BAT chief refuses to testify in person in $280bn tobacco lawsuit
Monday 20 September 2004
Paul Adams, the chief executive of British American Tobacco, is at the centre of a dispute with the US federal government .
Paul Adams, the chief executive of British American Tobacco, is at the centre of a dispute with the US federal government after refusing to testify in person in its $280bn (£160m) lawsuit against tobacco companies, due to start tomorrow.
The Department of Justice (DoJ) had called on Mr Adams to deliver live testimony at the trial, where six major cigarette companies, including BAT subsidiaries, face charges of "fraud and deceit" for allegedly concealing the dangers of smoking.
They stand accused of operating a conspiracy to mislead and harm the American public for more than 50 years by withholding, destroying and ignoring scientific research on the harmful effects of tobacco.
Mr Adams, who has been at BAT since 1991, was due to be the 22nd witness out of 182 to take the stand. But documents filed by the DoJ reveal that BAT has refused to make him available. Mr Adams could face further action against him as a result of his refusal to appear, as the DoJ seems unwilling to back down. The documents state that the DoJ "reserves the right to seek an appropriate remedy" for BAT's refusal.
In common with the other defendant in wrongdoing.
BAT says the case was not relevant to the parent company or to Mr Adams. Its former main US subsidiary, Brown & Williamson, which is a defendant in the case, has now merged with RJ Reynolds, another defendant. Although BAT still holds a 42 per cent stake in the new Reynolds American business, it says that all of Brown & Williamson's liabilities arising from the outcome of the trial have passed to RJ Reynolds.
A small US research subsidiary of BAT, known as BATCo, is also facing the charges, but BAT believes this company is too distant from Mr Adams and the global group to warrant his attendance.
"Brown & Williamson has now merged with RJ Reynolds, but always was run as a separate business anyway. BAT Plc is not part of the lawsuit," a spokesman for BAT said yesterday.
Mr Adams was made managing director of the group in 2002. He stepped up to become chief executive in January as Martin Broughton, the executive chairman, prepared to leave in June.
The DoJ case was initiated by Bill Clinton in 1999 after the tobacco industry reached a $206bn settlement with 46 US states over the costs of treating sick smokers. Philip Morris, the company behind the Marlboro brand, RJ Reynolds, Lorillard and Liggett are also facing the charges. The US claims the companies knew of the health risks of smoking and actively sought to keep these a secret through an industry pact that began in a hotel room in New York in 1953. The original claim to recoup healthcare costs was dismissed, and the case now centres on racketeering laws originally designed to fight the mafia. Under these laws, the government can claim on the past profits, or "ill-gotten gains", that the companies enjoyed.
BAT has already had a number of clashes with the DoJ in the run-up to the trial. Mr Broughton, who had been at BAT since 1971, also resisted being examined in the US, and eventually agreed to provide evidence at the High Court in the UK.
BAT has also fought to keep a number of its internal documents secret and earlier this year was criticised for its "inexcusable conduct" by the judge hearing the trial. Judge Gladys Kessler ordered BAT to hand over a copy of a memo from Andrew Foyle, a partner at the law firm Lovell's, which advises BAT.
The US claims this advises on the destruction of sensitive documents, but BAT is still fighting to keep its contents subject to legal privilege. This is being heard in a separate action alongside the main trial, which is expected to last about six months.
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