Big tobacco pays EU €1.65 billion to fight contraband cigarettes, MEPs demand agreements

Members of the European Parliament in the budgetary control committee have written to the European Commission to provide the parliament with all documents and correspondence concerning cooperation agreements the Commission has with the tobacco industry.

The request was made on Tuesday, two days before the same MEPs held a "damp squib hearing" with OLAF chief Giovanni Kessler, EUobserver.com reported on Thursday, on the investigation that was conducted on former European commissioner for health John Dalli.

MEPs from the budgetary control committee want access to all documents concerning cooperation agreements between the EC and Imperial Tobacco, Japan Tobacco International, British-American Tobacco, and Philip Morris International, all signed between 2004 and 2010.

To address the problem of contraband and counterfeit cigarettes, OLAF has legally binding and enforceable agreements with the world's four largest tobacco manufacturers, in which they agree to pay a collective total of €1.65 billion to the EU and countries participating in the agreements, and to prevent their products from being contrabanded by supplying only to legitimate markets and implement a tracking system to help law enforcement authorities if cigarettes are traded illegally.

"Smuggling of contraband and counterfeit cigarettes results in loss of customs duties - and VAT and excise duties - for national governments. The OLAF Cigarettes Task Group investigates and coordinates criminal cases relating to large-scale, international cigarette smuggling," OLAF's website states.

"All documents and correspondence concerning these agreements are of special importance to evaluate and analyse the possibility of conflicts of interest of the Commission emerging from those agreements," MEPs from all parliamentary groups said in the letter, "especially in the light of Article 12.3 of the JTI-Agreement, 12.4 of the BAT-Agreement, and Article 11 of the ITL Agreement."

"We demand comprehensive information on the relationship to the tobacco industry, in full disclosure," the MEPs write.

The same MEPs met OLAF chief Giovanni Kessler on Thursday, who on his part said the resignation of former supervisory committee president Christiaan Timmermans was unrelated to the Dalli investigation.

In comments to MaltaToday, German MEP Inge Graessle (EPP) said the allegations that had cost John Dalli his job - that he was aware of an attempt by a Maltese businessman to solicit a bribe to influence tobacco laws that Dalli was reviewing - are not yet clear enough.

"I wonder how the work was done and what the conclusions were that led to the resignation - this for me is relevant: what is the criminal act at the heart of the investigation? We still don't know, and I'm interested in the work that the police will do on the investigation."

"I'm sure a commissioner from a bigger member state would not have been dealt with that way," Graessle said referring to the instant resignation of Dalli on the strength of the covering letter accompanying OLAF's report. "We should also care about small member states."

Other similar agreements include the Philip Morris 12-year agreement signed with OLAF in 2004 to fight contraband cigarettes.

MEPs meet OLAF chief Kessler

German Liberal deputy Michael Theurer, the chairman of the budgetary control committee, said a behind-closed-doors meeting with Kessler "failed to clear up if ex-health commissioner John Dalli acted wrongly or why a top Olaf official has suddenly resigned."

Theurer said parliament chiefs should ask European Commission President José Manuel Barroso to hand over the OLAF report, or to come and answer questions himself.

"I think we have to put the question to the President of the commission and then I'm confident there can be found an appropriate way for the European Commission to inform parliament. We need to have a full insight into what happened. We could see the written report - that would be one thing - and if there is any evidence that we should investigate further, then there are different options ... parliament could set up an investigative committee."

EUobserver.com said that a source present at the Kessler meeting said that the OLAF chief hinted at the way the Zammit bribe took place: "He [Kessler] said: 'Imagine if I met my friend [a middleman] and some lobbyists in my flat. How would you feel about it?' But he phrased it in a very hypothetical way. We asked him: 'So what are the facts?' And he said: 'I can't give you the facts''."

On the strength of this source's claim, the example would tally with a Wall Street Journal report of a 10 February meeting between Dalli and a young Maltese lawyer, ostensibly a lobbyist for Swedish Match although Dalli says he is unaware of this, and Silvio Zammit - it was after Dalli explained the situation of the export ban on snus in the EU and walked out of the room, that Zammit allegedly floated the €60 million fee to influence the Tobacco Products Directive. This claim was made by Swedish Match vice-president Patrik Hildingsson.

EC midday brieing

The European Commission today said it cannot publish the report by anti-fraud office OLAF in an alleged case of bribery which has implicated former commissioner John Dalli, because of EU regulations.

A spokesperson for the Commission said the OLAF report was not the property of the Commission, and that this was part of EU legislation.

"The report is now in the hands of the Maltese judicial authorities and it is up to them whether to publish or not," spokesperson Olivier Bailly said with respect to the Attorney General's decision to pass on the OLAF report to the Commissioner for Police for investigation.

According to OLAF, "unambiguous" circumstantial evidence exists that Dalli was aware that Silvio Zammit, a Sliema businessman and political canvasser for the former minister, was soliciting a bribe from Swedish snus producers Swedish Match to influence tobacco legislation that Dalli was reviewing.

A former spokesperson for John Dalli also told the press in today's midday briefing in Brussels that the commissioner had been made aware of lobbying regulations upon taking up his post in the Commission.