Inquiry launched into BAT smuggling claims

Tobacco exports: Anti-smoking lobbyists and MPs push the Government into an investigation into Britain's biggest cigarette company

Government investigators were yesterday sent in to inquire into allegations that Britain's largest tobacco company has secretly been involved in cigarette smuggling.

Government investigators were yesterday sent in to inquire into allegations that Britain's largest tobacco company has secretly been involved in cigarette smuggling.

The Department of Trade and Industry launched an official inquiry into allegations that British American Tobacco (BAT) "deliberately stimulated" the smuggling market and profited from bootlegging.

Stephen Byers, the Secretary of State for Trade and Industry, told his officials to move in after reviewing evidence given to a committee of MPs about BAT's involvement.

"I have given careful consideration to the unanimous recommendation of the select committee that the DTI should investigate the allegations of BAT's involvement in smuggling," he said. "I have decided to appoint investigators to look into this and to report back to me as soon as possible. I will then decide what further steps I must take and whether the facts support a reference to other authorities."

The House of Commons Health Select Committee called for an official inquiry after it received evidence from the group Action on Smoking and Health (ASH) that BAT encouraged cigarette smuggling in Third World countries.

Clive Bates, director of ASH, said: "It seems as though the penny is finally dropping. People are starting to realise that the tobacco industry itself is the prime mover behind cigarette smuggling."

BAT denies any involvement in tobacco smuggling and said it was "naturally disappointed" at the Government's inquiry. "We will, of course, co-operate fully with the investigators, but will be making no further comments during the course of their work," a spokesman said.

DTI investigators yesterday visited BAT's London headquarters and are expected to gather evidence from their files through this week. Kenneth Clarke, the former Tory chancellor, who is deputy chairman of BAT, refused to comment on the inquiry.

The investigation into "allegations of criminal activity" could lead to a police prosecution. But the Government stressed, in an official response to the select committee, that even if the inquiry did not lead to a prosecution, this did not mean BAT would be vindicated. "A conclusion that there is no basis for prosecution action is not the same as a vindication," the response said. "Tobacco smuggling is unacceptable. It undermines the Government's health objectives, reduces revenue and involves serious crime."

It was ASH's evidence to the Health Select Committee that first prompted calls for an inquiry. The MPs heard allegations that BAT and its international subsidiaries were trying to increase market share in the Third World by encouraging smuggling.

The committee gathered evidence that BAT supplied millions of cigarettes around the world in the knowledge that they would end up in the hands of smugglers. Although no tax would be paid by the consumer, BAT would still profit from the middlemen, often wholesalers, who sold the cigarettes.

The committee was given extracts from dozens of internal BAT documents, which had become available following lawsuits in the United States against the tobacco industry.

The investigation launched yesterday falls short of a full public inquiry which would lead to the publication of a report. It is a confidential inquiry which could, in theory, lead to a major criminal prosecution.

Yesterday there was speculation that other tobacco firmsmay fall within the DTI's net. This week the House of Commons Treasury Select Committee will hear evidence on the activities of Imperial Tobacco and the possible destination of cigarettes it exports.