US judge fines BAT for withholding memo

A subsidiary of British American Tobacco, the cigarette company, has been fined $250,000 (£133,000) by a US judge for "reckless misconduct and bad faith" over its attempts to keep an internal document secret.

Judge Gladys Kessler has censured BATCo, a subsidiary of BAT, for refusing to supply a member of staff to testify in a government lawsuit which claims the tobacco industry engaged in a 50-year deception on the health risks of smoking.

Alison Kinnard, an employee of BAT, would have faced questioning on BAT's document retention policy and, in particular, a memo written by Andrew Foyle, a partner at Lovells, the legal advisers to BAT. The US government claims this memo shows BAT destroyed damaging scientific documents.

BAT, however, claims its document retention policy has always been lawful, and it will not hand over the document, saying it is subject to attorney-client privilege and should be kept confidential.

BATCo has previously had to pay a total of $1.4m for failing to comply with court orders arising from the trial. Fining BATCo a second time, Judge Kessler said: "It would appear from BATCo's egregious lack of candour that BATCo does not seem to have learned any lesson from that experience."

A spokeswoman for BAT said the company was not given an opportunity to explain in court why it was withholding the witness. It would have claimed that preparing Ms Kinnard to face cross-examination in court would have involved breaching the confidentiality of the memo from Mr Foyle.

The court penalties came as it emerged that Martin Broughton, the former chairman of BAT, earned £3.7m last year in salary, bonus and share awards. He retired in June with a pension pot worth nearly £12m, which will give him an annual pension of £689,000. Paul Adams, the current chief executive of BAT who also refused to be a witness in the trial, earned £2.5m. His salary of £1.7m was topped up by share option gains of £228,770 and a long-term bonus payout of £519,497, based on BAT's share price in February. His pension pot is £3.6m, worth about £285,000 a year if he retires aged 60.