Carlisle, England. March 1, 1995. The American mastermind of an intricate scheme to unload "fake" Latin-American versions of Marlboro cigarettes in eastern Europe has been sentenced to life in prison for the murder of one of his partners-in-crime--who had discovered the entire operation was fake.

A jury found Michael Austin, 39, guilty of hiring hitmen to kill David Wilson.

Austin's incredibly complex deal-making involved disguises, fake names and companies, and the Polish underworld.

The murder victim had apparently discovered that the crime scheme promoted by "Colonel Hector Portillo" was a fake itself, and confronted Austin/Portillo. Austin threatened Wilson's life, and when Wilson was arrested by a suspicious Scotland yard, Austin became nervous and had him killed.

More than 80 detectives and several international agencies took part in a massive international search to "untangle the web of false names and contact numbers Austin had used to set up his deals," according to Reuters.

The break came with revelation of a Canadian company--"Universal Exports," James Bond's cover company in the Ian Fleming novels--to buy a multi-million dollar condo in New York City's Trump Tower. Austin's alias for this purpose: Michael Bond.

FRANCE: SEITA TURNS PROFIT FOR INVESTORS

Paris, April 5, 1995. Last February's privatization of France's tobacco monopoly, Seita, is pleasing those who bought in. Today the company announced increased profits over last year, and a large dividend.

The company's success is due to the introduction of lighter, American-style versions of its classics. The new Gauloises Blondes and Gitanes Blondes brands feature filter tips and a richer golden Virginia tobacco blend.

Sales of the pungent Gauloises and Gitanes, made with French-grown black tobacco, have been losing share for years, as Jean Paul Sartre made way for the Marlboro Man in the minds of younger smokers. The new versions are a hit domestically, and Seita is also enjoying a booming international market in the brands.

Workers had feared privatization would lead to job layoffs, and strikes were held over the issue last year. When the company was sold, 5% was offered to workers.

Still worried are French tobacco growers along the Dordogne River in Southwestern France, where black tobacco is grown.

The 300-year-old Societe Nationale d'Exploitation Industrielle des Tabacs et Allumettes is worth an estimated $1 billion.

The success of Seita's privatization, which was oversubscribed by both private and industrial investors, is in marked contrast to the October 27, 1994 Japan Tobacco debacle. The government-owned monopoly sold 50% of its shares to the public, but shares quickly lost 1/3 of their value. The "disastrous aftermath" led to the delay of the government's further privatization plans.

FRANCE: ADS HALT SOCCER MATCH ON TV

Paris, France. February 3, 1995. English soccer stadium cigarette ads have led to the last-minute cancellation of live TV coverage of the European Cup Winners Cup in France.

The move by France's TF1 channel cost the British club, Arsenal, $900,000 in revenue.

In the past, France has threatened to block broadcast of the Grand Prix under these rules, but so far has granted exceptions to the auto race.

In related news, Australia is being pressured to grant an exemption to its TV tobacco advertising rules for the Australian formula one grand prix scheduled to be held in 1996 at Melbourne's Albert Park.

Australian law allows the Federal Health Minister to grant an exemption if it can be proved that the race is of international significance and that without an exemption, Australia would lose it.

ITALY: COURT BANS PUBLIC SMOKING

Rome, Italy. March 27, 1995. A regional Italian court today ruled that smoking in public must be banned throughout the country in order to protect nonsmokers from secondhand smoke. The Lazio regional tribunal has given the Health Ministry one month to draft such a law.

Italians routinely ignore no-smoking signs, and Radical Party leader Marco Pannella, often seen smoking on TV, has vowed to stage a "smoke-in" to protest the rule, according to Reuters.

GERMANY: VIETNAMESE SMUGGLERS WAR

Bonn, Germany. March 30, 1995. A shootout between rival Vietnamese gangs has left 5 dead, according to Reuters.

Police suspected the rumble was over untaxed cigarettes. Vietnamese gangs seem to rule the lucrative cigarette-smuggling trade in Germany.

GERMANY: SMOKERS & AIRBAGS

Munich, Germany. March 15, 1995. Germany's largest insurer warned smokers they risk facial burns if they are smoking when their car's airbag is inflated in a crash, according to Reuters.

Safety studies by Allianz AG-Holding found other potentially harmful objects are mobile phones and canned drinks. No problems had been reported for eyeglasses.

AUSTRIA: NEW ANTI-SMOKING LAW DRAFTED

Vienna, Austria. April 4, 1995. The Austrian cabinet today adopted a draft antismoking law which would ban smoking in all public buildings. Universities, theatres, train stations and airports would also be affected.

This is the cabinet's second draft, which must now be approved by Parliament. The first draft was rejected over advertising restrictions and mandatory non-smoking sections in restaurants.

SARAJEVO: CIGARETTE ECONOMY STILL FLOURISHING

Sarajevo, Bosnia. April 2, 1995. From a Reuters article on life in Sarajevo on the third anniversary of the Bosnian war:

"To make ends meet, surgeons, soldiers and widows alike are forced to sell cigarettes on street corners or peddle firewood foraged from no-man's-land on the hills above the city."

A carton of Marlboros sells for $21-$25 in Sarajevo, depending on the state of airlifts.

BELARUS: IMPORT CIG TAX CREATES CHAOS

Minsk, Belarus. April 7, 1995. Belarus President Alexander Lukashenko's new excise tax on imported cigarettes has led to confusion, and to such a severe shortage of foreign brands. It has also led to an unprecedented plunge in president's approval rating, plummeting down to only 10%.

Lukashenko's tax had meant to protect Belarus' domestic tobacco industry from the flood of brands from the trans-national companies, but there were two problems:

1. The April 1 tax was poorly communicated and implemented, leading to widespread confusion. It went into effect at the beginning of a weekend, when all government offices are closed, which compounded the problem.

2. Apparently nobody _likes_ the local Primo, Kosmos and Grodno brands, which are seen as cheap and harsh. Belarus smokers far prefer the more expensive but popular Marlboro and Camel.

Untaxed foreign cigarettes are now being sold on street corners for 3-4 times their normal price.

INDIA: ARSENIC & LACED TOBACCO

New Delhi, India. April 6, 1995. UPI reports that domestic tobacco here is often laced with arsenic, according to an Indian medical journal.

A biochemist quoted by UPI said the arsenic is put in by manufacturers in the belief that it functions as both a general tonic and an aphrodisiac.

The Indian Journal of Medical Sciences found arsenic in most samples they gathered--as much as 2.47 micrograms per gram of tobacco sample.

INDIA: BAT BOARDROOM BATTLE RAGES

Calcutta, India. March 24, 1995. In a fierce trans-national corporate battle, British tobacco giant B.A.T. Industries is trying to oust the chairman of its Indian affiliate ITC Ltd., a diversified and highly profitable tobacco company. The struggle led to today's tumultuous shareholders' meeting, which "broke up in pandemonium," according to Reuters.

BAT, which owns 31.67% of the ITC's shares, has demanded the resignation of chairman K.L. Chugh for "financial irregularities," and has threatened to derail the company's expansion plans unless he steps down.

Last Wednesday, Chugh refused to resign, and charged that BAT covets a 51% share of the company. Chugh claims, "B.A.T. is stifling the interest of ITC which is aspiring to become an Indian multinational. The move by B.A.T is to destabilize the company."

Chugh claims BAT neglected ITC for years, and now that it is becoming a profit powerhouse, BAT wants in.

Chugh became chairman in 1991, and has been expanding the company's interests. His next step was to take ITC into India's power sector, but BAT succeeded in blocking that move in the chaotic shareholders' meeting held today in ITC's HQ, Virginia House.

A BAT spokesperson said, "The Indian government's liberalization policy offers ITC significant new opportunities and we believe that the company can grow much faster once it has been returned to professional management."

Financial institutions hold 38% of ITC's shares, and are the key to who will win. They apparently abstained on the power sector vote, and are undoubtedly weighing their options.

ITC's next board meeting will be in May, when an audit committee set up today will report on allegations of financial irregularities.

While the government is apparently on ITC's side, it is hesitant to enter the conflict for fear of damaging its relations with foreign businesses.

HISTORY

The battle is the result of business liberalization reforms instituted in 1991. The government opened up Indian business to more foreign investment and liberalized business restrictions. The reforms allowed ITC, India's largest and most profitable tobacco company, to entertain dreams of becoming a multinational itself.

ITC was set up as Imperial Tobacco in 1910 to provide the British administration with cigarettes. After Indian independence in 1947, BAT steadily decreased its holdings to its present level of 31.67%, and had seemed satisfied to leave the running of the company to its Indian administrators.

ITC recently succeeded in diversifying to such a degree that non-cigarette business (financial services, hotels, edible oil and paper) now accounts for 35% of its $1.38 billion in revenues.

BAT earned a profit of about $40 million from ITC in 1993.

VIETNAM: BAT HALTS 555 PRODUCTION

Hanoi, Vietnam. April 4, 1995. British tobacco giant BAT Industries announced it had stopped producing "555" brand cigarettes at its plant here, due to the millions of smuggled cigarettes pouring into Vietnam from Cambodia and China.

It's not so much the contraband itself, which is just one part of Hanoi's smuggling problem, but that the government itself has authorized two of its companies to sell the 555s it confiscates. State-run Sundries Electric Appliances Co. and SaigonTourist have been selling 555s for 63 cents a pack, wildly undercutting the $1.86 charged for Vietnamese-made 555s.

BAT won its license to produce cigarettes only last November. Both Philip Morris and Rothmans of Pall Mall Pte. Ltd. of Singapore have also been granted licenses, and likewise are suffering from state sales of contraband. R.J. Reynolds Inc. just completed arrangements for a $21.2 million joint venture which would grow tobacco and manufacture cigarettes in Son La.

It is illegal to import finished cigarettes in Vietnam. Producers must pay about 40% of the sale price in taxes.

CHINA: Anti-Smoking News

Beijing, China. April 7, 1995. China forbid the sale of cigarettes in its state and collective shops for International Smoking-free Day, but Beijing's Enlightenment Daily newspaper still criticized lax enforcement of China's anti-smoking laws, according to UPI.

"Cycling, soccer, volleyball and basketball competitions are usually sponsored by cigarette companies," the newspaper said. "Cigarette ads are plastered everywhere.

". . . movies depict company managers, bosses, scientists and artists smoking, encouraging the habit" in youths.

"In the long-term interests of the China, we must create a smoke- free atmosphere. This depends upon the government," the editorial said.

On Feb. 1, China banned cigarette advertising on TV, radio, film, newspapers and magazines, and mandated "Smoking is hazardous to your health"warning labels on advertisements.

Beijing's first anti-smoking law will take effect Oct. 17, 1995. Smoking outside designated areas in all public places will be banned.

Shanghai was the first Chinese city to prohibit smoking in all public places. The ban is routinely ignored.

CHINA: 147-YEAR-OLD MAN DIES

Shanghai, China. March 30, 1995. Reuter reports that Gong Laifa, "China's King of Longevity" died of acute hepatitis today. He was 147 years old. According to officials, Gong was born in 1848 during the reign of the Manchu Qing dynasty Emperor Xuanzong

The 4'7" Gong was from the Yilao minority, was illiterate and lived in the remote countryside. He had never touched liquor or tobacco, and had attributed his long life to clean living, hard work, and the benefits of bachelorhood.

CHINA: SMUGGLING FORCES TARIFF CUT

March 1, 1995. In its efforts to control a burgeoning smuggling trade, China today cut tariffs on imported cigarettes to 80 percent from around 120 percent

Chinese officials estimate 10-20 billion cigarettes were smuggled into the country in 1994. Officials seized 4 billion. In addition to the smuggling problem, there are many factories in China which turn out a huge number of "fake" cigarettes--copies of well-liked brands such as 555 and Marlboro.

PEOPLE

OBIT: EDWARD L. BERNAYS, 103; "Father of PR"

Cambridge, MA. March 9, 1995. Edward L. Bernays, the oft-dubbed "Father of Public Relations," died today at the age of 103.

Bernays, the nephew of Sigmund Freud, was a seminal innovator in what he termed the "social science" of influencing public opinion and behavior.

At a time when public relations concentrated on influencing government policy, Bernays took his clients' messages directly to the people, and referred to his work by the famous phrase, "the engineering of consent." He pioneered the use by celebrities, doctors and other "experts" to endorse products, and made careful use of surveys and opinion polls.

He promoted World War I, the NAACP and the ACLU. He also is credited with forging the acceptance of women smoking in the twenties, though in the early sixties, when he learned cigarettes caused lung cancer, he became a fierce anti-smoking opponent, and in 1970 fought to have tobacco ads removed from radio and TV.

Bernays' cigarette client was the American Tobacco Co. Some of his most famous stunts were created while hawking their flagship brand, Lucky Strike.

When research showed women felt the Lucky Strike pack's green colors clashed with their clothing (the fashion then was red), he held chic events featuring the color green--green fashion shows, green balls, green window displays--

and actually succeeded in making green fashionable again.

From PR Watch:

"On behalf of Lucky Strike, Bernays sought the advice of the psychoanalyst A.A. Brill. Brill's message to Bernays and the American Tobacco company was "freedom": sell cigarettes to women as a symbol of liberation.

"Following this advice, Bernays staged a legendary publicity event that is still taught as an example in PR schools. He hired beautiful fashion models to march in New York's prominent Easter parade, each waving a lit cigarette and wearing a banner proclaiming it a "torch of liberty." Bernays made sure that publicity photos of his smoking models appeared world-wide."

Bernays did not care for modern-day public relations, and In 1990 in his home state of Massachusetts, he lobbied (unsuccessfully) to require public relations practitioners be licensed. He once said that those "who understand the mental processes and social patterns of the masses ... pull the wires which control the public mind."

Ann Douglas wrote in "Terrible Honesty: Mongrel Manhattan in the 1920s," that "Edward Bernays . . . orchestrated the commercialization of a culture..."

An Austrian immigrant, Bernays worked in Wilson's War Office, where he learned his trade propagandizing for World War I.

Among the clients he turned down: Adolf Hitler, Francisco Franco and Nicaragua's Anastasio Somoza. Goebbels kept a copy of Bernays' book, "Crystalising Public Opinion" (1923) on his desk.

Bernays also wrote, "Biography of an Idea: Memoirs of Public Relations Counsel Edward L. Bernays," and "The Later Years: Public Relations Insights 1956-

1986," and "Propaganda."

From "Propaganda":

"The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in a democratic society. . . Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country."

More of the millieu, from PR WATCH:

"Edward Bernays, Ivy Lee and John Hill today are legends within the PR profession. Bernays in particular is often referred to as the "father of PR." All three worked on PR for tobacco, pioneering techniques that today remain the PR industry's stock in trade: third party advocacy, subliminal message reinforcement, junk science, phony front groups, advocacy advertising, and buying favorable news reporting with advertising dollars.

"During the Roaring Twenties, the American Tobacco Company turned to PR to develop a vast new market-American women--for sales of Lucky Strike cigarettes. The company first hired adman A.D. Lasker, whose advertisements featured female opera stars, their soprano voices somehow unaffected by their love for Luckies.

"Lasker portrayed Lucky Strikes as a healthy cigarette by concocting surveys using spurious data to claim that doctors preferred Luckies as the 'less irritating' brand. However, his most effective campaign urged women to 'Reach for a Lucky instead of a sweet' The campaign increased Lucky sales threefold in just twelve months."

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�1996 Gene Borio, Tobacco BBS (212-982-4645). WebPage: http://www.tobacco.org).Original Tobacco BBS material may be reprinted in any non-commercial venue if accompanied by this credit

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