Racketeering,Smuggling and Money-Laundering: BAT to face hard questions from shareholders.

Despite continuing to make money hand over fist in the past year,British American Tobacco (BAT) still has no peer as a rogue company, withmounting allegations of involvement in smuggling, money laundering and drugdealing. To mark the Annual General Meeting of BAT in London on 2 May, ASH is casting an eye over thecompany's conduct in the past year, and asking pressing questions that shouldconcern shareholders.

ASH Public Affairs Manager John Connolly said:

“It is important to remember that, whileBAT crows about its share price, the company is facing potentially enormousfines from legal action. Shareholders should be asking whether BAT is a companythey want to be associated with”.

Smuggling

Evidence continues to emergerevealing the depth of BAT's involvement in cigarette smuggling. Followingquestioning of BAT Chairman Martin Broughton and his deputy Kenneth Clarke bythe House of Commons Health Select Committee, the DTI has launched aconfidential investigation into its involvement in smuggling, mounting a dawnraid on BAT's London HQ.

The Columbian Regional Governorshave also launched a RICO (Racketeer Influenced Corrupt Organisations) action against BAT, alleging involvement in smuggling, money-laundering and drug-dealing, as well as alleging that BAT “…committed, and continue to commit, acts that constitute negligence, fraud, unjust enrichment, public nuisance and negligent misrepresentation.”

ASH has amassed a vast numberof documents which can be viewed on the ASH Website,which show the depth of the involvement of senior BAT executives insmuggling. Despite this, BAT continueto deny any wrong-doing. At last year'sAGM, an internal inquiry was announced.

Connolly said:

“The evidence against BAT is overwhelming. This is not just an occasional rogue trader. BAT has used the black market in cigarettes as an outlet for its products. Some of the individuals most deeply implicated now sit on the Board. Last year, Rupert Pennant-Rea promised an internal inquiry into the accusations, but of course this inquiry has disappeared without trace.

“

Questions for the Board:

What was the outcome of the internal inquiry?

If the DTI find serious misconduct within the company, or if the company is found guilty in the RICO action, who will take responsibility by resigning?

Marketing & Advertising.

BAT, along with Philip Morris and Japan Tobacco, arecurrently funding a new advertising campaign with the supposed aim of stoppingunderage smoking. These campaigns have been thoroughly discredited. ASH published a report last autumn [2] inwhich it demonstrated that the real reasons for BAT funding this research arequite different to those they would have us believe.

Connolly said:

“The tobacco industry wants to givethe impression that they are capable of regulating themselves, to stopgovernments doing anything which might be effective. Decades of sharp practiceshow why this cannot be allowed to happen. “

Questions for theBoard:

The World Bank hassaid that “the most effective way to deter children from taking up smoking is toincrease taxes on tobacco”. Does BAT agree?

The BAT advertising research has said that teenagersview smoking as cool. If BAT doesn't want this to happen, why does it sponsorevents like Formula 1?

Framework Conventionon Tobacco Control

Negotiationsare taking place in Geneva this week on the World Health Organisation's Framework Convention onTobacco Control, an international agreement that will set internationalstandards for the regulation of the tobacco industry. Last year, the House of Commons Health Select Committee,condemned BAT for its attempted hindering of the Treaty negotiations. In itsreport “The Tobacco Industry and the Health Risks of Smoking”, thecommittee said that:

“…..any success [of the treaty] will be dependent on aresponsible approach being taken by the tobacco companies. Depressingly, there is little sign of thatin the cheap jibes made at the WHO's expense by BAT. To call an organisation committed to improving global health“zealots” and a “super-nanny” because of its concern about the 10 milliondeaths which will be caused by tobacco each year by the late 2020s seems to usbizarre”.

Speaking from the WHO negotiations in Geneva, ASHDirector Clive Bates said:

“BAT has quite rightly faced harsh criticism from MPs for its stance on the WHO Framework Convention talks. Nocompany with this attitude to a major international agreement deserves to betaken seriously.The company has shot itself inthe foot and nowwill have to face theconsequences”.

Questionsfor the Board:

Whataction has BAT taken to co-operate with the WHO on the Treaty negotiations?

ENDS

Notes to Editors:

[1] ASH's report “Danger! PR in the Playground” waspublished in October 2000. An electronic version is available at http://www.ash.org.uk/html/advspo/html/prmenu.html

[2] An electronic version of this release, withlinks, is available at www.ash.org.uk

Contacts: JohnConnolly : 020 77395902 (office) 07702 817477 (Mobile), or

KarenRichardson: 020 77395902 (office) 07951 602011 (Mobile)

ISDN AvailableProfessor Antony Young, Tel. 020 7960 5550 or 077 9906 2992 (mobile)

~~John Connolly 020 77395902 (office); 07702 817477(Mobile)~~

~~ISDN available~~

~~For more information on how smoking affects theskin and a person's appearance see ASH fact sheet, ‘How smokingaffects the way you look'~~.