May I ask you to introduce yourself by telling us a little about your personal background (education, professional experience) and when, how and why you got involved in tobacco control?
Eric LeGresley: I'm a Canadian lawyer who has been working in tobacco control for well over a decade. I
first became involved in tobacco control while a law student in the
1980s, and returned to the issue after completing an LL.M. in public
international law. In the mid-1990s, I was legal counsel for the
Non-Smokers' Rights Association in Canada, and later I joined the WHO
when TFI was being set up. For most of the past decade I've been a
consultant to law firms, international organisations, NGOs and
governments, with smuggling-related matters being the single largest
component of my work.
Q1. You have co-authored an article in Tobacco Control about BAT's involvement in smuggling activities in Africa. Many documents that you quote were obtained (often with difficulty) from the Guildford repository and they are now several years old. How do you assess the situation today?
Eric LeGresley: Contraband activities are always in flux, so one has to be cautious about projecting the specifics of smuggling circa 1995 (the date of the most recent documents in Guildford) to today. The industry documents show that contraband routes, volumes, brands etc. rapidly change as enforcement efforts change and the market develops.
What did not change through the time captured by the Guildford documents, however, was contraband being used strategically to help develop brands in the legal market under regulatory conditions the cigarette manufacturer deemed desirable.
The documents suggest that smuggled cigarettes were strategically used, often with great effect, to force open markets, to develop consumer demand for specific brands, and to drive down tobacco taxes. Being simultaneously involved in both the legal and illegal markets, their approach essentially was smuggling if necessary, but not necessarily smuggling.
Nothing fundamental has changed between the 1990s and now. Although the industry faces increasingly stringent regulation in ever more countries regarding advertising etc., borders are not yet as sufficiently tight to preclude smuggling. So strategic smuggling remains a viable option.
What has changed, however, is widespread media reporting on industry-promoted smuggling. Those press reports resulted in a concerted industry public relations campaign to deny any involvement in smuggling and to portray themselves as a necessary and honest participant in the ongoing talks on a smuggling protocol.
Q2. BAT and the other transnationals use
smuggling as an argument for what they call "balanced taxation" but
from the limited information available the taxation level does not look
that high in Africa.
What do you make of their argument? Is the taxation level out of balance in Africa?
Eric LeGresley: Taxation, or more accurately relative price differences between adjacent countries, drives some smuggling by contraband entrepreneurs hoping to make some quick money, but it frequently will be of little import to the sort of large scale, widespread, industry fostered smuggling suggested by BAT's own internal documents.
Others have aptly demonstrated that in Europe tobacco smuggling is most rampant in those countries with low taxation, owing in large part to lax enforcement.
The world over BAT says: don't raise taxes very high or you'll start a flood of smuggled cigarettes. It's a simple argument to make when you can turn on or off the conduit of contraband. It may be cunning cigarette company strategy, but it isn't sound public policy advice.
African countries should progressively move their tax incidence upward to discourage tobacco use and recoup social and economic costs associated with illness and other damage cased by tobacco industry products. Where feasible, they should do this in co-ordination with their neighbors to reduce opportunistic smuggling. However, tax- or price-harmonization alone will not deter the sort of strategic smuggling evidenced in the industry documents. Enhanced and vigilant enforcement (supported in part by increased tobacco tax revenues) also will be needed to hold back the tobacco manufacturers.
Q3. Counterfeit cigarettes, apparently often from China, appear to be an increasing problem. How do these relate to smuggling, and in particular the sort of tobacco industry-fostered smuggling you describe in Africa?
Understanding that reality, tobacco companies fought to have the protocol cover counterfeit as well as smuggling, as that gives them with a more legitimate claim to be heard. This is a claim denied the tobacco companies with respect to smuggling due to their apparent complicity as suggested by their own documents.
Those companies should not be surprised to find enterprising souls along that illicit distribution chain venturing into moving counterfeit cigarettes as well. Would a smuggler, thousands of kilometres away from London, say to himself: I'm a principled man. I'll smuggle BAT's cigarettes but I won't smuggle fake BAT cigarettes? Of course not.
Q4. You suggest that repression should be much harsher, including jail terms for executives involved in smuggling. But you also mention the very small number of investigations (when they are not abandoned) and my impression is that the people arrested and jailed are rarely the organizers. How do you assess the level of corruption that is often alleged as a big obstacle to a repressive approach while some governments seem to prefer negotiating agreements with the transnationals to address smuggling (as was the case recently in Algeria)?
Eric LeGresley: A crime is a crime, and justice demands that punishment be meted out to all those responsible regardless of social or economic status, or political connections.
I'm not opposed in principle to a negotiated settlement with tobacco companies, but I believe that countries can negotiate from a position of strength if they have in their arsenal plausible criminal proceedings either underway or in contemplation.
Moreover, smuggling and related illegal activity is by necessity covert, and industry documents suggest a great effort on the part of BAT to minimize the documentary record, often through 'oral only' or document destruction policies. The documentary evidence we have on smuggling, as large as it is, is just the remnant bits that fell through the cracks.
The looming threat of criminal sanctions against executives, however, may provide leverage to assist in the recovering evidence once thought by the companies to have been destroyed. If you were a mid-level tobacco executive engaging in activities that you knew to be questionable, wouldn't you quietly hold on to information about what your superiors knew, even if you were directed to destroy such documents?
Key decisions within tobacco companies are taken by senior executives who disproportionately benefit should the decision turn out to be a profitable one for the company. If we seek to hold only the company to account, either through litigation where the company is the sole named defendant or through a negotiated agreement, then we penalize the shareholders but not those in upper management most directly tied to the smuggling.
Absent a resolution at a company annual general meeting deciding to endorse a plan to smuggle, I fail to see why shareholders should shoulder all of the burden and executives relatively little.
Q5. As INB 2 is going to start what should be the priorities for tobacco control advocates as far as smuggling activities in Africa are concerned. Is there a way for countries to increase their cooperation in this field?
Eric LeGresley: Advocates in Africa have a two-fold challenge for the illicit trade INB.
First, they need to highlight to all delegations, including their own, the extent and destructiveness of tobacco smuggling in their region, and the pervasive involvement of the industry in that smuggling. Many of the most dramatic smuggling documents in existence come from BAT's activities in Africa, and the entire world has much to learn from the experience there.
Second, African advocates need to balance encouraging collective positions among African delegations where doing so would harmonize standards upward, with isolating those delegations inclined to act as the industry's proxy on particular points.
Q6. Is there anything else you would like to add?
Eric LeGresley: The illicit trade protocol is important not only for what it can do on this issue, but also for the FCTC system as a whole. It's a litmus test to see if we can move beyond the administrative arrangements and generalities of the central treaty to much more substantive provisions.
All countries, whether they believe they currently have a problem with illicit tobacco trade or not, have a significant interest in seeing a strong and successful first FCTC protocol.
Thank you Eric for having taken the time to answer our questions.