British American Tobacco (BAT) recruited and paid for a union to disrupt production at one of its chief rivals, according to a whistleblower. The union plan was part of a strategy to drive Mastermind Tobacco, an African rival, out of business.
The clandestine plot is revealed in internal BAT documents disclosed by whistleblower Paul Hopkins, who worked for the tobacco giant in Africa for 13 years. The strategy also involved bribing Kenyan tax officials to disclose its rival’s confidential tax dealings, paying company officials to disclose vital corporate secrets, and offering cash to port officials to “lose” or impound its rival’s export shipments and supplies of raw materials.
The damaging revelations will further embarrass Britain’s fifth biggest company, which generated profits of more than £4bn last year. In Kenya there are growing demands for an official investigation into Mr Hopkins’ revelations.
The union plot, codenamed Operation Snake, was an attempt to disrupt Mastermind’s factory production, the documents state. The confidential BAT report said Mastermind had operated without a registered union and claimed any attempt to register one had been “met with ruthless resistance from senior management”.
The result was “iron-fist management” and employees with “no formal channel of airing their grievances”, the report said. “Victimisation of employees is the order of the day,” it claimed. Previous attempts to unionise “lacked co-ordinated effort”, it stated.
Under the scheme, BAT recruited “vocal employees from various departments such as marketing, leaf [tobacco], transport and factory” to be union reps. They were approached with “a handsome offer”, the report said.
BAT budgeted 4.5 million Kenyan shillings (£30,000) for five union reps, it added. As the union reps might face violent opposition, the money “will be able to cater for risk including terminal benefits just in case”, it said.
The person recruited to organise the union was told the money was coming from an anti-tobacco campaign group. BAT also paid to officially register Mastermind workers with the Kenyan Commercial Food and Allied Workers Union. The company funded the union’s legal fees when it became involved in dispute with the management. After two years, BAT withdrew as the union funded itself from membership fees. Once legally recognised, the union was encouraged to start a series of disputes to disrupt Mastermind’s production.
According to Mr Hopkins, BAT came up with the union scheme after another campaign ran into difficulties. BAT had suspected Mastermind was not paying its taxes. Mr Hopkins, a former Irish special forces soldier, was told by BAT to “facilitate” bribes to Kenyan Revenue Authority (KRA) officials to obtain its rivals’ confidential tax details.
For more than five years, Mr Hopkins accumulated a detailed dossier of KRA tax demands and other legal documents which allegedly revealed that Mastermind regularly failed to pay its tax bill. The KRA documents and correspondence showed the Kenyan tax authority was demanding billions in unpaid taxes from Mastermind but collecting only a fraction of it. Mr Hopkins said senior BAT officials instructed him to leak some of the documents to Kenyan newspapers and parliamentarians to embarrass the company as well as force the KRA to be more aggressive in its tax collecting.
According to documents seen by The Independent on Sunday, the strategy was only partially successful and Mastermind paid millions more in taxes. However, when the KRA wrote to Mastermind’s bankers threatening to freeze accounts until the outstanding amounts were paid, officials in the office of former Kenyan Prime Minister Raila Odinga stepped in and ordered them to suspend the demands.
Mr Hopkins also facilitated payments on BAT’s account to officials and politicians to cripple anti-smoking laws in several East African countries as well as making payments to undermine the World Health Organisation’s efforts to reduce deaths from smoking.
He also revealed how BAT made a secret campaign donation to a Presidential candidate, Martha Karua, in a bid to block a rival firm winning a multi-million pound contract to minimise cigarette smuggling.
Ms Karua has said she was unaware BAT had made a donation to her campaign. She believed Mr Hopkins had made a personal donation. She said she would have not accepted the donation if she had known it had come from BAT. “If any person within my campaign team, or beyond, purported to accept the donation in exchange for influence of government procurement was acting beyond the scope of their authority, without my knowledge and in their individual capacity, not for me or my campaign. I believe I lost the Presidential campaign in large part because of my unwavering commitment to rule of law and my position against corruption and impunity,” she said.
A BAT spokesman said: “All BAT companies are required to operate in line with the group’s standards of business conduct and are obliged to ensure that all 57,000 employees understand them and abide by them.”
For more on tobacco industry tactics and its efforts to influence public health policy and stall tobacco control laws read the work of the University of Bath's Tobacco Research Control Group.