Author: Staff Writer

Altria said yesterday that Philip Morris USA expected to receive a credit of about $145 million, plus interest, following the findings of an arbitration panel looking into payment disputes relating to the U.S. Master Settlement Agreement.

“An arbitration panel has determined that six out of 15 states failed in 2003 to diligently enforce laws that require escrow payments from the cigarette manufacturers that have not signed the Master Settlement Agreement (MSA),” Altria said in a note posted on its website. “The states enacted these Non-Participating Manufacturer (NPM) escrow laws after the MSA was signed in 1998. Manufacturers that participate in the MSA … receive downward adjustments in their MSA payments if, among other things, states fail to diligently enforce NPM escrow laws.”

As a result, PM USA expects to receive a credit of about $145 million, plus interest, against its next year’s MSA payment. This is the full remaining amount available to PM USA as part of the 2003 arbitration.

The panel’s decision does not affect the 22 states and jurisdictions that joined a December 2012 settlement of the NPM adjustment disputes.

Meanwhile, R.J. Reynolds Tobacco said the arbitration panel had determined that it was entitled to about $266 million in disputed payments from Indiana, Kentucky, Maryland, Missouri, New Mexico and Pennsylvania.

“We are pleased that the arbitration panel found that six jurisdictions failed to meet their diligent enforcement obligations under the MSA,” said Martin L. Holton III, executive vice president and general counsel for Reynolds. “Between today’s rulings and a settlement reached with 22 jurisdictions earlier this year, R.J. Reynolds should recover nearly $549 million with respect to its 2003 NPM adjustment claim.”

The announcements of the arbitration panel’s findings are at http://www.altria.com/Media/Press-Releases/Pages/PressReleaseDetails.aspx?reqID=1854037 and http://files.shareholder.com/downloads/RAI/2320600200x0x690190/5d76d4b4-7d8d-40ba-ab23-bfc3ce5b5ffa/R.J._Reynolds_receives_favorable_rulings_from_arbitration_panel.pdf.

A problem arises with a company’s having a hiring policy that disqualifies smokers on the basis of a nicotine test because the applicant might be an e-cigarette or smokeless-tobacco user.

For instance, from next month, anybody looking to work for Flagler County, Florida, USA, will have to pass a nicotine test, according to a story on Watchdog.org (Franklin Center for Government & Public Integrity).

A failed test would automatically disqualify a candidate and prevent him or her from working for the county for one year. The policy is being introduced under the guise of reducing the cost of health insurance.

But Gregory Conley, a volunteer legislative director for Consumer Advocates for Smoke-free Alternatives (CASA), says that conflating tobacco use and nicotine with costs associated with smoking is bad policy.

“Mountain climbing has a far higher risk of death or injury than smoke-free nicotine usage,” said Conley. “But there are no public employers banning mountain climbers from gaining employment.”

CASA is an Alabama-based advocacy group dedicated to protecting access to reduced-harm alternatives to smoking, including electronic cigarettes and smokeless tobacco, the use of which would trigger a failed nicotine test under Flagler County’s new hiring ban.

According to Conley, a carbon monoxide test would be more effective than a broad-based nicotine test for identifying smokers.

“Considering that 99 percent of all disease and death caused by tobacco is caused by inhaling smoke from cigarettes, punishing people who are using smoke free nicotine products—including Nicotine Replacement Therapy—is patently absurd,” said Conley.

Transnational tobacco companies have taken a cynical approach to European investments in smokeless tobacco products, according to a ScienceDaily story on new research by Silvy Peeters and Anna Gilmore from the University of Bath, U.K., and the U.K. Centre for Tobacco Control Studies, published this week in PLOS Medicine.

ScienceDaily reported that the study had found that these companies’ European investments in smokeless tobacco, such as snus, had not been driven by a concern for the health impacts of smoking but “purely by business interests.”

The researchers analyzed internal tobacco industry documents that have been made available by litigation alongside contemporary industry documentation to examine the historical interests of transnational tobacco companies.

The authors concluded that by investing in snus and recently nicotine, transnational tobacco companies had eliminated competition between cigarettes and lower-risk products, thus helping to maintain the current market balance in favor of highly profitable cigarettes.

At the same time, these companies had ensured their long-term future should cigarette sales decline further and profit margins be eroded.

The ScienceDaily story is at http://www.sciencedaily.com/releases/2013/09/130910205429.htm.

The PLOS Medicine piece is at http://www.plosmedicine.org/article/info%3Adoi%2F10.1371%2Fjournal.pmed.1001506.

At the Tobacco End Game conference in New Delhi, India, the World Heart Federation (WHF) on Monday called for countries worldwide to follow the example set by nations such as Finland, New Zealand and Scotland in setting a target year for the ending of tobacco use among their populations, according to a Science Codex story.

“Ending” tobacco use in this sense, the WHF said,  meant reducing the prevalence of smoking to 5 percent or below, as well as implementing further measures included in the World Health Organization’s Framework Convention on Tobacco Control.

“Finland (2030), Scotland (2034), New Zealand (2025) and other nations, including a group of Pacific Island States (2025), have all publicly announced a ‘target year’ to bring their tobacco use down to below 5 percent,” the WHF said.

“Tobacco use is one of the main risk factors for heart disease and causes millions of premature deaths each year worldwide.

“Despite this, tobacco companies continue to market their deadly product and are particularly active in low-income and middle-income nations, where tobacco control measures are not as strong as in many high-income countries.”

The Science Codex story is at http://www.sciencecodex.com/world_heart_federation_calls_on_all_countries_to_follow_example_of_finland_new_zealand-119018.

Imperial Tobacco said today that Oliver Tant, formerly vice chairman of KPMG and chairman of KPMG’s Client Council, would succeed Bob Dyrbus as finance director.

Tant will be appointed to the board on Oct. 1 and will be appointed finance director on Nov. 5, when Dyrbus will step down from the board ahead of retiring from the business on Dec. 31.

Tant has held a number of senior positions at KPMG during a career that has included being global managing director of the Private Equity Division and head of UK Audit. He was also a member of the U.K. board of KPMG.

“He has a wealth of international experience in change management, organisational restructuring, corporate finance and mergers and acquisitions,” Imperial said in a note posted on its website.

“Over the years, his industry focus has included consumer and industrial markets, retail, audit, private equity and insurance.”

Flue-cured prices in some districts of the Indian state of Andhra Pradesh soared during the just-concluded auctions there, according to the most recent issue of the BBM Bommidala Group newsletter.

Prices went as high as INR200 a kg in West Godavari, while the statewide average for the season was INR145 a kg.

The Tobacco Board of India has set the Andhra crop target for the 2013–2014 season at 172 million kg, an increase of 2 million kg on that of 2012–2013.

The board is keen for growers to keep to their production quotas but is probably wary given some of the prices paid at the just-concluded sales.

Officials are likely to keep an eye on nurseries to try to limit unauthorized output.

Flue-cured tobacco auctions in the Indian state of Karnataka got off to a record start this season, according to a story in the latest issue of the BBM Bommidala Group newsletter.

Prices were said to have touched INR150.20 per kg, a record for a first day and more than 7 percent above last season’s opening-day top-price, INR140 per kg.

Eight buying companies took part in the first day of sales, which were held across 11 platforms.

Karnataka is estimated to have produced about 120 million kg of flue-cured this year.

The Tobacco Board of India crop target had been set at 102 million kg, up from 98 million kg in 2012.

An estimated 1.6 million smokers attempted to quit smoking because of the Centers for Disease Control and Prevention’s (CDC) “Tips From Former Smokers” national campaign, according to a CDC press note describing the results of the campaign.

“As a result of the 2012 campaign, more than 200,000 Americans had quit smoking immediately following the three-month campaign, of which researchers estimated that more than 100,000 will likely quit smoking permanently,” according to the press note issued through PRNewswire/USNewswire.

“These results exceed the campaign’s original goals of 500,000 quit attempts and 50,000 successful quits.”

The study was said to have surveyed thousands of adult smokers and nonsmokers before and after the campaign.

“Findings showed that, by quitting, former smokers added a total of about a third of a million years of life to the U.S. population,” the CDC said.

The Tips campaign, which aired from March 19 to June 10, 2012, was the first time a federal agency had developed and placed what it referred to as “paid advertisements for a national tobacco education campaign.”

“Ads featured emotionally powerful stories of former smokers living with smoking-related diseases and disabilities,” the press note said.

“The campaign encouraged people to call 1-800-QUIT-NOW, a toll-free number to access quit support across the country, or visit a quit-assistance website.”

The tobacco monopoly administration of Shantou, Guangdong Province, and local government agencies blew up a facility destined to be used for the production of fake cigarettes at Xinmin village on Saturday, according to a China Daily story quoting the Southern Metropolis Daily.

Explosives were used to destroy the production site, which was said to have been located in a cave seven meters under a hill, because there were no roads that could be used to bring in the big machinery that otherwise would have been needed to destroy it.

The entrance to the cave allowed only one person to go through at a time.

The machines that would have been used to produce the fake cigarettes had been assembled inside the cave and were still being tested ahead of manufacturing operations.

The authorities had received tip-offs about the site many times but had previously failed to spot it.

They received the latest clue on Thursday and on Saturday found the site, which was sheltered by a pig farm and a fruit farm.

More than 140 of Imperial Tobacco’s German employees gave up their time recently to take part in a community volunteer day. The employees, based in Hamburg, joined one of eight local projects for the Reemtsma Help Day.

Projects included helping out at animal rescue centers, taking part in tandem bike rides with blind people, creating wildlife havens, building a forest garden, clearing a river and helping the homeless.

“Our first volunteer day last year proved such a success that we wanted to do it again,” said Media Relations Manager Svea Milena Schröder, who coordinated the events.

“There was so much demand last time that we had more volunteers than places, so we increased the number of opportunities to get involved this time around.

“By showing our commitment to good causes in this way, we give back to our community, gain new perspectives and also get to know our colleagues better across all functions.”