector representative to the new Tax Code drafting team. ITIC’s comments, provided by company representatives, have resulted in significant changes being made in the draft Tax Code.

* At the request of the Russian Deputy Minister of Finance, formed a three-person team which assisted the Ministry in rewriting the draft Tax Code to conform with the Russian Civil Code.

* Along with other international advisors, successfully worked with the Ministry of Finance and State Tax Service to repeal the excess wage tax and reduce the VAT rate.⁶¹

The Threat of Specific Excise has been “Diverted”

BAT’s monthly report for Russia for November 1996 noted:

“The threat of specific excise appears to have been diverted for the time being. ITIC and their sponsors (PMI, RJR, Rothmans), although foiled on this occasion, will not give up. We will not be sure of the minimum, however, until the Duma actually votes. We are developing our follow-up strategy with the Center”.

The document also stated:

“This month in official bodies, including the State Duma, BAT was lobbying jointly with Tabakprom on ad valorem excise system. The lobbying was against the specific excise system, proposed by Philip Morris and other international manufacturers and promoted through the International Tax and Investment Center (ITIC)”.⁶²

A “Quiet Lobbying Opportunity” with ITIC

A 1996 RJ Reynolds (RJR) Monthly Report highlighted the role of ITIC regarding the progress on harmonisation of excise tax rates for tobacco products in Russia:

“The debate between specific excise versus ad valorem excise tax calculation has left parliamentary committee and will now be taken to the State Duma floor this week, as discussions over the 1997 budget continue. Since our last report, the Ministry of Finance has come around to the arguments in favour sic of a specific taxation system, a position defended by RJRI, PMI and Rothmans.”

“An influential Position Paper funded by Philip Morris and prepared by the Russian Scientific and Research Institute of Market Research (VNIKI by its Russian acronym) was submitted to the Taxation Committee of the Duma. According to PMI in Moscow, this document weighed heavily in favour of the specific taxation system, along with the International Tax and Investment Center’s (ITIC) earlier submissions.”

“A further quiet lobbying opportunity will be provided in late January 1997, when Duke University and ITIC host an RJRI-sponsored taxation conference on Russia, which will take place at Duke University in Durham (NC). Key Russian decision-makers in the legislative and executive branches, including Deputy Finance Minister Sergei Shatalov, are expected to take part. One day of the conference program will take place in Winston-Salem and will be devoted to excise taxation. We hope to include a tour of Tobaccoville and provide entertainment opportunities to Russian visitors.”⁶³

Meeting “Under the Aegis of ITIC”

A 1997 RJR memo describes ITIC’s role in assisting RJR and PMI in favourable tax reform in Russia:

“The new Russian excise tax structure that came into effect this year differentiates between different types of tobacco products based on Russian State Standards (GOST) specifications. Anything that was not a traditionally-made Russian cigarette was taxed at a higher rate (including imports and American blend products made in Russia, like North Star and Peter 13`). Russia is now moving to fully reform the cigarette classification and standardization system, and thus get rid of the GOST cigarette class system.”

The memo continued:

“BAT has gone to the highest level at the Duma (the Speaker), a Communist, and has appealed to his nationalistic leanings to save the local industry from the foreign hordes. Under the aegis of the International Tax and Investment Center (ITIC) in Moscow, we are meeting with PMI this week to map out a response strategy, which may include a new campaign to protect the gains of the current system, while at the same time capitalizing on the opportunity of GOST reforms to further simplify the existing system.”⁶⁴

An “Injustice” to Raise Cigarette Taxes

A 1997 RJR memo suggested that ITIC was used to promote the tobacco industry’s position that increases in tax result in increases in illicit trade:

ITIC along with the IMF were urged “to address the contraband problem – perhaps to form a study group, or ask for a report to be prepared for IMF consideration. Objective: the IMF is doing a grave injustice to emerging Democracies and third-world countries when it advises them to raise cigarette taxes — as this will only encourage organized criminal groups to get into trafficking contraband. These countries need to build a tax base — not encourage an underground economy.”⁶⁵

Philip Morris and Argentina

In 1998, a Philip Morris document noted that PM hired ITIC to:

“conduct an economic impact study and to sponsor a project supporting the conversion from an ad valorem tax system to a specific tax system for cigarettes and other products. ITIC will use data from other countries to create a financial model for Argentina and will work to develop a proposal by mid-year in conjunction with the UK-based Oxford economic forecasting group and FIEL, an Argentine think-tank.”⁶⁶

TobaccoTactics Resources

• Third Party Techniques
• Lobby Groups
• International Tax and Investment Center

References

The post International Tax and Investment Center – A History of Tobacco Industry Facilitation appeared first on TobaccoTactics.

Norway: Increase in Young People Using Snus

A 2015 briefing by Euromonitor International reported that Norway had seen a sharp increase in snus use amongst young people, which has been attributed by the Norwegian government to marketing by the tobacco industry:

“According to the Minister Health and Care Services, the growth in snus usage among young people began after the snus industry began developing snus boxes with new designs, new colours and flavourings such as vanilla, menthol and liquorice which ‘appeal to young people’.”⁷¹

On 1 July 2017, Norway introduced plain packaging on snus products, with a one -year transition period.⁷² Swedish Match filed a court case against the Norwegian government, but lost the case in November 2017.⁷³

Russia: Snus Targeted at the Young and Wealthy

In September 2012, the academic journal Tobacco Control published a news story which provided details of a proposed marketing strategy for Parliament snus in Russia.⁷⁴

In December 2011 SMPM International, the joint venture between Philip Morris International (PMI) and Swedish Match, commenced a trial market of Swedish snus in Russia, following earlier test markets in Taiwan in 2009 and Canada in 2010. Three snus varieties were introduced under PMI’s premium cigarette brand Parliament, which has a strong presence in Russia. A few months earlier, Swedish Match’s CEO Lars Dahlgren had informed investors that the launch would be supported by a number of marketing activities, including brand building and sampling, considering that “marketing restrictions Russia are not as strict as they have been for us in the Taiwanese market and the Canadian market”.⁷⁵

In June 2012, a marketing campaign for PMI’s Parliament branded snus, by advertising firm Proximity Russia, was cited on Behance.net, an online network that showcases professional creative work.⁷⁶ Proximity Russia’s brief was “to launch in the Russian market a new category of tobacco product targeted at wealthy audience, operating in the context of dark market”. With the brief in mind, Proximity developed print advertisements depicting well-dressed young adult males (Image 1), stylish product display units (Image 2), and a product website (www.snus.ru) which was open to registered users only. Furthermore, the proposed marketing strategy included “youth engagement materials” and the use of attractive and successful looking young adults, referred to as the “snus envoy”, recruited to promote Parliament snus (Image 3).

Similar techniques were used in the mid-1980s by United States Tobacco Company (UST) when it attempted to introduce smokeless tobacco product Skoal Bandits in Europe, by paying college students to promote Skoal Bandits amongst their peers.⁷⁷⁷⁸

Taken together, this indicates that, contrary to the industry argument that snus should be legalised in the EU to offer smokers a less harmful tobacco alternative to cigarettes,⁷⁹⁸⁰ snus may be promoted in new markets to young adults and non-tobacco users. This is in line with evidence from the United States, which has an established smokeless tobacco market, and where tobacco industry marketing messages have been used to promote dual use of smokeless tobacco and cigarettes, and encourage smokeless tobacco uptake by young non-tobacco users.^81828384

TobaccoTactics Resources

• Snus
• Cigarette Companies Investing in Snus
• SMPM International
• Snus: EU Ban on Snus Sales
• Newer Nicotine and Tobacco Products

TCRG Research

• How online sales and promotion of snus contravenes current European Union legislation, S. Peeters, A.B. Gilmore, Tobacco Control, 2013; 22:266-273

For a comprehensive list of all TCRG publications, including TCRG research that evaluates the impact of public health policy, go to the Bath TCRG’s list of publications.

References

The post Snus: Marketing to Youth appeared first on TobaccoTactics.

On 16 July 2015 it was announced that the joint venture had been dissolved.⁸⁹

According to Swedish Match, “…There is a small but growing demand for snus in current joint venture markets. The development has, however, taken longer than the parties had initially anticipated. As a consequence the parties have mutually agreed to dissolve the joint venture.”⁸⁹

PMI acquired Swedish Match in 2022. For more information see the PMI page.

Background

Based in Stockholm, this joint venture company was incorporated in December 2008 (No. SE5567717128).⁹⁰ Its Managing Director was Fredrik Laurell, previously Vice President Special Projects at Swedish Match.

Board Members

• André Calantzopoulos (from 11 Feb 2009)
• Ashok Rammohan (from 3 September 2010)
• Even Hurwitz (from 11 February 2009)
• Lars Arne Martin Dahlgren (from 30 January 2009)
• Lars Olof Lofman (from 30 January 2009)
• Martin Kallstrom (from 3 September 2010)

Snus Test Markets: Canada, Russia, Israel, and Malaysia

SMPM ran test markets in Malaysia, Canada (under Swedish Match’s premium brand ”General”), Russia (under PMI’s premium cigarette brand ”Parliament”)⁹¹⁹² and Israel (under PMI’s ”Marlboro” brand).⁹³

Snus in Russia

PMI is the largest cigarette manufacturer in Russia, leading in both the premium and super premium price categories. Swedish Match trialled snus in Russia before (from 2002 to 2008) in Moscow and St Petersburg, however the company never shared the results publicly. Lars Dahlgren, CEO of Swedish Match, suggested that marketing freedoms were a consideration when selecting Russia as a potential future snus market:

“Yes, we think that Russia is a very interesting country when it comes to snus. We have had some limited presence there before, when Swedish Match did it alone, and we did see definitely some consumption, so we have some experience that it can appeal to the Russian consumer. And now together with PMI, with their strength in the market, and providing the offering under a very strong premium brand, cigarette brand for the Russian market, I think it’s going to be a very interesting test market to follow. And it’s also the case that in the Russian market, marketing restrictions are not as strict as they have been for us in the Taiwanese market and the Canadian market.” ⁹²

In June 2012, Proximity Russia, an advertising firm in Russia posted a page online about a proposed Parliament snus marketing campaign which included Youth Engagement Materials, fuelling concerns that snus might be marketed to young non-smokers.

• See Snus: Marketing to Youth for full details.

Potential Markets in South and Central America

A snus blogger reported in March 2012 that Swedish Match’s Online Sales Manager had been promoted to become the Area Manager of the Latin and Central American Region of SMPM International.⁹⁴ This could have indicated that SMPM was considering a Central and South American snus test market, although market research company Euromonitor suggested that “in the absence of a defined message, strategy and product portfolio, the company would be better advised to save on the airfares”. ⁹⁵

“More Stillborn Than Thriving”

Prior to SMPM’s dissolution, there were indicators that the joint venture was not successful.

Both PMI and Swedish Match were secretive about the progress of the joint venture, raising doubts with investors about how well the joint venture was performing, in particular in light of the adoption of the Tobacco Products Directive Provisions, which maintains the sales ban on snus in all EU countries except for Sweden, dampening any prospects of potential EU growth.

As early as October 2012, Euromonitor questioned the viability of the joint venture in a report titled ”The Curious Case of SMPM International – More Stillborn Than Thriving?”, criticising the company for not having a defined message, strategy and product portfolio, noting that “there is a distinct lack of information emanating from either Swedish Match or Philip Morris on progress to date” ⁹⁵

In March 2015 Euromonitor echoed earlier concerns, proclaiming that the joint venture’s presence in the Swedish Match’s annual report was reduced to a footnote and that investments in the joint venture were diminishing:

“…Perhaps significantly, the only mention of it [SMPM] in the Swedish Match Annual report was in a footnote concerning ‘investments in associated companies and joint ventures’ which reported ‘additional investments in SMPM International of 35MSEK in 2014 with 57 MSEK in 2013.”⁹⁶

TobaccoTactics Resources

Snus

Cigarette Companies Investing in Snus

Snus: Marketing to Youth

Snus: EU Ban on Snus Sales

TCRG Research

• Understanding the emergence of the tobacco industry’s use of the term tobacco harm reduction in order to inform public health policy, S. Peeters, A. Gilmore, 2015, Tobacco Control, 24(2):182-189
• Transnational tobacco company interests in smokeless tobacco in Europe: Analysis of internal industry documents and contemporary industry materials, S. Peeters, A. Gilmore, 2013, PLoS Medicine’, 10(9):1001506
• The revision of the 2014 European tobacco products directive: an analysis of the tobacco industry’s attempts to ‘break the health silo’, S. Peeters, H. Costa, D Stuckler, M. McKee, A. Gilmore, 2016, Tobacco Control, 25(1):108-17

For a comprehensive list of all TCRG publications, including TCRG research that evaluates the impact of public health policy, go to the Bath TCRG’s list of publications.

References

The post SMPM International appeared first on TobaccoTactics.

In November 2011, the Organised Crime and Corruption Reporting Project (OCCRP) unveiled the results of a major investigation into Japan Tobacco International‘s complicity in cigarette smuggling. The article alleged that:

• Russia and Middle East were the “hub of smuggling by JTI distributors”.
• JTI’s own investigators say JTI “did almost nothing when faced with reports their distributors smuggled tobacco through Russia, Moldova, the Balkans, Afghanistan and the Middle East”. There was apparent “rampant smuggling”. Another transit route was through Kaliningrad.
• When company investigators received information that 13 JTI employees or distributors may have been working directly with smugglers, a senior executive at JTI blocked an investigation into the activities.
• Emails uncovered by the OCCRP detailed “how widespread the smuggling had become across several regions. JTI Investigators caught an Israeli distributor smuggling large quantities of cigarettes into Iraq and Belgium, but investigators say the company took no action”.
• In 2009 and 2010 as JTI investigators uncovered what they called substantial evidence of illegal trade, managers repeatedly interfered with efforts to stop the trafficking. A senior Vice President directly blocked an investigation into the Audeh Group, its main Middle East distributor, suspected of facilitating smuggling.
• JTI continued and expanded its relationship, with another alleged smuggler, IBCS Trading, which is owned by the Audeh group, which had previously been accused in an EU lawsuit of being a “co-conspirator” with RJ Reynolds in smuggling operations.
• The company’s general manager in Russia said that he wasn’t concerned about an increase in cigarette seizures at Baltic borders because profits outstripped potential EU-imposed fines for not stopping the smuggling.
• The head of the compliance team wrote that ” JTI management has not lived up to the ‘zero-tolerance policy’ of smuggling” and, “in those cases that touch on smuggling into or via the European Union, has specifically and repeatedly violated (its obligations under the European Commission agreement of 2007)”.
• The investigators had their computers hacked into by a company paid $300,000 by JTI. Subsequently, a JTI senior vice president eventually admitted ordering some of the hacking.
• The same investigators were later fired and the information on what the investigators had uncovered was leaked to smugglers. ¹⁰¹

Allegations Undermine Agreement with the EU

These allegations were all the more pertinent because in December 2007 JTI had signed an agreement with the European Commission (EC) and Member states to stamp out smuggling.

The agreement acknowledged that the “illicit traffic in cigarettes is a growing problem for the EC, for Member States and for legitimate trade in tobacco products”. Due to this JTI had “committed to a continuous process of dialogue and cooperation with the EC and Member States to evaluate and address the trade in Illegal Product”. ¹⁰²

On the signing of the agreement, JTI had issued a statement that said it “cooperates with government authorities around the globe in its efforts to combat the illegal trade of cigarette products. This problem is detrimental to the brand value of our products and it penalizes legitimate retailers and our customers, while depriving governments of revenues. Japan Tobacco believes that today’s forward-looking agreement represents a significant milestone in the Japan Tobacco Group’s endeavours to tackle this societal issue while protecting the brand equity of the company’s products”.¹⁰³

Despite these commitments, OCCRP alleges that JTI investigators identified “a persistent pattern of smuggling” by one of JTI’s distributors IBCS, and in turn IBCS’s distributors. In 2009, the company’s Vice President Jean-Luc Perreard “wrote to the internal investigations team promising that JTI would start getting tough and would ‘most likely’ terminate two IBCS distributors the next time they got in trouble”.

OCCRP also alleges that Perreard wrote one email to several JTI executives, indicated that “writing a stern letter to IBCS should be enough to appease OLAF regulators”. Perreard wrote that “As soon as the letter is sent – please provide me with a copy so that I could – if needs be – use it to demonstrate OLAF that we are proactive in addressing such matters”.¹⁰⁴¹⁰⁵ OLAF is the European Union’s Anti-Fraud Office.

Despite this letter, JTI’s company documents allege that “smuggling continued unabated”. Furthermore a series of emails obtained by OCCRP show that in reality “Perreard and others took a softer stance” with IBCS. The emails also “said a proposed letter admonishing IBCS should be worded in ‘such a way that it can be disclosed to OLAF.'” ^{106 107}

OLAF Investigation Secretely Closed Down: “Did Not Prove JTI Involvement”

OLAF investigated the allegations of smuggling, but in April 2016 confirmed that:

“In July 2015, OLAF closed an investigation into the alleged involvement of JTI in the diversion of tobacco products from third countries into the EU, as well as possible non-compliance with the provisions of the Anti-fraud Agreement between JTI and the EU and its Member States of 2007. The investigation did not prove any involvement of any JTI entities or employees in illegal activities such as cigarette smuggling or diversion of cigarettes into the EU.” ¹⁰⁸

JTI Denied “Sensationalistic and Salacious” Accusations

In response to the allegations, JTI issued a two page employee briefing paper that argued the story was “as sensationalistic and salacious” and “nothing more than an attempt at vengeance on the part of disgruntled former employees” and argued that “none of the outrageous allegations against JTI in the article is grounded in reality”. ¹⁰⁹

The company also told the Reuters news agency that any issues raised in the article “had been resolved”. Hideyuki Yamamoto, a spokesman for Japan Tobacco said: “These matters have all been properly addressed and handled within JTI in line with our overall stance towards anti-illicit trade and my understanding is that it has been all solved or addressed already as far as JTI is concerned.” ¹¹⁰

TobaccoTactics Resources

This page is part of the historical section of Tobacco Smuggling, which also includes:

• Imperial And Gallaher Involvement in Tobacco Smuggling
• Gallaher versus its Cypriot distributor
• BAT Involvement in Tobacco Smuggling
• Michel Poirier

TCRG Research

Visit Tobacco Control Research Group: Peer-Reviewed Research for a full list of our journal articles of tobacco industry influence on health policy.

TCRG Blogs

• Unscrupulous methods used by the tobacco industry revealed over the illicit trade, K.A. Evans-Reeves, A. Rowell, 2015, The Conversation
• Tobacco industry rallies against illicit trade – but have we forgotten its complicity?, K.A. Evans-Reeves, A. Rowell, 2015, The Conversation

References

The post JTI Involvement in Smuggling appeared first on TobaccoTactics.