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• Destroyed documents: uncovering the science that Imperial Tobacco Canada sought to conceal  

Background: In 1992, British American Tobacco had its Canadian affiliate, Imperial Tobacco Canada, destroy internal research documents that could expose the company to liability or embarrassment. Sixty of these destroyed documents were subsequently uncovered in British American Tobacco's files. . . .

Results: Imperial Tobacco destroyed documents that included evidence from scientific reviews prepared by British American Tobacco's researchers, as well as 47 origin al research studies, 35 of which examined the biological activity and carcinogenicity of tobacco smoke. The documents also describe British American Tobacco research on cigarette modifications and toxic emissions, including the ways in which consumers adapted their smoking behaviour in response to these modifications. The documents also depict a comprehensive research program on the pharmacology of nicotine and the central role of nicotine in smoking behaviour. British American Tobacco scientists noted that "... the present scale of the tobacco industry is largely dependent on the intensity and nature of the pharmacological action of nicotine," and that "... should nicotine become less attractive to smokers, the future of the tobacco industry would become less secure."

Interpretation: The scientific evidence contained in the documents destroyed by Imperial Tobacco demonstrates that British American Tobacco had collected evidence that cigarette smoke was carcinogenic and addictive. The evidence that Imperial Tobacco sought to destroy had important implications for government regulation of tobacco.

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• Government of Ontario lawsuit is "hypocrisy", says Imperial Tobacco Canada 

Imperial Tobacco Canada is stunned that a province in which close to 50 per cent of tobacco products purchased are illegal is targeting the legal industry while continuing to turn a blind eye to illegal tobacco sales.

"We find it unbelievable that the Government of Ontario - a senior partner in the tobacco industry for more than 50 years - would use taxpayers' dollars to sue legal tobacco companies rather than invest in eliminating the contraband market which, today, accounts for almost 50 percent of the cigarettes purchased in Ontario," said Donald McCarty, Imperial Tobacco Canada's Vice President of Law.

Recent studies have shown that the huge increase in illegal cigarettes in Ontario seems to have ended the thirty year decline in smoking rates, and signal an increase in the amount of youth smoking illegal cigarettes.

"Why isn't the Ontario government going after the illegal manufacturers with the same zeal that it goes after the legal industry?" added Mr. McCarty.

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We find it unbelievable that the Government of Ontario - a senior partner in the tobacco industry for more than 50 years - would use taxpayers' dollars to sue legal tobacco companies rather than invest in eliminating the contraband market
Imperial Tobacco Canada, on Ontario's lawsuit.

• BLIZZARD: Smoke 'em if you swiped 'em 

Canada's illegal cigarette trade is soaring out of control -- and governments at all levels are reluctant to do anything about it. . . .

With cigarettes selling illegally for as little as $10 a carton, it's mostly kids who are buying.

"They're recruiting youth to transport the cigarettes from the Akwesasne Mohawk territory to smoke shacks in other aboriginal communities," Harvey said.

In one case, a 17 year-old girl was making $6,000 a week doing that and used the money to finance her drug addiction.

"The general public sees this as sticking it to the tax man and that it's their right to buy cigarettes at low prices (because) the government is over-taxing them," he said. "They are really financing organized crime groups, who are using this money to produce drugs such as Ectasy and meth labs across Canada."

I don't smoke. I don't like people to smoke around me. But if people are going to buy a legal product, they should do so legally. This week, the UN said Canada is a "primary source" of Ecstasy and methamphetamines.

As long as governments refuse to deal with the illicit tobacco trade, we'll continue to be the party drug dealer of choice to the world.

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• Imperial Tobacco Canada to governments: Do your job and stop illegal tobacco sales 

Imperial Tobacco Canada today stated that Canada has lost its leadership in tobacco control because the provincial and federal governments have, for too long, ignored the growing crisis of illegal tobacco sales.

In a speech delivered today at the Economic Club of Canada, Benjamin J. Kemball, President and Chief Executive Officer of Imperial Tobacco Canada said, "Despite supposedly world renowned tobacco control policies, over one third of the Canadian tobacco industry has been handed over to an illegal, unregulated, un-enforced and un-taxed free for all and tobacco control is collapsing around us."

Imperial Tobacco Canada believes that something should and can be done now. "Let's get someone in charge - a senior government official would be a good start. Let's get the laws enforced. Let's control the supply of raw material and machinery. Let's get taxes applied, including perhaps a revenue sharing agreement on a First Nations tax, equivalent to the Provincial Tobacco Tax," said Mr. Kemball. "This would facilitate tobacco control across Canada, including the reserves that could benefit from the proceeds of this tax. Let's bring everyone involved to the table, from the health authorities to the First Nation communities."

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• Smokes: First you'll feel green, and then you'll die 

In a full-page advertisement inside Toronto Life magazine, du Maurier Canada boasts of its new "greener" cigarette packages, which, at this rate, may soon be safer to smoke than the products they contain.

Parent company Imperial Tobacco has replaced foil wrapping with paper and uses external cardboard packaging that "meets standards supporting sustainable forest management,' according to the ad.

"Small steps make the difference," it reads.

Gideon Forman laughed when asked about it. Later, when he stopped laughing, the spokesperson for the Canadian Association of Physicians for the Environment said:

"Is it green washing? Yes. . . .

Imperial Tobacco Canada spokesperson Eric Gagnon responded, "Our product is going to be in the waste or the dumpster, so what we try to do in terms of ... corporate social responsibility is do it in a good manner." . . .

Cynthia Callard, executive director of Physicians for a Smoke Free Canada, had already seen du Maurier's green plans advertised on the plastic wrapping of older cigarette boxes.

"I had to wonder," she said, "why isn't this space being used to give consumers more information on their health?"

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• Ontario's Healthcare Cost Recovery Act Misses the Mark 

Imperial Tobacco Canada stated today that Ontario's lawmakers should take a stand against the rampant sales of illegal tobacco in Ontario rather than adopting politically expedient legislation such as the Tobacco Damages and Health Care Costs Recovery Act when they return to Queen's Park this week.

"The Government of Ontario cannot claim that this legislation has anything to do with public health when they are ignoring half the market. Illegal tobacco accounts for close to 50 per cent of tobacco purchases in Ontario - the most in Canada," said Benjamin Kemball, president and CEO of Imperial Tobacco Canada. "It is hypocritical that the Government of Ontario turns around and sues a legal industry that they oversee and license while it allows an illegal tobacco industry to flourish."

The illegal tobacco trade is robbing Canadians of government revenue, undermining tobacco control initiatives, exposing children to cheap cigarettes and allowing organized crime to cash in all the way to the bank. . . .

"This legislation is simply a cash grab. If the government is looking for money, it would be far better to deal with the illegal market than enter into years of legal wrangling that will not result in the monetary windfall the government is hoping for," said Mr. Kemball. "It is time for a government to take a stand. We expect that the Government of Ontario will include the illegal manufacturers in any lawsuit it may bring forward."

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• KEMBALL: What’s stopping cigarette crackdown?  

It is a rare thing when the tobacco control community and the tobacco industry are on the same side of an issue. When it does happen, governments should take notice. This illegal trade not only robs Canadians of government revenue, it undermines tobacco control initiatives, exposing children to cheap cigarettes and allowing organized crime to cash in.

The numbers are alarming: 13 billion illegal cigarettes were sold in Canada in 2008; nearly 50% of all cigarettes purchased in Ontario are illegal; 40% of cigarettes purchased in Quebec are illegal; Organized crime is making hundreds of millions of dollars in profits.

There are social costs as well. Illegal cigarettes are falling into the hands of young people. . . .

We believe this trade must be stopped and we have offered our full resources to government to help in this fight. In doing so, we make a simple plea to governments and the public at large: In these times of economic crisis, if you do not like the messenger, at least listen to the message.

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• KEMBALL: Illegal tobacco costs billions in lost taxes 

Yet, shockingly billions of dollars in unpaid tobacco taxes are lost every year from the sale of illegal cigarettes. And it is only getting worse.

In 2008, the federal and provincial governments together lost approximately $2.4 billion in taxes and that number is growing as the sale of illegal cigarettes grows. The federal government's share was $1.1 billion. . . .

Is Canada truly in a position to turn its back on billions of dollars in uncollected tax revenues? In our view, the federal government needs to act. . . .

In a recent news release, the Canadian Coalition for Action on Tobacco urged the same thing. Regarding the federal government's losses, Garfield Mahood, the executive director of the Non-Smokers' Rights Association stated, "In this time of economic recession, a time when governments are desperate for revenue, it is critical that the government recover over a billion dollars in unpaid tobacco taxes."

It is a rare thing when the tobacco control community and the tobacco industry are on the same side of an issue. When it does happen, governments should take notice.

When it comes to the illegal tobacco trade in Canada, this is one of those times. This illegal trade is robbing Canadians of government revenue, undermining tobacco control initiatives, exposing children to cheap cigarettes and allowing organized crime to cash in all the way to the bank. . . .

We believe this trade must be stopped and we have offered our full resources to government to help in this fight. In doing so, we make a simple plea to governments and the public at large: in these times of economic crisis, if you do not like the messenger, at least listen to the message.

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• Imperial Tobacco Canada responds to Prime Minister Harper 

In response to the Prime Minister's call to crack down on the sale of cigarillos and flavoured cigarettes to reduce their attractiveness to youth, Imperial Tobacco Canada would like to ask the Right Honourable Stephen Harper to include in this crack down the rampant illegal tobacco market that currently plagues Canada, targets Canada's youth and undermines all of Canada's tobacco control policies.

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The facts and figures are staggering: . . .

These findings seem to validate some of Health Canada's conclusions from the recent Canadian Tobacco Use Monitoring Survey, in particular the stabilization of tobacco incidence among minors and, indeed the general population, after many years of decline.

Inaction on illegal tobacco sales gives minors unrestricted access to cigarettes at pocket money prices. And, criminals who traffic illegal tobacco do not ask for proof of age.

Imperial Tobacco Canada does not produce or sell cigarillos or flavored cigarettes, except mentholated products. The Company does not target minors in any of its marketing practices.

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• Smuggling fine was a bargain 

A former executive with the holding company that once owned Imperial Tobacco says the agreement reached in July to settle federal and provincial claims on smuggling was little more than "chump change" compared with what the company earned during the smuggling era in the late 1980s and early 1990s.

Paul Finlayson, who for 16 years was an executive at Imasco, which once owned Imperial, said the government basically caved in to tobacco interests when it made what he claimed was a token settlement with Imperial and Rothmans Inc.

Finlayson said Imperial earned $600 million to $700 million a year during the smuggling era when the company "lubricated" a system that defrauded Canadian governments of billions of dollars in unpaid taxes. . . .

Now retired, he said in an interview that the $600-million settlement with Imperial represented a small fraction of the profits Imperial earned during that period and an even smaller fraction of the taxes and duties governments lost to smuggling.

The Canada Revenue Agency refused to comment on Finlayson's statements. . . .

Finlayson, who managed operational systems at Imasco, said he prepared the operational plans for sending Imperial cigarettes tax-free into the United States, where they were later sold to smugglers who brought them back into Canada through the Akwesasne Six Nations reserve near Cornwall, Ont. . . .

"The RCMP knows all about this. They could have walked in and just handcuffed everybody at Imperial," he said, adding that the government did "not have the guts of a field mouse to go after the executives of the company." He admitted that this group could have included him.

He said he was speaking out because he believes Imperial crossed the line. "The envelope was being pushed a little bit beyond what I could tolerate it being pushed." He said he left Imasco during this period.

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The RCMP knows all about this. They could have walked in and just handcuffed everybody at Imperial . . . . [The Canadian government didn't] have the guts of a field mouse to go after the executives. . . . [T]hey had Imperial cold, on the ground screaming. (But) they reached down and gave it a hand and pulled them up and said, 'Ah, give us 50 million bucks and we'll forgive and forget.'
Paul Finlayson, who for 16 years was an executive at Imasco, which once owned Imperial Tobacco Canada. Finlayson said he developed the company's 1994 smuggling/tax evasion model.

• Executives revealed how cigarettes got into Canada 

The investigation into Canada's three major tobacco companies for aiding and abetting smuggling in the late 1980s and early 1990s began eight years ago, after The Gazette ran a series of articles alleging the companies were the main black market suppliers.

Central to The Gazette stories were a tobacco smuggler, who has since committed suicide, and two former tobacco sales executives who oversaw a scheme to funnel billions of Canadian brand cigarettes to the black market.

Les Thompson, an RJR Macdonald sales executive, described in interviews in hotel rooms in Ontario and Quebec how RJR Macdonald (now called JTI-Macdonald) established separate offices and companies in Toronto and the United States to oversee the funnelling of its brands, like Export A, to smugglers. . . .

Another key witness is former RJR Macdonald vice-president Stan Smith, who was Thompson's boss. Smith pleaded guilty in Ontario in 2006 and was sentenced to eight months of house arrest. He had been co-operating with police since 2000. . . .

The articles also focused on the role played by Imperial Tobacco and Rothmans. Both companies sent huge shipments of Canadian brand cigarettes into the U.S. under the pretext they were supplying the duty-free market. In fact, the cigarettes were simply sold back into Canada. . . .

Smugglers told The Gazette that company sales representatives regularly showed up at the smuggling spots and warehouses near Cornwall and Buffalo, N.Y., to take inventory.

After The Gazette articles, in 1998 and 2000, Imperial and Rothmans both denied any role in the smuggling.

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• RCMP Closes Book on Historic Tobacco Investigations 

The Royal Canadian Mounted Police (RCMP) announced it has concluded a long-running file after two of Canada's largest tobacco companies entered guilty pleas this morning in response to indictable offences under Section 240(1)(a) of the Excise Act.

The guilty pleas, from Imperial Tobacco Canada Limited (ITCL) and Rothmans Benson & Hedges (RBH), are the culmination of more than eight years of investigative work by RCMP Customs and Excise sections in Ontario and Québec. As part of agreed statements of fact, the two companies admitted to "aiding persons to sell and be in possession of tobacco manufactured in Canada that was not packed and was not stamped in conformity with the Excise Act and its amendments and Ministerial regulations." . . .

The material time of the charges involved illegal activity between the years of 1989-1994. Then, the contraband tobacco market in Canada involved product being produced in Canada, and shipped to locations in the US near the Canada/US border. From there, it was distributed to smugglers or black market distributors who brought it back into Canada for further illegal distribution.

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As part of agreed statements of fact, the two companies admitted to 'aiding persons to sell and be in possession of tobacco manufactured in Canada that was not packed and was not stamped in conformity with the Excise Act and its amendments and Ministerial regulations.'
RCMP, on the guilty pleas of Imperial Tobacco Canada and Rothmans Benson & Hedges.

• Tobacco firms cough up 

Imperial Tobacco Canada and Rothmans Inc., Canada's two largest tobacco manufacturers, have pleaded guilty to aiding and abetting the smuggling of cigarettes in the 1980s and 1990s and agreed to pay fines and penalties totalling more than $1.1 billion in an unprecedented settlement of criminal and civil cases.

The amount represents the "largest criminal fines and civil settlements in Canadian history," federal Revenue Minister Gordon O'Connor said at a news conference in Lévis yesterday. The settlement ensures the companies do not benefit financially from the smuggling, he added.

"I believe we are sending some strong and clear messages. Firstly, that such activity will not be tolerated. And secondly, that no company is above the law."

The settlements "close a significant chapter in contraband tobacco history," RCMP Assistant Commissioner Mike Cabana said. . . .

In addition to the fines, Imperial and Rothmans will each pay $50 million to establish a new government Contraband Tobacco Enforcement Strategy. The payments are due by Dec. 15.

To settle civil liability, Imperial is to pay the federal government and the provinces a percentage of its annual net sales revenue over the next 15 years, to a maximum of $350 million. Rothmans is to pay $200 million over the next 10 years, at a rate of $20 million per year. The first payment is to be made on Dec. 31, 2009. . . .

Just as the tobacco companies lied for years about the deadly health effects of smoking, Damphousse noted, they also lied originally about their involvement in smuggling.

"They have made lying a regular corporate practice," he said.

Cheap contraband cigarettes helped increased smoking rates among young people, damaging the health of thousands of Canadians, Damphousse added.

It was regrettable the RCMP did not charge any of the company executives, he said. . . .

Rothmans said the settlement opened the door to the sale of the company to Philip Morris International Inc. for $2 billion. The deal was contingent on the company settling its criminal and civil cases. . . .

If found guilty, JTI-Macdonald could face extensive forfeiture to the Crown equivalent to the amount of the fraud.

But getting money out of the tobacco firm could be difficult. The company filed for bankruptcy protection in 2004 after Quebec assessed it for $1.36 billion in unpaid taxes dating from the early 1990s.

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• Tobacco firms hit with $1-billion in penalties 

Two of Canada's big three tobacco companies will pay more than $1-billion in criminal and civil penalties for orchestrating the wholesale shipment to the United States of cigarettes that were smuggled back to this country and resold at bargain prices.

The admissions of guilt drew only lukewarm praise from anti-smoking activists. Imposed under the federal Excise Act, the fines and settlement costs total $1.15-billion and are the largest ever levied in Canada.

As part of an agreed statement of facts read out in a Toronto courtroom packed with lawyers and investigators, Rothmans Benson Hedges Inc. was fined $100-million.

Simultaneously in Montreal, Imperial Tobacco Canada Ltd. agreed to pay a $200-million fine. . . .

In addition, the two companies will pay $815-million in civil damages to the federal government and to the Ontario and Quebec provincial governments.

The companies both admitted “aiding persons to sell and be in possession of tobacco manufactured in Canada that was not packed and was not stamped in conformity with the Excise Act.”

However, tobacco foes voiced dismay that the scheme's architects seemed to have evaded punishment.

“We've been involved in this issue for many years and this exposes once again to the public who we've been dealing with,” said François Damphousse, Quebec director of the Non-Smokers' Rights Association. “But when you look at the executives who were behind this fraud, they're getting off scot free, and I think that's despicable.” . . .

The accord included no admission of guilt and Philip Morris called the $1-billion penalty a “voluntary payment.”

Thursday's settlements, however, do acknowledge wrongdoing.

Still unresolved is the future of the third big tobacco firm, Mississauga-based JTI-Macdonald Corp., which is under bankruptcy protection and which, along with two of its executives, is facing trial on fraud charges. . . .

veteran anti-tobacco campaigner Garfield Mahood was unimpressed, saying he welcomed the fines but that “justice escapes us” because nobody went to jail.

“There's no winners in this because the industry has addicted a whole bunch of young people who then became lifetime annuities for these companies,” he said.

“Over time the companies will financially benefit. And literally thousands of people will die in the future as a result of this crime.”

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There's no winners in this because the industry has addicted a whole bunch of young people who then became lifetime annuities for these companies.
Canadian anti-tobacco campaigner Garfield Mahood, on the penalties Imperial Tobacco Canada and Rothmans Benson Hedges must pay for smuggling "wrongdoing."

• New Brunswick's lawsuit has nothing to do with public health 

Imperial Tobacco Canada is disappointed that a senior partner in the tobacco industry, the Government of New Brunswick, has decided to move forward with legal action that is simply a cash grab and not in the interest of New Brunswick taxpayers. "Governments are senior partners in the tobacco industry. Governments in Canada earn from tobacco 18 times the profits of the entire tobacco industry, they heavily regulate the industry and have been fully aware of the risks associated with tobacco products for decades," said Benjamin Kemball, president and CEO of Imperial Tobacco Canada. "It is hypocritical that governments, like New Brunswick, turn around and sue a legal industry that they oversee and license while allowing an illegal tobacco industry to flourish." Governments across Canada collect approximately $8 billion in taxes from the tobacco industry; the province of New Brunswick collects over $80 million a year. Imperial Tobacco Canada believes that this lawsuit will take years to be resolved and will cost the New Brunswick taxpayers millions of dollars.

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