Cigarette makers pay their debt to early cancer victims

Tom Stevenson,Patricia Wynn Davies
Sunday 23 October 2011 08:46

Pressure mounted on the two biggest British tobacco companies to settle claims from lung cancer victims yesterday after BAT held out the prospect of a multi-billion pound settlement with thousands of smokers in the United States.

BAT, maker of one in ten of the 5.3 trillion cigarettes smoked every year, said for the first time that it would consider a "sensible proposal" to resolve its 40-year stand-off with the anti-smoking lobby, although it stopped short of admitting liability for any deaths.

Martin Broughton, chief executive of London-based BAT, which makes Lucky Strike, Kool and Benson & Hedges in the US, said the cost of litigation and the impact of outstanding American court cases on shares had forced it to consider a deal.

He added: "There ought to be a sensible figure ... that would get lawsuits off our agenda and let us get on with running our business...".

The climbdown is a dramatic development after four decades in which the industry has consistently refused to admit the harm cigarettes cause and has boasted of how it has never paid a cent in damages.

While BAT does not sell cigarettes in Britain, the company's shift in attitude could have important implications for claims by British smokers against two other tobacco giants. In the first group legal action in the UK, 40 cancer victims are claiming that Gallaher, which makes British Benson & Hedges and Silk Cut, and Imperial Tobacco Group, which makes Embassy and Players, negligently failed to cut tar levels in their products when it became clear that this would have reduced cancer among smokers.

Martyn Day, of Leigh, Day & Co, the solicitors co-ordinating the case, said: "I think there is no question that BAT considering settlement will have a very big impact on the cases here, because of the effect the smoking litigation has had on share prices.

"We know that the prices have been severely depressed here. By having some sort of resolution they will lift the cloud that is hanging over their heads. The pressures from stockholders in Gallahers and Imperial will be very great," he said.

Mr Day has estimated that if the two companies lost, they could be at risk of claims for the next 10 to 15 years from smokers who took up the habit in the late 1940s and early 1950s, the heyday of cigarette advertising when the joys of tobacco were also at the heart of cinema chic. Taking an average claim of pounds 50,000, that could cost them pounds 1bn to pounds 2bn a year over the 10- to 15-year period.

Ash, the anti-smoking group, has been urging investors to take note of the legal action when considering whether to invest in the tobacco industry. But Ash is concerned that the tobacco conglomerates might settle cases in the US and Europe, but largely unregulated sales would continue unabated in the Third World.

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