03.22.19

Tobacco industry, bribery and anticorruption

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This post was written by Camila Florencia Tort, Consultant at the Department of Legal Cooperation of the Organization of American States and Andrés Constantin.

The World Health Organization projects the death toll from tobacco will rise to more than eight million by 2030. Despite the strides made in curbing the tobacco epidemic, the tobacco industry interest in increasing tobacco consumption is increasing.

The tobacco industry’s strong desire to increase tobacco use opens the door for possible government bribing and corruption to prevent the implementation of tobacco control laws and policies. The WHO Framework Convention on Tobacco Control (FCTC) aims towards regulating this tension. However, fully implementing FCTC is still weighted down by the tobacco industry that leverages its economic power and strategic connections to exert influence and prevent effective public health measures. In this regard, Article 5.3 of the FCTC provides for the protection of health policies of state parties from tobacco industry interference, which is unanimously endorsed. State parties also adopted specific implementing guidelines in 2008 to ensure Art. 5.3 implementation. Still, implementation of these guidelines vary largely in different countries.

 

The tactics of the tobacco industry

The tactics used by the tobacco industry to resist government regulation of its products include conducting public relations campaigns, buying scientific and other expertise to create controversy about established facts, funding political parties, hiring lobbyists to influence policy, using front groups and allied industries to oppose tobacco control measures, pre-empting strong legislation by pressing for the adoption of voluntary codes or weaker laws, and corrupting public officials.

The interference of the tobacco industry in the design and implementation of public policies constitute the greatest obstacle to the effective implementation of norms that protect the population from the health consequences of consuming tobacco. The goals of the tobacco industry and the implementation of public health policies are irreconcilable. When a government allows tobacco industry interference it is protecting the profits of the tobacco industry at the expense of the life and health of the population.

Bribery to prevent tobacco control measures

It is not novel that bribe paying is one of the mechanisms that the tobacco industry has used to prevent the implementation of tobacco control law. In 2010, the U.S. Securities and Exchange Commission sanctioned two tobacco companies that had joined efforts to operate in a coordinated bribery scheme under the name of Alliance One International Inc. for having paid more than $5 million US dollars in bribes to public officials in Thailand in order to secure tobacco sales contracts for the subsidiaries of Thailand Tobacco Monopoly (state-owned company) in Brazil and Europe.

Moreover, recently released documents indicate that the tobacco industry attempted to use bribery and intimidation to influence the outcomes of the FCTC discussions. Since 2017, the British American Tobacco company is being investigated by the UK’s Serious Fraud Office for suspicions of corrupt practices to undermine anti-smoking legislation. Back in 2015, the BBC obtained hundreds of documents that reveal how BAT employees bribed politicians, public officials and even people working for a rival company in Africa.

Anticorruption legal frameworks to prevent tobacco industry interference

Efforts to link anticorruption with tobacco control have often focused on considering article 5.3 of the FCTC as an anticorruption measure to discourage collusion between policymakers and the tobacco industry. However, the tobacco industry still remains largely unpunished.

Resort to other general anticorruption norms within the domestic, regional and international realm remain underused. In this context, anti-corruption laws can offer a great opportunity to ensure that public health takes precedence over corporate interests.

In terms of anticorruption, criminal law currently recognizes two models that could be applied to corrupt bribery practices by tobacco companies. On the one hand, some legislations explicitly prohibit indirect bribery as criminal offenses. This is the case of Australia, the United States, the United Kingdom, France, Mexico, Spain, among others. On the other hand, legislations that do not contain an express prohibition of indirect bribery, usually resort to general rules of criminal participation to hold intermediaries accountable with respect to any crime.

The main international instruments in the area of anticorruption reflect both models. The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, for example, provides both formulas (see Articles 1.1; 1.2 and 2). Similarly, the U.N. Convention against Corruption requires the criminalization of the promise, offering or giving to a public official, and the solicitation or acceptance by a public official, directly or indirectly, of an undue advantage, for the official himself or herself or another person or entity, in order that the official act or refrain from acting in the exercise of his or her official duties, in order to obtain or retain business or other undue advantage in relation to the conduct of international business (Articles 15 and 16).

Ignorance, due diligence and new opportunities

Until a few years ago, the main problem was that to condemn a company or its executives for a bribe paid by a third party for the benefit of the company, the accuser had to prove that the company or its executives knew that the third party had paid a bribe that would benefit them. Thus, prosecution of transnational bribery cases was very rare, precisely because of the difficulty of proving the knowledge of the company about bribes paid in other countries. For years, ignorance was enough to avoid prosecution.

However, the current trend towards models of corporate responsibility based on the violation of duties of due diligence and oversight allowed the imposition of sanctions to companies for the conduct of their agents and other third parties. This, in turn, can be promising when it comes to avoiding the interference of the tobacco industry in political decision making. In this context, deliberate ignorance or intentional indifference is no longer a sufficient defense. In the last decade, many countries stopped requiring a standard of direct knowledge and turned their systems of attribution of responsibility towards models based on the violation of due diligence or the lack of oversight of the actions of their agents.

This new trend led to jurisprudential advances that systematically extended the scope of bribery to include, among others, payments made by third parties in order to obtain preferential treatment in customs authorization processes; payments to accelerate product authorizations, their distribution and sale; payments to guarantee the approval of a patent; payments to obtain favorable treatment in pending litigation; payments to obtain a reduction in the payment of taxes; or for making payments through agents to prevent the adoption of a law that would prohibit the marketing of a certain product.  

Conclusion

Anti-corruption legal frameworks offer a great opportunity to ensure that public health takes precedence over corporate interests and prevent the tobacco industry efforts to undermine or subvert tobacco control laws and policies. States have the duty to ensure that undue influence, real or perceived, is not exercised on interests other than the public good, on persons or institutions responsible for public decision-making. In this sense, the political commitment to avoid industry interference and corruption is not enough, but the application of mandatory regulations is required.

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The views reflected in this blog are those of the individual authors and do not necessarily represent those of the O’Neill Institute for National and Global Health Law or Georgetown University. This blog is solely informational in nature, and not intended as a substitute for competent legal advice from a licensed and retained attorney in your state or country.

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