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TOBACCO NEWS January, 1996
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- FEDERAL
- LOCAL
- INTERNATIONAL
- BUSINESS
- Multinational Conglomerate Hanson Splits in 4
- RJR: Odd Bedfellows Urging Divorce
- Citicorp Hires Ex-PM Exec
- LAWSUITS
- Wigand Speaks--on CBS!
- CBS Depositions Sought in Wigand Case
- CBS' Wallace, Safer subpoenaed
- B&W Smears Wigand in 500pp, May Take Action Against WSJ; CBS to Air Interview
- Wigand Sues B&W; Publicist Scanlon Subpoenaed
- SOCIETY
- THEATRE: The Cigarette Papers
- OBIT: Mike Synar, 45, Congressional Tobacco Foe
- OBIT: Okla Jones II, 50, Castano Class Action Case Judge
- NEW WEB SITES
- THE FUNNY PAGES --Queen Nicotina Reigns
Wigand Updates:
FEDERAL
Headliners:
1/6/96. The FTC is looking at new ways to list tar and nicotine contents on cigarette ads. The new ways might reflect the range of nicotine levels actually inhaled, which are dependent on an individual's smoking patterns. The FTC has no authority to regulate listings on cigarette packs themselves.
End of the FDA comment period
On the last day of the comment period, the five major tobacco companies (Philip Morris, RJR Nabisco Holdings Corp, BAT, Loews Corp and Brooke Group) filed a 2,000 page complaint, backed up with 45,000 pages of documents, against the proposed rules, claiming the FDA was engaged in an "illegal power grab" and that:
- The FDA does not have the authority from Congress to regulate tobacco
- The rules violate the First Amendment and "would unconstitutionally burden our [the tobacco companies] right to advertise."
- The FDA failed to disclose all the documents it relied upon in making its decision--including secret tobacco company files, along with data from tobacco control advocates.
- The classification of a drug should be a manufacturer's advertising and public statements, not how a consumer uses it. This would rule out using a manufacturer's internal research or memos.
- Nicotine is not an addicting drug like cocaine or heroin
- The industry does not manipulate nicotine or use other compounds to increase the nicotine available to smokers.
- The FDA did not disclose the rules' true economic impact. The cost of implementing the rules would be far higher than the FDA's estimate--$748 million to more than $1 billion in one-time costs (mostly employee training, removal of promotional items, and package re-design), and $1.25 billion annually thereafter (mostly due to loss of advertising and promotional events), according to a study by the Barents Group, a subsidiary of KPMG Peat Marwick. According to Philip Morris spokesperson Steven Parrish, the rules would financially damage "a race car driver in South Carolina who participates in brand-sponsored events...an artist in California who designs packaging, a New Hampshire paper mill that provides point of sale materials and an Illinois advertising agency."
FDA Brief by Tobacco Companies Brown & Williamson's Summary of Comments, Jan. 2, 1996 All 2,000 pages of it.
In other developments:
- The Freedom to Advertise Coalition, made up of advertising and publishing trade organizations, filed a complaint that the FDA did not have authority to regulate tobacco.
- 32 Senators--including Republican presidential hopefuls Bob Dole and Phil Gramm, as well as Minority Leader Tom Daschle (D., S.D.)--urged the FDA to abandon the proposed rules on First Amendment grounds.
- The Lesko Brothers, 14 and 11, stated to how easy it was for them to buy cigarettes. (Lesko Home Page: http://www.cquest.com/LeskoBrothers.html)
- The FDA received 570,000 letters of comment, though so many were form letters there were only--but still a record--57,000 individual comments, to which the FDA must respond.
- A finalized rule--and a record of how the FDA went about the rule-making period in a reasonable fashion--is not expected until November.
- Lawsuits filed by tobacco, advertising and retail interests could delay implementation of any rule for years.
Clinton State of the Union Addresses Tobacco
His words were:
I say to those who make and market cigarettes, every year a million children take up smoking, even though it's against the law. Three hundred thousand of them will have their lives shortened as a result. Our administration has taken steps to stop the massive marketing campaigns that appeal to our children. We are simply saying: Market your products to adults, if you wish, but draw the line on children.
The line was followed by applause from many members of Congress.
LOCAL
Headlineers:
ARLINGTON HEIGHTS, IL. 1/2/95. Possession of tobacco products by minors has been banned by the Board of Trustees. Fines range from $5 to $75. The ban goes into effect immediately.
WINSTON-SALEM, NC. 1/6/96: The city's leading employer is no longer RJR Nabisco, but a hospital/medical center (Baptist Hospital and Bowman Gray School of Medicine). Bowman Gray was a noted former CEO of RJ Reynolds Tobacco Co.


SUPREME COURT: Smoker Hiring Ban Upheld
Washington, DC. January 8, 1996 The US Supreme Court today let stand the city of North Miami's ban on hiring smokers.
The decision, lets stand a Florida Supreme Court decision and allows other state agencies to deny jobs based on tobacco-use, but has no immediate national ramifications. Employers in Florida's private sector may already refuse to hire tobacco users.
The case was brought before the court on behalf of Arlene Kurtz, a smoker who in applying for a clerk-typist job with the city (pop: 50,000), refused to sign a newly-required statement averring she had not smoked or used any tobacco products during the previous 12 months. Her interview was terminated, and she was not hired.
The 1990 policy, applicable to new hirees only, was adopted to save money on medical coverage, due to smokers' costlier medical bills, according to the city. Ms. Kurtz, 52, had been smoking for 30 years, and challenged the policy as embodying constitutional violations of privacy and due process. She won her case in an appellate court, but lost when it was brought before the Florida Supreme court in 1995.
The justices in that case ruled 5-2 that Kurtz had no expectation of privacy as a smoker--smokers are constantly asked to disclose their habit, as in hotels and restaurants. Furthermore, the court said, the city's interest in reducing medical costs was a valid reason for the rule..
Ms. Kurtz had said the state court's decision would allow government to open up virtually every aspect of a person's private life to intrusive governmental regulation in the supposed interest of cost-cutting.
Chief Justice William Rehnquist, and Justices Antonin Scalia and Clarence Thomas are the only smokers on the US Supreme Court.
INTERNATIONAL
Headliners:INDIA 1/6/96: Tobacco giant ITC has been ordered to pay 7.99 billion rupees ($235 million) in excise taxes owed from 1983-1987, when, the government alleged, ITC took part in a conspiracy with retailers to charge higher prices than those marked on the packages. ITC, whose stock dipped on the ruling, will file a challenge. ITC may ask 31% shareholder BAT Industries or other financial institutions for financing to pay the charge.


ARGENTINA: 7% Cig Tax Due for Feb. 1
Buenos Aires, Argentina. January 9, 1996. Contrary to the expectations of tobacco manufacturers, President Carlos Menem signed into law a 7% tax on cigarettes, according to Stephen Brown of Reuters.
When Congress had introduced the tax bill--expected to raise $200 million for social programs--Menem had said he'd made a "definitive, terminal, absolute and complete decision" against a tax.
The industry here is furious at Menem's failure to veto the bill. It claims to be facing intense pressure from a 12% smuggling rate, which it says costs the government $200 million in lost revenues--the very amount it is hoped the new tax will raise. The industry claims the tax would force them to raise prices 10-14%, which would increase smuggling.
Brown writes that since 1980, the Argentine tobacco industry has coalesced into only 2 competitors, both units of multinational giants:
IRELAND: Clean Air in Eire Pubs?
January 8, 1996. The new year ushered in expanded no-smoking rules in Ireland. Smoking is now banned in taxis, pool halls, bowling alleys and hairdressers; 2/3 of airplanes, trains and ferries must be smoke-free.
Now junior Health Minister Brian O'Shea says talks have begun to provide non-smoking areas in Ireland's notoriously smoky pubs.
O'Shea pointed out that 73% of the population does not smoke. "People should be able to drop into their local without having to spend the evening inhaling other people's tobacco smoke," he said.
BUSINESS
Multinational Conglomerate Hanson Splits in 4
Once Imperial is on its own, analysts feel, it would become a prime takeover target. Hanson chief executive Derek Bonham will be the company's chairman, at least in its early stages, as he is considered the most likely successor to Lord Hanson, who will retire in 1997.
The energy, chemicals, and building materials and equipment arms would also form separate companies.
While the multinational conglomerate has been seen as unwieldy and a low-growth business, Hanson's spin-off of US Industries last year was wildly successful. The demerger is extremely complex, and would require a range of approvals from shareholders and from various agencies in several countries.
Odd Bedfellows Urging RJR Divorce
- The Securities and Exchange Commission on Dec.15, 1995 approved the ICCR's request for a vote on the matter at RJR's April shareholder's meeting. The ICCR cited tobacco control group INFACT's campaign to boycott Nabisco goods and to force the company to pay health care costs arising from tobacco-related diseases.
- A shareholder vote on LeBow & Icahn's consent solicitation has been scheduled for Jan. 12; the solicitation, if approved, would allow shareholders to vote on the resolution to immediately split the units at a specially convened meeting.
Citicorp Hires Ex-PM Exec
Citicorp CEO and chairman John Reed is himself an outside director of Philip Morris, according to Reuters.
When asked about the perjury allegations, a spokesperson said,: "The bank is aware and has confidence in Mr. Campbell's integrity."
Campbell is considered a brilliant marketer; when his position is confirmed by the Citicorp board, he will become an executive vice president.
SOCIETY
Headliners:
1/3/96: LAWSUITS: Flight Attendants' Class Action Status Certified
In the airline workers' second-hand smoke case, flight attendants' class-action certification was upheld by the District Court of Appeals in Florida for the third district. The ruling was expected. Two of the three judges had sat on the original decision to grant certification. Philip Morris said it will ask the panel to rehear the case. If the same decision prevails, the tobacco companies will likely appeal the decision to an 11-judge appellate court.

Wigand Speaks--on CBS!
January 26, 1996. Former tobacco executive Dr. Jeffrey Wigand, whose excised "60 Minutes" interview sparked a major journalistic debate and a lawsuit from his employer Brown & Williamson, finally spoke today, when CBS allowed the interview to be broadcast on the CBS Evening News. His words were as blistering as promised. See Wigand's November 29, 1995 Deposition in Miss. Medicaid case.
CBS Depositions Sought in Wigand Case
Jefferson County Circuit Court Judge Steven Mershon granted B&W permission to seek a commission from New York State Supreme Court to take the depositions.
In addition to the reporters, segment producer Lowell Bergmann, executive producer Don Hewitt, former CBS News President Eric Ober, and CBS attorneys Jonathan Sternberg and Ellen Oran Kaden could be called.
CBS will probably fight the action.
In other Wigand news:
CBS' Wallace, Safer subpoenaed
The depositions are scheduled to begin February 9, and B&W said it will serve the subpoenas "immediately" on Mike Wallace, Morley Safer, 60 Minutes producers Lowell Bergmann and Don Hewitt, CBS President Peter Lund, former CBS News President Eric Ober, and CBS attorneys Jonathan Sternberg and Ellen Oran Kaden.
"This is not a First Amendment issue -- the First Amendment protects the right to report news, but it does not protect improper activities to gather the news," said B&W attorney Tom Bezanson.
Wigand Update: B&W Smears Wigand in 500pp, May Take Action Against WSJ; CBS to Air Interview
Messengers Catch Fire, Too.New York, NY. Feb. 1, 1996. Tobacco Company Brown & Williamson struck back hard at both Jeffrey Wigand--and those who carried his message.
The company not only sent the Wall St. Journal and the Louisville Courier-Journal a 500 page dossier devoted to Wigand's' possible peccadillos, but announced it would ask a Mississippi judge to impose sanctions against the WSJ for printing parts of Wigand's sealed deposition.
Early in this dizzying Wigand Week, B&W subpoenaed CBS employees connected with the network's August interview, which had led to the deposition the WSJ published. To round the week out, CBS--feeling WSJ's publication of the same charges freed them from culpability--will finally broadcast that segment, plus new material featuring Florida's Gov. Lawton Chiles and Attorney General Bob Butterworth, on "60 Minutes" this Sunday.
THE DOSSIER ON WIGAND
B&W outside counsel Jerome C. Katz told the WSJ that while much of the material in the dossier may not be admissible as evidence in a court of law, but "all of it is admissible in the court of public opinion. . . What it adds up to is that Jeffrey Wigand is a pathological liar. His entire life, as best we can tell, has been a tissue of lies."
The dossier is the result of investigations by top lawyers, a private detective firm, and a scientific consultant. The B&W team combed myriad public and private records, and tried to determine signs of plagiarism in Wigand's doctoral thesis.
The WSJ investigation of the charges were painstakingly presented in an article that detailed histories of minor civil actions, along with historical timelines of relatively innocuous organizations such as the US Judo Association and the YMCA--which surely never dreamed their internal workings would ever be so carefully pored over.
B&W investigators "sifted through Mr. Wigand's phone credit-card records," "made extensive use of the videotape of a job-interview rehearsal," and "went looking for Mr. Wigand's name in the files of the Jefferson County District Court in Mr. Wigand's Louisville hometown"
THE CHARGES
Subheadings in the document, The Misconduct of Jeffrey S. Wigand Available in the Public Record, include:
- Wigand's Lies About His Residence
- Wigand's Lies Under Oath
- Lies on Wigand's Resumes
- Other Lies By Wigand.
- Wigand Beat His Wife
- Possible False or Fraudulent Claims
According to the Wall St. Journal, which did its own investigation, the charges are mostly overblown, and sometimes even "demonstrably untrue."
The most serious charge stems from a complaint of spousal abuse his wife filed on Oct. 23, 1993. The Journal said the judge did not rule on the offense, and the charge was dismissed after Wigand attended anger-control and psychotherapy sessions.
A 1994 shoplifting charge stems from an incident in which Wigand claims he left a liquor store with a bottle of Wild Turkey to get money to pay for it from his car.
While the dossier claims Wigand pled guilty, serving 20 hours of volunteer work as a penalty, the WSJ claims the judge in the case said the charge was dismissed after Wigand's work.
Illustrative of the mind-numbing triviality of many of the charges, under the "Fraudulent Claims" subhead is a $95.20 cleaning bill Wigand sent an airline when it returned his lost luggage soaking wet. 17 other claims concerned other minor consumer goods like sunglasses, golf clubs and a fountain pen. While none of the claims were proved by B&W to be fraudulent, Mr. Katz told the WSJ the large number of complaints is indicative of duplicity.
THE LESSONS
Wigand's attorney Richard Scruggs called the report a "smear campaign" against a whistleblower. "If you subjected any citizen of the United States to this sort of scrutiny, they would probably fare far worse than Jeff Wigand has," he said.
The WSJ article said, "whatever [B&W's tactics] turn out to prove about Mr. Wigand, they provide sometimes-chilling insight into how much a company can find out about a former employee -- and the lengths it may go to discredit a critic."
A further lesson here seems to be that questionably-founded charges can be as accessible as a 4-word sound-bite ("Wigand Beat His Wife"), but the refutation, while necessary, can require an unusually high capacity for investigative zeal on the part of whole-truth-seekers, matched by a similar capacity for tedium on the part of observers.
The dossier also provides considerable distraction. The Journal's resources and readers have been turned from questions of conspiracy to defraud the public by a major tobacco firm, to questions along the lines of whether the United States Judo Association had a medical committee in 1966.
And one final lesson is surely learned by other industry personnel who may be considering the whistleblower option. That lesson, loud and clear, is that unless you've been an angel all your life--don't.
B&W'S INVESTIGATORS:
- Chadbourne & Parke, a top NY law firm
- King & Spalding, a top Atlanta law firm
- John Scanlon, a top New York public-relations adviser
- The Investigative Group Inc., a top Washington (DC) detective firm. Former NYC police commissioner Raymond Kelly runs its NY office)
Wigand Update: Wigand Sues B&W; publicist Scanlon subpoenaed
There has been no invasion of privacy, according to a spokesperson. This is not a public-relations war. We are just trying to achieve balance.
Meanwhile, New York PR maven John Scanlon, who released B&W's 500 page dossier on Wigand, has been subpoenaed by a Washington grand jury investigating whether B&W is trying to intimidate a federal witness. Scanlon said he would cooperate fully, but that It should be clear that my professional engagement on behalf of a major law firm [New York's Chadbourne & Parke] and its client, Brown & Williamson, involved arranging meetings for journalists with the law firm to review documents and receive materials for possible stories.
It is hard to understand how openly offering to disseminate materials to interested journalists could possibly be viewed as a violations of law, he said.
THEATRE: The Cigarette Papers
SPORTS Headliner:
DARTS: Dec. 29, 1995. 30-year-old Dutchman Roland Scholten won the British Open Darts in London today, winning $3,000. I was not too confident because I have not been feeling well for a couple of days, he said. I'm a heavy smoker but I didn't touch a cigarette all day and didn't have a drink until it was all over.
OBIT: Mike Synar, 45, Congressional Tobacco Foe
In his statement of condolence, President Clinton wrote that the 8-term (1979-1994) Oklahoma congressman "did not always do what was popular, but he always did what he thought was right," and that he was "a brave and unflinching public servant who in tough political times remained true to his principles."
House Democratic Leader Richard Gephardt said Synar was "one of the finest people, one of the finest public servants," he had ever known. . . What is so stunning about Mike's passing is that he had so much youth and energy in him, and so much more to do for himself and his country. Certainly, he accomplished more in his lifetime than many can hope to achieve in twice as many years."
Synar battled the tobacco industry by:
He also angered the NRA by seeking to ban assault rifles.
He said at a 1994 conference that not once had a constituent personally thanked him for his tobacco work.
He said in a 1992 interview, "I really believe in what I am doing, and I take high-risk propositions. . . Do I make people mad? Absolutely. Has it caused me a tremendous amount of problems? Absolutely. . . But that's what you have to do to make a difference."
Synar lost his seat in 1994 in a Democratic primary. He won the Profile in Courage Award from the John F. Kennedy Library in 1995.
He was diagnosed with the tumor (glioblastoma multiforme) last summer.
OBIT: Okla Jones II, 50, Castano Class Action Case Judge
The tobacco industry is now appealing Jones' decision to the Fifth U.S. Circuit Court of Appeals.
Judge Morey Sear, chief judge for the Eastern Federal Judicial District of Louisiana, said he would call a meeting of New Orleans federal judges to determine how to replace Jones. He said that "Nothing's going to happen to delay the case."
Jones certified the class action in February. In March he suffered an infection which severely damaged his immune system, and from which he never fully recovered.
New Web Sites
THE FUNNY PAGES
From News Of The Weird By Chuck Shepherd, January, 1996.Laina Baumann, 17, was crowned the 60th queen of the Charles County Fair in LaPlata, Md., in September. Because the county has historically been a leading tobacco producer, the pageant winner has long been referred to as Queen Nicotina.
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