Inside Philip Morris’ campaign to subvert the global anti-smoking treaty

13 July 2017:

Source: Reuters

By: ADITYA KALRA, PARITOSH BANSAL, DUFF WILSON and TOM LASSETER

The world’s largest publicly traded tobacco company is deploying its vast resources against international efforts to reduce smoking. Internal documents uncovered by Reuters reveal details of the secret operation.

NEW DELHI/LAUSANNE, Switzerland – A group of cigarette company executives stood in the lobby of a drab convention center near New Delhi last November. They were waiting for credentials to enter the World Health Organization’s global tobacco treaty conference, one designed to curb smoking and combat the influence of the cigarette industry.

Treaty officials didn’t want them there. But still, among those lined up hoping to get in were executives from Japan Tobacco International and British American Tobacco Plc.

There was a big name missing from the group: Philip Morris International Inc. A Philip Morris representative later told Reuters its employees didn’t turn up  because the company knew it wasn’t welcome.

In fact, executives from the largest publicly traded tobacco firm had flown in from around the world to New Delhi for the anti-tobacco meeting. Unknown to treaty organizers, they were staying at a hotel an hour from the convention center, working from an operations room there. Philip Morris International would soon be holding secret meetings with delegates from the government of Vietnam and other treaty members.

The object of these clandestine activities: the WHO’s Framework Convention on Tobacco Control, or FCTC, a treaty aimed at reducing smoking globally. Reuters has found that Philip Morris International is running a secretive campaign to block or weaken treaty provisions that save millions of lives by curbing tobacco use.

In an internal document, the company says it supported the enactment of the treaty. But Philip Morris has come to view it as a “regulatory runaway train” driven by “anti-tobacco extremists” – a description contained in the document, a 2014 PowerPoint presentation.

Confidential company documents and interviews with current and former Philip Morris employees reveal an offensive that stretches from the Americas to Africa to Asia, from hardscrabble tobacco fields to the halls of political power, in what may be one of the broadest corporate lobbying efforts in existence.

Details of those plans are laid bare in a cache of Philip Morris documents reviewed by Reuters, one of the largest tobacco industry leaks ever. Reuters is publishing a selection of those papers in a searchable repository, The Philip Morris Files.

Dating from 2009 to 2016, the thousands of pages include emails between executives, PowerPoint presentations, planning papers, policy toolkits, national lobbying plans and market analyses. Taken as a whole, they present a company that has focused its vast global resources on bringing to heel the world’s tobacco control treaty.

Philip Morris works to subvert the treaty on multiple levels. It targets the FCTC conferences where delegates gather to decide on anti-smoking guidelines. It also lobbies at the country level, where the makeup of FCTC delegations is determined and treaty decisions are turned into legislation.

Excerpts from the Philip Morris Files

The documents, combined with reporting in 14 countries from Brazil to Uganda to Vietnam, reveal that a goal of Philip Morris is to increase the number of delegates at the treaty conventions who are not from health ministries or involved in public health. That’s happening: A Reuters analysis of delegates to the FCTC’s biennial conference shows a rise since the first convention in 2006 in the number of officials from ministries like trade, finance and agriculture for whom tobacco revenues can be a higher priority than health concerns.

Philip Morris International says there is nothing improper about its executives engaging with government officials. “As a company in a highly regulated industry, speaking with governments is part of our everyday business,” Tony Snyder, vice president of communications, said in a statement in response to Reuters’ findings. “The fact that Reuters has seen internal emails discussing our engagement with governments does not make those interactions inappropriate.”

In a series of interviews in Europe and Asia, Philip Morris executive Andrew Cave said company employees are under strict instructions to obey both the company’s own conduct policies and local law in the countries where they operate. Cave, a director of corporate affairs, said that while Philip Morris disagrees with some aspects of the FCTC treaty and consults with delegates offsite during its conferences, ultimately the delegations “make their own decisions.”

“We’re respectful of the fact that this is their week and their event,” said Cave in an interview in New Delhi, as the parties to the treaty met last November. Asked in an earlier interview whether Philip Morris conducts a formal campaign targeting the treaty’s biennial conferences, Cave gave a flat “no.”

When the FCTC delegates gather, lives hang in the balance. Decisions taken at the conferences over the past decade, including a ban on smoking in public places, are saving millions of lives, according to researchers at Georgetown University Medical Center.

Between 2007 and 2014, more than 53 million people in 88 countries stopped smoking because those nations imposed stringent anti-smoking measures recommended by the WHO, according to their December 2016 study. Because of the treaty, an estimated 22 million smoking-related deaths will be averted, the researchers found.

According to the WHO, though, tobacco use remains the leading preventable cause of death – and by 2030 will be responsible for eight million deaths a year, up from six million now.

There was jubilation among anti-smoking advocates when the treaty was adopted in 2003. The treaty, which took effect in 2005, made it possible to push for measures that once seemed radical, such as smoke-free bars. About 90 percent of all nations eventually joined. A big holdout is the United States, which signed the treaty but has yet to ratify it.

Since the FCTC came into force, it has persuaded dozens of nations to boost taxes on tobacco products, pass laws banning smoking in public places and increase the size of health warnings on cigarette packs. Treaty members gather every two years to consider new provisions or strengthen old ones at a meeting called the Conference of the Parties, or COP, which first convened in 2006 in Geneva.

But an FCTC report shows that implementation of important sections of the treaty is stalling. There has been no further progress in the implementation of 7 out of 16 “substantive” treaty articles since 2014, according to a report by the FCTC Secretariat in June last year.

A key reason: “The tobacco industry continues to be the most important barrier in implementation of the Convention.”

Indeed, the tobacco industry has weathered the tighter regulation. There has beenonly a slight 1.9 percent decline in global cigarette sales since the treaty took effect in 2005, and more people smoked daily in 2015 than a decade earlier, studies show. The Thomson Reuters Global Tobacco Index, which tracks tobacco stocks, has risen more than 100 percent in the past decade, largely due to price increases.

“Some people think that with tobacco, you’ve won the battle,” said former Finnish Health Minister Pekka Puska, who chaired an FCTC committee last year. “No way,” he said. “The tobacco industry is more powerful than ever.”

With 600 corporate affairs executives, according to a November 2015 internal email, Philip Morris has one of the world’s biggest corporate lobbying arms. That army, and $7 billion-plus in annual net profit, gives Philip Morris the resources to overwhelm the FCTC.

The treaty is overseen by 19 staff at a Secretariat office hosted by the WHO in Geneva. The Secretariat spends on average less than $6 million a year. Even when buttressed by anti-smoking groups, the Secretariat is outgunned. Its budget for this year and last year for supporting the treaty clause on combating tobacco company influence is less than $460,000.

Vera Luiza da Costa e Silva, head of the FCTC treaty Secretariat, is the person tasked with preventing the industry from neutering the agreement.

In two interviews at her Geneva office, da Costa e Silva, a medical doctor who holds a PhD in public health and has a dyed pink streak in her hair, explained why the FCTC banned attendance by any member of the public at the 2014 biennial conference in Moscow. The ban came in response to efforts by tobacco executives to use public badges to get inside the venue, she said, adding that industry representatives then started borrowing badges from delegates they knew to gain entry.

“It’s a real war,” said da Costa e Silva.

“Some people think that with tobacco, you’ve won the battle. No way… The tobacco industry is more powerful than ever.”
Former Finnish Health Minister Pekka Puska, who chaired an FCTC committee last year

But she had only a partial picture of the forces ranged against her. She wasn’t aware of the fact that Philip Morris had a large team operating throughout the convention in Moscow, or the details of its activities in New Delhi last November.

“This is so disgusting. These are the forces against which we have to work,” da Costa e Silva said in May after being told about the Philip Morris documents. “I think they want to implode the treaty.”

The idea of a global tobacco treaty had been discussed among health advocates since at least 1979, when a WHO committee suggested the possibility. Gro Harlem Brundtland, a former prime minister of Norway who became director-general of the WHO in 1998, made it happen.

She was aided by outrage over documents that surfaced as part of the landmark 1998 Master Settlement Agreement, in which the four largest U.S. tobacco companies agreed to pay more than $200 billion to 46 U.S. states. The internal communications showed that tobacco executives lied for years about their knowledge of the deadly nature of cigarettes.

A 1989 document revealed one company’s plan to fight threats to the industry

. “WHO’s impact and influence is indisputable,” the document said. It went on to contemplate “countermeasures designed to contain/neutralize/re-orient the WHO.”

That company was Philip Morris.

In 2008, Altria Group Inc split up its Philip Morris business. Philip Morris USA, which remains a subsidiary of Altria, sells Marlboro and other brands in the United States. Philip Morris International was spun off, and handles business abroad. Since the split, Philip Morris International shares have more than doubled and Altria’s have more than tripled.

Philip Morris International’s operational headquarters are in Lausanne, Switzerland, down the street from a patch of Gallo-Roman ruins, in a sleek building with a cafeteria, gym and a patio facing Lake Geneva. From there, the company is working to hobble the treaty.

Internal company communications reveal the scope of Philip Morris’ operation during the 2014 FCTC treaty meeting in Moscow. The company set up a “Coordinating Room” that could seat 42 people, according to the 2014 PowerPoint presentation, titled “Corporate affairs approach and issues.”

Leading the operation was executive Chris Koddermann. Formerly a lawyer and lobbyist in Canada, Koddermann joined Philip Morris in 2010. He is now a director of regulatory affairs in Lausanne. The PowerPoint describes the ideal corporate affairs executive as someone who is able to “play the political game.” Koddermann previously worked for federal and provincial cabinet ministers in Canada, according to his LinkedIn profile.

Reached on his cell phone in March, Koddermann said he wouldn’t be able to meet and that any questions should be directed to Philip Morris International.

At the end of the Moscow meeting, on Oct. 18, 2014, Koddermann sent an email congratulating a 33-person Philip Morris team on their success in diluting or blocking measures intended to strengthen tobacco controls and reduce cigarette sales. The gains he touted at the end of the week-long conference were the culmination of a two-year effort, his email said.

The documents shed light on one key objective in Philip Morris’ FCTC campaign: Keep tobacco within the ambit of international trade deals, so that the company has a way to mount legal campaigns against tobacco regulations.

In Moscow, one proposal initially called for carving out tobacco from trade pacts. International trade treaties often include provisions, such as the protection of trademarks, that Philip Morris has used to challenge anti-smoking measures. If tobacco were taken out of the treaties, as suggested by the proposal, Philip Morris could be deprived of many such legal arguments.

An early draft asked parties to support efforts to exclude tobacco from trade pacts and to prevent the industry from “abusing” trade and investment rules. In the end, the proposal was watered down. The final decision only reminded parties of “the possibility to take into account their public health objectives in their negotiation of trade and investment agreements.” There was no mention of excluding tobacco.

Koddermann, in his email to colleagues on the last day of the conference, declared victory, describing the change as “a tremendous outcome.” Overall, the company achieved its “trade related campaign objectives,” including “avoiding a declaration of health over trade” and “avoiding the recognition of the FCTC as an international standard,” he wrote.

The win was significant. A former Philip Morris employee said the company has routinely used trade treaties to challenge tobacco control laws. The aim, he said, was “to scare governments away from doing regulatory changes.” Even though the tobacco industry has lost a series of major legal battles, its suits have served to discourage the implementation of regulations that curb smoking. Those delays can yield years of unimpeded sales.

As the Philip Morris PowerPoint presentation from 2014 put it: “Roadblocks are as important as solutions.”

One roadblock was a campaign to stop the 2011 introduction of rules in Australia banning logos and distinctive coloring on cigarette packs. The company’s litigation and arbitration against the measure ultimately were dismissed – but not before five countries filed complaints against Australia on the same subject at the World Trade Organization. The global trade body has yet to announce a decision in the matter.

The attempt to undo Australia’s regulations has had a chilling effect elsewhere. It slowed the introduction of plain-packaging rules in New Zealand. Citing the risk that tobacco companies may “mount legal challenges,” the government announced in 2013 that it was postponing the move and waiting to “see what happens with Australia’s legal cases.” The legislation is now scheduled to go into effect next year.

In his Moscow conference email, Koddermann also expressed pleasure at the fate of a proposal on farmers. Initial language would have recommended that countries restrict support for tobacco growers. The proposal was “significantly watered down,” he wrote. “This is a very positive result.”

Gustavo Bosio, at the time a manager for international trade, chimed in a few days after the conference in an email: “These excellent results are a direct consequence of the remarkable efforts of all PMI regions and markets during the past two years and throughout the intense week in Moscow.”

Philip Morris isn’t alone in seeking to weaken the treaty. Ahead of the 2012 FCTC conference, in Seoul, four cigarette giants – Philip Morris, British American Tobacco (BAT), Japan Tobacco International and Imperial Brands Plc – formed an “informal industry Working Group” to oppose various proposals on tobacco taxation, according to an internal BAT document reviewed by Reuters.

The 45-page paper, whose existence hasn’t been previously reported, noted that the group would coordinate “to the extent that these issues do not raise any anti-competitive concerns.” The paper outlined a global campaign planned by BAT to counter the FCTC, which was “increasingly going beyond” its mandate. And it listed objectives, including a bid to block discussions around the introduction of a minimum 70 percent tax on tobacco.

BAT declined to answer questions about the industry working group. Both Imperial and Japan Tobacco International said they didn’t want to comment on a document from a competitor. Japan Tobacco International said its tax experts met with counterparts from other tobacco companies to discuss treaty guidelines on taxation ahead of the 2012 conference. Philip Morris did not comment on the document.

The Philip Morris emails and documents don’t explicitly detail how the company pulled off the victories in Moscow. But they provide insight into the importance it places on wooing delegates.

The FCTC traditionally makes decisions by consensus, and so influencing a single national delegation can have an outsized impact. The treaty has a key clause meant to keep the industry from unduly influencing delegations. Article 5.3, as it’s known, says nations should protect their public health policies from tobacco interests. Guidelines that accompany Article 5.3 recommend that countries interact with the industry only when “strictly necessary.”

But the article – a single sentence – contains a loophole Philip Morris has exploited. The sentence ends with the words “in accordance with national law,” opening the door to arguments by pro-tobacco forces that any lobbying that’s legal in a certain country is permissible when interacting with that country’s representatives. They also argue that a sentence in a related document, the guidelines for Article 5.3, allows for such interactions to take place as long as they are conducted transparently.

Lobbying strategy

 

One of the company’s targets has been Vietnam.

The day the Moscow meeting ended, Koddermann received an email from his colleague Nguyen Thanh Ky, a leading corporate affairs executive for Vietnam. Ky said he had a “debrief lunch” with the Vietnamese delegation and had a good outcome to report: The delegation was in favor of “moderate and reasonable measures” to be implemented over a “practical timeline,” he wrote. He did not specify which measures they discussed.

The Vietnamese delegation spoke up often during the Moscow meeting. A review of notes compiled by tobacco-control groups accredited as observers showed Vietnam’s interjections frequently mirrored Philip Morris’ positions on tobacco-control regulations. Just like the tobacco giant, the Vietnamese said a higher tax on cigarettes would lead to more illicit sales. Like Philip Morris, they said the FCTC should stay out of trade disputes. And like Philip Morris, they opposed proposals to set uniform parameters for the legal liability of tobacco companies.

The FCTC guidelines on taxation did ultimately include a WHO recommendation for a minimum tax of 70 percent – something Philip Morris opposed. But the proposal to give the treaty more sway over trade disputes was weakened, and measures to strengthen the legal liability of cigarette companies were delayed.

Vietnam’s foreign ministry did not respond to questions from Reuters.

As soon as the conference ended, the documents show, Philip Morris turned to the next one: the 2016 meeting in India.

The 2014 PowerPoint presentation outlined the need to identify ways to gather intelligence during the Delhi conference. In a separate 2015 planning document, the company talks about the arrangement of farmer protests in the run-up to the meeting. Such protests did take place – including one in front of WHO offices in New Delhi. Reuters couldn’t determine whether Philip Morris was behind those demonstrations.

While other major tobacco companies also sent people to Delhi in November, Philip Morris was distinguished by its stealth. Executives from the company did not sign in with their tobacco industry colleagues at the FCTC convention center and stayed at a hotel about an hour’s drive away.

The anonymity and distance helped Philip Morris approach delegates covertly. On the second day of the conference, a white Toyota van pulled away from the front of the Hyatt Regency hotel – where Philip Morris had its operations room – and headed for the FCTC treaty venue. The van was carrying Ky, its corporate affairs executive from Vietnam.

Ky’s driver talked his way past police at the barricade outside the conference center, where FCTC-issued credentials were checked, explaining that he was driving “VIPs,” the driver later told Reuters.

A few minutes later, a man in a dark suit walked out of the conference center, passed the van and stopped at a street corner. The van did a U-turn, and a Reuters reporter saw the man in the suit quickly climb in. He was a senior member of Vietnam’s delegation to the FCTC conference: Nguyen Vinh Quoc, a Vietnamese government official.

The driver, Kishore Kumar, said in an interview that he dropped the two men off at a local hotel. Kumar said that on several other occasions that week, he took Ky to pick up people from the Hotel Formule1, a budget lodging where Vietnam’s delegation was staying during the conference.

Ky and Quoc did not respond to requests for comment.

Asked by Reuters about the interaction between Ky and the Vietnam representatives, Philip Morris executive Andrew Cave thumped on the table in a bar at the hotel where company representatives were staying. Reuters should focus, he said, on efforts by the industry to develop so-called reduced-risk products – those that deliver nicotine without the burning of tobacco and which the company says reduce harm.

When pressed about the meetings with Vietnam, Cave thumped the table again: “I’m angry that you’re focusing on that, rather than the real issues that matter to real people.”

In a subsequent email, Cave said: “Representatives from Philip Morris International met with delegates from Vietnam” during the Delhi conference “to discuss policy issues and this complied fully with PMI’s internal procedures and the laws and regulations of Vietnam.”

Delegates, Cave said in separate interviews, are reluctant to meet openly with Philip Morris because they are afraid of being “named and shamed” by anti-smoking groups.

Some delegates questioned the extent to which Philip Morris shaped the decisions made at the Moscow conference, saying attendees genuinely disagreed on certain issues. Nuntavarn Vichit-Vadakan, a Thai delegate, oversaw many discussions as the chair of an FCTC committee at the Moscow conference. She said delegates differed over the regulation of e-cigarettes, for instance, and any lobbying the company carried out would not have determined the outcome.

The Philip Morris documents leave questions unanswered. In some cases, the documents show the company hatching plans to change an anti-smoking regulation or to monitor activists, but don’t always make clear to what extent or how the plans were executed, if at all. The 2014 PowerPoint presentation called for “achieving scrutiny” of tobacco control advocates and said a “global project team” had been established for this purpose. It did not list what means would be used.

In some instances, Philip Morris’ lobbying plainly failed. In July 2015, the Ugandan parliament passed sweeping new anti-tobacco laws inspired by the treaty. All that was needed was President Yoweri Museveni’s signature, and the small African nation would become a leader on the continent in implementing a strict interpretation of the FCTC.

Philip Morris sent an executive, a younger white man, to tell the septuagenarian president, who long ago had helped topple dictator Idi Amin, why the tobacco act was a bad idea. Sheila Ndyanabangi, Uganda’s lead health official for tobacco issues who was present at the meeting, described the executive’s approach as lecturing the statesman.

“He said, ‘Ugandan tobacco will be too expensive’ and ‘it will not be competitive,’” Ndyanabangi said. Her account was confirmed by a senior Ugandan government official who was also present.

FCTC chief Vera Luiza da Costa e Silva says there is a “real danger” of the tobacco industry influencing treaty deliberations.

Museveni stared for a moment at the Philip Morris executive and a representative from a major tobacco buyer who’d come with him. The president then declared: “Slavery ended a long time ago.” There was a long silence in the room, recalled Ndyanabangi. Museveni said Uganda didn’t need tobacco, and the meeting was over. The president signed the bill that September.

Museveni’s office did not respond to requests for comment.

Over time, however, the industry’s lobbying has slowed the treaty’s progress. At the biennial conferences, the discussions have changed. In Moscow, for instance, there was a strong focus on trade and taxes. “You could see from the floor that interventions were very, very, very much focusing on the trade aspects, many times even putting trade over health,” the FCTC’s da Costa e Silva said in an interview last year.

The composition of FCTC delegations sent by governments has changed to include more members who aren’t involved in health policy. That’s in line with what Philip Morris and other tobacco companies want: Philip Morris, as well as British American Tobacco, has sought to move the balance of the membership away from public health officials and toward ministries like finance and trade. Such agencies, said the former Philip Morris executive, benefit from tobacco tax revenues and attach less weight to health concerns.

“The health department would just want tobacco to be banned, while for the finance ministry it’s more like how can we leverage or get as much money as we can,” he said.

The object of Philip Morris’ efforts, according to the 2014 PowerPoint on corporate affairs, is to “move tobacco issues away” from health ministries and demonstrate there are broader public interests at play – that “it’s not about tobacco.”

Cave, the Philip Morris corporate affairs executive, confirmed the company tries to persuade governments to change the composition of delegations. Health officials, he said, aren’t equipped to handle the intricacies of issues such as taxation.

“You’re looking at illicit trade, you’re looking at tax regimes, you’re looking at international law,” he said. “Now each of these areas, it’s logical, if you want to really tackle the trade and tobacco smuggling, illicit trade, who would you go to? You wouldn’t go to the health ministry.”

“I’m angry that you’re focusing on that, rather than the real issues that matter to real people.”
Philip Morris executive Andrew Cave, when asked about the company’s interaction with FCTC delegates

Reuters analyzed the rosters of the almost 3,500 accredited delegation members who have attended the seven FCTC conferences since 2006. The analysis found that there were more than six health delegates for every finance-related delegate in 2006. In Delhi last year, that ratio had fallen to just over three health delegates for every finance delegate. The number of delegates from finance, agriculture and trade fields has risen from a few dozen in 2006 to more than 100 in recent years.

Vietnam’s delegation, for example, has changed markedly. At the first FCTC conference in 2006, none of its four delegates were from finance or trade ministries. By 2014, in Moscow, there were 13 delegates, with at least four from finance-related ministries, including the chief delegate. Vietnam’s foreign ministry did not respond to questions about the delegation.

Da Costa e Silva isn’t opposed to having delegates from trade ministries, but she says their primary focus needs to be on health. And she was concerned by the makeup of the Vietnamese delegation. In a letter to the Vietnamese prime minister in late 2015, she asked that tobacco industry employees be excluded from the delegation. If they weren’t, she wrote, Vietnam might be “unable to play a full part in discussions.”

In 2016, Vietnam brought 11 delegates to the conference, of whom six were from health agencies, including the chief representative.

Some tobacco-control activists who attended the Delhi meeting in November say it was the worst so far in terms of passing new anti-smoking provisions.

Matthew Myers, who heads the Campaign for Tobacco-Free Kids, said multiple countries came prepared to consciously block action. He said he heard delegates making arguments “I haven’t heard in 25 years.”

A Nigerian delegate, for instance, asked to remove a reference to “the tobacco epidemic” from a draft proposal on liability for tobacco-related harm, according to notes taken by anti-smoking groups.

Asked for comment, Christiana Ukoli, head of the delegation in Delhi, said the “Nigerian delegation strongly dissociates itself from [that] statement.”

The Delhi conference ended as it began, with treaty Secretariat officials not knowing where Philip Morris had been or what it had done. The company had flown in a team of executives, used a squad of identical vans to ferry officials in New Delhi, and then left town without a trace.

Watering down

Just days after the FCTC conference in Moscow ended in October 2014, Philip Morris executive Gustavo Bosio sent an email to colleagues highlighting what he said was the company’s success in pushing back on three treaty proposals related to trade issues. “These excellent results are a direct consequence of the remarkable efforts of all PMI regions and markets during the past two years and throughout the intense week in Moscow,” wrote Bosio, then manager for international trade. The first two columns in each tab below show the initial proposal and the final outcome, and are from an analysis Bosio attached to his email. The third column contains extracts from his email explaining what happened in each case.

• FCTC DISPUTE SETTLEMENT
• TOBACCO CARVE-OUT
• HEALTH OVER TRADE

Source: Internal Philip Morris documents; emphasis added by Philip Morris. Note: “AMRO” refers to the Americas regional office of the World Health Organization.