Footnote to “A Stateless Philip Morris?”

At Altria/Philip Morris’s annual shareholder meeting yesterday, Altria CEO Louis Camilleri was confronted by protesters, including Maori activists who came from New Zealand to denounce the company for selling a “Maori Mix” brand in Israel. Camilleri repeatedly apologized for the marketing effort.

Maori Smokefree Coalition Director Shane Bradbrook told Camilleri,

“Let me tell you, this product called Maori Mix was an absolute affront to my people.

“Your company’s misappropriation and exploitation of our culture to sell your product of death and illness to Israelis was at a minimum culturally insensitive — and at worst another form of oppression and abuse that indigenous peoples have faced for decades.

“I stand before you to hold you in absolute contempt and derision. I don’t expect a weak apology or some glib rationale from you for associating our culture with Maori Mix. But I do have a message for you: do not misrepresent, do not associate our proud culture with your deceitful practices and product.”

After Camilleri issued his apology, Bradbook told the Altria CEO that he would accept the apology, but that he rejected the idea that the company made a “mistake.” Said Bradbook, “You spend millions of dollars on marketing and research. You never make mistakes.”

A Stateless Philip Morris?

[posted on corp-focus, April 27, 2006]

A Stateless Philip Morris?

By Russell Mokhiber and Robert Weissman

Shareholders in Altria, the parent company of Philip Morris, are meeting today in East Hanover, New Jersey and singing “Happy Days Are Here Again.”

Happy shareholders in a cigarette company is bad news for public health.

In the short term — and never underestimate shareholders’ obsession with the short term — the shareholders are pleased that Philip Morris has managed to capture an increasing share of a declining market. While U.S. cigarette sales fell more than 4 percent in 2005 and 20 percent in the last decade — perhaps the greatest and most unsung public health achievement in the United States in recent decades — Philip Morris’s U.S. market share has risen, to just over 50 percent.

In the medium term, however, what has the shareholders so excited is the potential breakup of the company. If a handful of major lawsuits break Philip Morris’s way over the next year or so, Altria plans to split into three independent companies: Philip Morris USA, Philip Morris International, and Kraft. Wall Street analysts say such a move is likely to result in a 20 percent to 33 percent premium for shareholders, primarily because the assets of Kraft and Philip Morris International will no longer be vulnerable to lawsuits related to the actions of Philip Morris USA.

The liberation of Philip Morris International from Philip Morris USA has potentially grave consequences, however.

An independent Philip Morris International might be incorporated in the United States (though it very likely will not make sales in the United States), or it might be located in Switzerland, where the Philip Morris International subsidiary is now based (but to which it has no historic connection and which it could leave quickly, if there were cause). Either way, an independent Philip Morris International is likely to feel almost no ties to its home country.

In other words, Philip Morris International may effectively be on the verge of converting itself into a corporation that is, from a practical standpoint, close to stateless.

Philip Morris has for decades been a rogue company, committing some of the most egregious marketing abuses and flagrant exercise of illegitimate political influence around the globe. (See for recent marketing examples.)

But things could always be worse. Up to now, Philip Morris has felt at least a little constrained by public opinion in its home country and most important market, the United States, as well as by the (dormant) possibility of U.S. domestic regulation of its overseas operations and the possibility that it might be held liable in U.S. courts for what it does overseas.

How an independent Philip Morris International chooses to conduct itself is a matter of the utmost importance: Philip Morris is the world’s largest tobacco multinational, and 80 percent of its sales are made by Philip Morris International. The company has been a leader in innovating new marketing techniques to attract new smokers, with deadly effect. The World Health Organization estimates that 10 million people will die annually from smoking-related disease by 2030, 70 percent in developing countries. Half the people that smoke today — about 650 million people — will eventually die from cigarette-related disease, according to WHO.

In the deregulated world in which we live, no governmental authority has much power to do anything to block or condition an Altria breakup.

Governments can take steps to mitigate the potential harms, however. The most important is to ratify and implement the terms of the Framework Convention on Tobacco Control, a global treaty with strong public health measures.

Pressure on Philip Morris International could also make a difference.

More than 100 organizations in 50 countries have called on Philip Morris International to “make commitments — in advance of a breakup — to ensure that the separation of Philip Morris International and Philip Morris USA does not worsen the tobacco epidemic.” (See Essential Action organized this effort.

Among the groups’ demands are for Philip Morris International to commit to:

– Adhere to the provisions of the Framework Convention on Tobacco Control, including by ending all advertising and marketing of tobacco products;

– Not lobby or work — including through front groups — against proposals to implement the terms of the Framework Convention, or against proposals to enact 100 percent smokefree places;

– Not invoke provisions of any trade or investment agreement to challenge any tobacco control-related law or regulation.

– Fully disclose all political contributions, lobbying costs, and charitable/educational donations in every country in which it operates; and

– Refrain from tobacco product placements in movies, TV or other media.

From creation of front groups to inventing “tort reform” (the effort to deny victims’ the right to sue corporate wrongdoers), the tobacco industry has long been on the cutting-edge of developing new forms of corporate nefariousness. The evolution of an effectively stateless operating company threatens to be a new chapter in this terrible saga, making efforts to confront Philip Morris International before it is set free all the more important.

Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime Reporter, . Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor, and director of Essential Action . Mokhiber and Weissman are co-authors of On the Rampage: Corporate Predators and the Destruction of Democracy (Monroe, Maine: Common Courage Press).

(c) Russell Mokhiber and Robert Weissman

This article is posted at:

Democrats and the Gas Price Crisis — About to Blow Another Opportunity?

[posted on Huffington Post, April 26]

So now everyone is worked up about gas prices.

The Republican leadership in the Congress has called for Federal Trade Commission investigations into price-gouging, and President Bush amusingly has done the same.

This all reflects what the Washington Post concisely said in a Tuesday headline: “Cost of Gas Puts Pressure On GOP.”

The Democrats, understandably, are very happy. People don’t like high gas prices, and everyone understands the Republicans are the party of Big Oil, and thus get blamed for high prices.

But the Democrats are positioning themselves to blow the political opportunity, not to mention failing to advance a policy that would actually help consumers and the environment.
The main Democratic response has been to call for … Federal Trade Commission investigations. OK, to be fair, what the Dems want would give the FTC power it does not now have, and perhaps would result in a more serious effort than what the Republicans have in mind.

But by way of contrast, consider this: three decades ago, when the oil giants profiteered in the wake of the first oil embargo, almost half the U.S. Senate voted to break up the integrated oil companies.

While it would make even more sense on the merits now than it did then, asking the Democrats to support such a move today is perhaps asking too much. (Beyond political cowardice, one reason the Dems may be uncomfortable going into this territory is that the oil industry consolidation that facilitates price gouging and other abuses occurred largely on Bill Clinton’s watch.)

What is not too much is to ask the Democrats not just to blow hard about price gouging, but to support measures that would directly do something about it. And the simplest thing would be to enact a windfall profits tax, which would take Big Oil’s ill-gotten gains, and re-direct it to consumers and, most critically, investments in renewable fuels.

There are such proposals in the Congress, made after the gas price spikes of last year, including the huge jump following Hurricane Katrina. However, just 40 members of the House of Representatives were willing to co-sponsor the leading legislation calling for a windfall profits tax on the oil companies (H.R,2070, the Gas Price Spike Act of 2005, introduced by Representative Dennis Kucinich of Ohio). Only eight members of the Senate co-sponsored the leading windfall profits bill there (S.1631, the Windfall Profits Rebate Act of 2005, introduced by Senator Byron Dorgan of North Dakota). (To his credit, Senate Minority Leader Harry Reid was one of those eight).

The Democratic chatter inside the beltway is now all about delivering a “vision” and moving away from laundry lists. No doubt vision is important, though most of the discussion is really akin to commercial branding (Toyota is “moving forward,” Chevrolet is leading “an American Revolution,” Ford is “Built for the Road Ahead,” etc.) than setting out real points of principle.

Lost in the discussion about “vision” is the absolutely vital discussion about line drawing – as in, how do the Democrats meaningfully distinguish themselves from Republicans.

Calling for better FTC investigative power doesn’t meet the test.