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Malawi, the world’s largest burley tobacco producer, said it will deport officials of Alliance One Inc. and the local unit of Universal Corp. for paying below government-mandated prices for the leaf.
“This is the action I have taken,” President Bingu wa Mutharika said in a speech broadcast live on the state-owned Malawi Broadcasting Corp. radio station today. “They have been defying my orders to pay better prices and I have decided to chase them.”
The government yesterday revoked temporary work permits for officials of Alliance One, Universal-unit Limbe Leaf Tobacco, and Premium Tama Tobacco Co., and issued them with 24-hour deportation orders. . . .
Malawi started setting minimum prices for the various grades of tobacco two years ago after it accused merchants of putting farmers out of business. While dealers denied that they underpaid farmers, Wa Mutharika on April 6 threatened to deport buyers if prices didn’t improve.
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Eugene Trani's connection to the tobacco industry runs deep.
The New York Times reported last week that Virginia Commonwealth University inked a controversial research deal with Philip Morris USA in 2006. The deal prohibits researchers at the public university from publishing their findings without a longer-than-usual review process from the company. Between the restricted contract and other moneys, Philip Morris gave $1.3 million to VCU last year.
But Trani, VCU's president, has gotten more from the tobacco industry than a million bucks. In fact, Trani is the tobacco industry.
As a member of the board of directors of Universal Corp., Trani receives an annual retainer of $40,000, including stock options. He also receives a fee of $2,000 for each board of directors' meeting he attends and another $1,500 for attending committee meetings. . . .
"I don't see any connection between these two," university spokeswoman Pam Lepley says. "And his being on the board doesn't really pertain to the university."
"I do believe the wheel is turning and sanity will prevail at some stage," Mr Swales said. "I speak to various Zanu PF moderates and all of them advise us to be patient, there will be change, this thing can't continue."
Mr Swales believes Mr Mugabe's regime is nearing the end, that an economy battered by inflation reported to have hit 13,000 per cent in June and where supplies of even basic foods such as maize flour and cooking oil have dried up, must surely soon collapse altogether.
"I might not get my farm back but when the dust settles I might get another farm. Maybe I'll buy a farm from someone who doesn't want to come back to Zimbabwe. I have to hope I can survive that long and wait out old Bob."
Back in 2002, Mr Swales and his family were forcibly evicted from their 1,976-acre farm in Darwendale, 50 miles north east of Harare, by a mob of "war veterans". The chance to move over the border to Chimoio, in Mozambique, was too good to turn down.
Like many of those now returning to Zimbabwe, Mr Swales was on a scheme sponsored by tobacco companies such as Universal Leaf Tobacco. The companies provided start-up capital and seasonal loans.
Universal Corp. said Friday it completed the sale of the non-tobacco businesses of subsidiary Deli Universal Inc. in a deal valued at $527 million in cash and debt after selling expenses.
The buyer is a new company owned by Deli Universal managers, along with NIBC Principal Investments and NPM Capital NV., both based in the Netherlands.
Tobacco leaf producer Universal Corp. said on Wednesday that it has been notified by the U.S. Securities and Exchange Commission of a formal investigation into possible violations of the U.S. Foreign Corrupt Practices Act.
It said an investigation by an outside law firm hired by the company's board found that about $1 million was paid over a five-year period involving its tobacco subsidiaries.
Universal Corp. is considering selling some of its non-tobacco businesses, the company said.
The Richmond-based company also said it found in a tobacco subsidiary possible violations of a federal law that prohibits bribery of foreign officials.
Universal said it received an offer for a "substantial portion" of its non-tobacco operations and has been in discussions with a potential buyer. "However, there can be no assurance that such discussions will ultimately result in a transaction," the company said in a statement.
Universal is the world's largest tobac- co-leaf merchant, buying tobacco from farmers in the United States and other countries and processing the raw leaf for cigarette companies and other tobacco-product manufacturers.
The company's non-tobacco businesses include lumber distribution and trading agricultural products such as rubber, tea, nuts and sunflower seeds.
Universal has recently considered an offer for a substantial portion of its non-tobacco operations and has been in discussions on that matter. . . .
In another matter, Universal also announced today that as a result of a posting to the Company's Ethics Complaint hotline alleging improper activities that involved or related to certain of the Company's tobacco subsidiaries, the Audit Committee of the Company's Board of Directors engaged an outside law firm to conduct an investigation of the alleged activities. That investigation revealed that there have been payments that may have violated the U.S. Foreign Corrupt Practices Act. At this time, the payments involved appear to have approximated $1 million over a five-year period. In addition, the investigation revealed activities in foreign jurisdictions that may have violated the competition laws of such jurisdictions, but the Company believes those activities did not violate U.S. antitrust laws. The Company voluntarily reported these activities to the appropriate U.S. authorities. The Company has initiated corrective actions, and such actions are continuing.
Universal Corp.'s announcement on Tuesday that it will cease processing tobacco in Danville - a task the company and its predecessors have performed here for 125 years - had long been foretold.
The seed was sown four years ago when construction started on a 1.2 million square-foot processing plant near Rocky Mount, N.C., in Nash County. While the company also spent millions for an upgrade of its Danville plant, the Nash County factory - completed in 2003 - was hailed as the largest leaf-processing operation in the world and stocked with the latest equipment designed by Universal's engineers.
U.S. tobacco production was on the decline then and has continued to fall. . . .
All tobacco processing in Danville effectively ended with the Tuesday morning announcement of the closing.
With it goes a 125-year history of the company in Danville, the second longest tenure for tobacco processing here. Dibrell Brothers started in 1873, but that company - after having undergone two mergers, the latest forming Alliance One - moved its production in March from Danville to Wilson, N.C.
Universal (UVV:NYSE) unit Deltafina was fined $36 million in a European Union tobacco antitrust case. The Richmond, Va., company pledged to appeal.
Universal said the European Commission Competition Directorate imposed fines on four Italian tobacco processors totaling $67 million. The EU charges the processors broke European Union antitrust law in connection with the purchase and processing of tobacco in the Italian raw tobacco market.
Universal Leaf Tobacco Company, the world's largest leaf tobacco merchant, is entering India by setting up a wholly owned subsidiary.
The $3.2-billion giant's Indian subsidiary will sell 25 per cent of processed tobacco in the country and export the balance to its Singapore arm.
However, Universal will not set up a manufacturing facility in India as the existing policy does not allow 100 per cent foreign direct investment in tobacco production.
Instead, the company will go in for contract manufacturing. This means it will act as an intermediary between farmers and the final product manufacturer.
Universal Corp, the world's biggest tobacco-leaf merchant, cut its forecast for global production of burley tobacco in 2005 for a second month as it reduced its production estimates for China, Malawi and Mozambique.
Richmond, Virginia-based Universal lowered its production outlook for the tobacco variety to 784 million kilograms (1.72 billion pounds) from a May forecast of 831 million kilograms, the company said in a report on its Web site on June 24.
Universal cut its estimate of burley production in China by more than half to 23 million kilograms. The estimate for Malawi, the world's biggest producer last year, was reduced by 4.2% to 113 million kilograms as a drought caused crops to fail. In neighboring Mozambique, which has also been affected by dry weather, the crop estimate was cut to 44 million kilograms from 51 million kilograms.
The estimate for the amount of higher-grade flue-cured Tobacco available for export was raised 1.1% to 1.809 billion kilograms, on a higher estimate for India
Miklos Marffy lost his home, his farm and his crop two years ago when Zimbabwe's government seized his land near the northeastern town of Mvurwi. Last year, he grew $460,000 of tobacco in neighboring Zambia after a “reassuring” visit from President Levy Mwanawasa. Zimbabwe's neighbors are profiting from President Robert Mugabe's land redistribution program, which has ravaged the world's second-biggest tobacco export industry since 2000. More than 340 commercial farmers have relocated to Zambia, Mozambique, Malawi and Tanzania, creating jobs and boosting exports from some of the world's poorest countries. “The entry of Zimbabwean farmers into Zambia is a blessing to agriculture,” says Chance Kabaghe, 50, the chairman of Zambia Seed Co., who was deputy agriculture minister until last month and lives in the capital, Lusaka. “They bring with them the latest technology and knowledge.”
Universal Corp., the world's biggest tobacco-leaf merchant, and No. 3 Standard Commercial Corp. are backing the farmers
While countries such as Brazil continue to increase production, the flue-cured tobacco crop in the United States has fallen from nearly 1 billion pounds in the mid-1990s to about 526 million pounds this year, a downward spiral that shows no signs of reversing.
With such a grim outlook, any big investments in the U.S. tobacco leaf business might seem foolhardy. Yet that's exactly what Universal Corp. has done.
Richmond-based Universal, the world's largest tobacco leaf dealer, has just completed a $130 million modernization of its domestic tobacco processing operations. The project included major upgrades to its Danville processing plant and the construction of a plant near Rocky Mount, N.C.