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Lawsuit targets BAT’s role in Reynolds deal

| November 12, 2014

The plaintiff in a lawsuit targeting Reynolds American Inc.’s $27.4 billion offer for Lorillard Inc. wants the deal blocked, saying that British American Tobacco (BAT) is protecting its 42 percent Reynolds stake at the expense of public shareholders.

The Beatrice Corwin Living Irrevocable Trust is suing Reynolds, its board — which includes top executive Susan Cameron — and BAT for breach of fiduciary duty in the deal announced July 15, according to an article in the Winston-Salem Journal. The plaintiff accuses Reynolds’ board of directors of agreeing to the new BAT investment, along with a “joint technology-sharing strategy for next-generation products,” as a means of keeping BAT from taking majority ownership of the company. A 10-year moratorium on BAT acquiring additional Reynolds stock ended July 30.

The plaintiff says the non-BAT directors wanted Reynolds to remain independent in order to keep their director seats that paid in fiscal 2013 between $90,000 and $378,000 (for Chairman Thomas Wajnert) in cash fees and between $229,880 and $459,760 (Wajnert) in stock awards.

“The threat of a complete takeover gave BAT additional leverage to impose its terms on the Reynolds board during those negotiations,” according to the complaint.

The lawsuit was filed Aug. 8 in Guilford County Superior Court and was moved Aug. 12 to the N.C. Business Court. The plaintiff wants class-action status and a jury trial.

Indian states crack down on tobacco

| November 11, 2014

An attempt at heading off the growing incidence of cancer in the Indian state of Bihar has led to a ban on a number of non-combustible oral products containing tobacco, but has exempted cigarettes, bidis and raw tobacco or khaini, according to a story in the latest issue of the BBM Bommidala Group newsletter.

Bihar’s chief minister, Jitan Ram Manjhi, declared on November 7, National Cancer Awareness Day, a ban on tobacco products such as pan masala, zarda, packaged khaini and scented areca nut or sugandhit supari.

The ban is being imposed under the Food Standards and Safety Act.

Bihar is the 11th Indian state to introduce such a ban on the huge range of oral products that combine tobacco with other ingredients. India has 29 states, including Telangana, which was formed this year, and seven union territories.

The latest ban in Bihar is an extension of a ban on gutkha that was imposed in 2012.

It will apply for one year to the manufacture, storage, distribution and sale of all chewable products, except raw tobacco.

At the same time, the Himachal Pradesh state administration is considering banning the sale of single cigarettes.

Health Minister, Kaul Singh Thakur, said the ministry had recently received approval from the law department regarding making the necessary amendments to legislation, which would be ‘introduced in the Assembly soon’.

Meanwhile, the Delhi state administration, as part of its plan to make the state tobacco-free, has launched an initiative to turn the departments of transport, health, education and the police into tobacco-free zones where it would be illegal even to carry tobacco products.

Rising tide of tobacco taxes in Maldives

| November 11, 2014

The Maldives’ Minister for Finance, Abdulla Jihad, said on Monday that the government would propose a tax increase on tobacco products of 300 percent, according to a Haveeru Online story.

Speaking during a Budget Committee meeting, Jihad said that it was planned also to increase import duty on tobacco and other products.

The current import duty on tobacco products is 150 percent.

“We are considering increasing import duty mostly on luxury items, or items harmful to the environment or health,” Jihad was quoted as saying.

Petition calls for shisha-ban review

| November 11, 2014

More than 200 people have signed a petition calling for a ban on the sale of shisha in Singapore to be reviewed, according to an AsiaOne story.

The appeal, on the petition website Change.org, was started on Thursday by Isabelle Yeo, a National University of Singapore law graduate.

Yeo also wrote an open letter to the Ministry of Health (MoH) saying that it was not so much the ban’s objective that she was opposed to, but the way in which the ban was put in place. She said she didn’t agree with absolute bans, and more so when there were no clear explanations given for the bans.

The ban on the import, distribution and sale of shisha is due to come into force later this month, though existing importers and retailers may continue to do business until July 31, 2016.

An MoH spokesman said previously it was necessary to ban shisha now to prevent it from becoming entrenched in Singapore, in the way that cigarettes had become entrenched.

Fine cigar auction, London, December 1

| November 11, 2014

C.Gars Ltd’s fifth winter auction of rare, aged and vintage cigars is due to be held in London on December 1.

Managing director, Mitchell Orchant, said his company was currently holding 350 Lots and that bids were expected to range from £40 to £30,000, which would be a record for a C.Gars auction.

Due to the high number of Lots, the auction is set to start at 16.00, at Boisdale Belgravia.

It will be followed by a dinner and smoke-in on Boisdale’s cigar terrace.

The C.Gars winter 2014 auction catalogue is online at www.cgarsltd.co.uk.

 

BAT moves swiftly to investigate U.S. tobacco farm labor abuse allegations

| November 10, 2014

British American Tobacco says it is bringing forward to next year a scheduled independent review of its US supply chain.

This follows the publication of a number of reports alleging labor abuses on US farms, including tobacco farms.

One report, A Smokescreen for Slavery: Human Rights Abuses in UK Supply Chains, by UK Labour Party members Jim Sheridan and Ian Lavery, followed a July fact-finding trip (see July 25 story: Joint US and British delegation to check on conditions on US tobacco farms) to migrant camps and tobacco fields, which was led by the Toledo-based Farm Labor Organizing Committee.

Asked to comment on a Huffington Post blog by the two MPs last week, BAT said that it hada long and proud history in agriculture, working directly with farmers around the world and advancing agricultural best practice.

“We do not own tobacco farms or directly employ farmers, instead we partner with over 100,000 contracted farmers and third party suppliers around the globe,” a spokesperson said.

“Our Social Responsibility in Tobacco Production (SRTP) programme sets out the standards we expect of our leaf suppliers, including in the US. We publish all supplier scores on our website at www.bat.com/srtpdata.

“We take any allegations of poor working conditions within our supply chain very seriously.”

The spokesperson said that since being made aware of the alleged issues in relation to farm labor in the US, BAT had been in regular dialogue with both the Farm Labor Organizing Committee (FLOC) and R.J. Reynolds Tobacco Company (RJRT), with whom it contracted to purchase a small amount of tobacco leaf.

Last week’s report, a personal account by Labour Party MPs with whom BAT recently met, alleged a number of specific issues in North Carolina, USA. “While it is not clear the issues identified take place within our supply chain, further investigation is needed,” the spokesperson said.

“We have therefore brought forward to next year a scheduled independent review of our supply chain in the US.

“While we are a large shareholder of RJRT, we do not control the company.

“With regards to the specific issues raised in relation to US law, we maintain that they can only be resolved through a multi-stakeholder approach – one that involves all key US based stakeholders in the process, not just FLOC and RJRT.

“We agree with RJRT that the Farm Labor Practice Group, whose members include FLOC, federal and state level government, tobacco growers and other relevant organisations, remains the best mechanism for resolving these US specific issues.”

Farm labor practices in the US have been much in the news recently. In announcing recently new leaf tobacco supply arrangements with Philip Morris International, both Universal and Alliance made mention of the US Agricultural Labor Practices code.

Universal said that ALP was designed to further its corporate goals and the goals of its customers of progressively addressing and eliminating concerns found in agriculture with child and other labor issues, and achieving safe and fair working conditions on all farms from which Universal sourced tobacco.

The MP’s report is at: http://www.toledoblade.com/attachment/2014/11/06/Trade-Union-Group.pdf.

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