/ 3 November 2004

How tobacco giant squeezed Blair

Documents obtained by The Guardian newspaper reveal how one of the world’s biggest tobacco companies, British American Tobacco (BAT), put private pressure on British Prime Minister Tony Blair and a Cabinet minister who wanted to hold an inquiry into allegations that the firm was colluding with criminals.

Behind Parliament’s back, the head of BAT, Martin Broughton, obtained access to Blair at a private breakfast, followed by a private meeting with then trade secretary, Stephen Byers.

These privileges were granted despite the fact that BAT stood accused of colluding in cigarette smuggling on an unprecedented scale.

Two former United Kingdom Department of Trade and Industry (DTI) officials on BAT’s payroll were also used to approach former colleagues.

After this behind-the-scenes lobbying, Byers’s plan for an inquiry, which could have published a highly damaging report, was dropped.

Instead, MPs were told a watered-down inquiry would be conducted in secret. Its activities were ”buried” for four years, after which it emerged that no action would be taken.

BAT was so pleased that its lobbyists described the inquiry, in a private note, as ”not a problem”.

The documents, obtained partly thanks to government moves towards information freedom, and partly from BAT’s archives, show the powerful private influence large corporations wield.

Four years ago pressure mounted on Broughton, R15-million-a-year chairperson of BAT, after The Guardian published documents detailing how the corporation condoned tax evasion in a global effort to boost sales.

According to the documents, BAT arranged to supply massive numbers of cigarettes to distributors, expecting them to 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. Byers was threatening to launch an inquiry and publish the results.

Such a report might be highly damaging for BAT, opening the door to lawsuits from foreign governments cheated of taxes and unable to enforce health standards.

In 2000 Broughton approached Byers privately, but got the cold shoulder.

In March Byers signalled that he planned to set up an inquiry under Section 432 of the Companies Act, allowing files to be seized, employees to be questioned on oath, and — crucially — permitting Byers to ”cause any such report to be … published”.

Broughton was able to go over Byers’s head, as a member of a shadowy group of privileged lobbyists — the ”multinational chairman’s group”, whose members include BP, Shell, the drinks firm Diageo, Unilever and Vodafone. He was on the shortlist of those invited to breakfast at Downing Street.

Byers, too, had been summoned to breakfast by Blair. The company chairman seized the opportunity, buttonholing the minister who had been avoiding him. After shaking hands in No 10, Byers was left with no alternative but to change his tune — he granted Broughton a meeting.

”Dear Martin,” Byers wrote back, in warmer nomenclature than before. He apologised for the ”error” in redirecting his earlier letter.

Broughton followed up with intensive lobbying of No 10, sending Blair a long letter demanding that he cut taxes on cigarettes, and hinting that smuggling would continue unabated into Britain if he did not cooperate: ”The chosen tax policy contains within it the seeds of its own destruction.”

In April, he told BAT shareholders at the annual general meeting: ”There is really no need for a DTI investigation.”

The threatened inquiry then ran into the sand. Byers insisted it go ahead, but was persuaded to make a crucial change. Instead of ordering an inquiry under Section 432, which would have led to a public report, he agreed to use  Section 447 of the Companies Act which, crucially for the company, prohibited publication. — Â