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CORRUPTION-MEXICO: Tobacco Companies Accused of Bribing Legislators

Diego Cevallos

MEXICO CITY, Oct 26 2005 (IPS) - The disreputable record of foreign tobacco companies in Mexico has been further tarnished by accusations of bribing lawmakers and doctoring figures to prevent tax hikes, leveled by members of the Mexican Congress.

The disreputable record of foreign tobacco companies in Mexico has been further tarnished by accusations of bribing lawmakers and doctoring figures to prevent tax hikes, leveled by members of the Mexican Congress.

Philip Morris and British American Tobacco “corrupted the conscience” of Mexican legislators until they finally succeeded in securing the defeat of a congressional bill that would have raised cigarette industry taxes, Deputy Miguel Toscano of the conservative ruling National Action Party (PAN) alleged on Wednesday.

Toscano, a member of the Chamber of Deputies Finance Committee, voiced his accusations after the majority of his colleagues voted on Tuesday to withhold support for a proposal to raise the taxes charged to tobacco companies from the current 110 percent to 130 percent for the 2006 fiscal year.

According to Toscano, the transnational tobacco giants, and particularly British American Tobacco, bankrolled trips for a number of deputies and their wives to Brazil, Costa Rica, Spain and France, as a means of securing their votes against the tax hike. He added that he will attempt to provide proof of his accusations of bribery, but stressed that it will prove difficult, because the tobacco companies operate with great caution, through third parties, as reflected by internal company documents made public in the 1990s.

Fellow Deputy Guillermo Velasco from the Green Party told IPS that the tobacco companies “went all out in their lobbying” to keep the tax increase from going through, and said he would not put it past them to bribe his fellow members of Congress with free trips.

“I wouldn’t venture to make direct accusations, but I can tell you for a fact that the tobacco companies have really lobbied hard in Mexico, they’ve manipulated figures and presented fallacious arguments to escape higher taxes,” said Velasco, a member of the Chamber of Deputies Health Committee.

Emilio Chuayffet, coordinator of the Institutional Revolutionary Party (PRI) caucus in the Mexican Congress, denied the charges of bribery and said that those making them should offer evidence to back them up.

IPS attempted to contact both Philip Morris and British American Tobacco after the accusations against them were made public, but did not receive a response.

By not raising taxes on cigarettes in Mexico, home to over 13 million smokers and 35 million “passive” smokers (who are regularly exposed to second-hand smoke) out of a total population of 104 million, the government will continue to comply with a controversial agreement signed in 2004 between tobacco companies and the administration of President Vicente Fox.

Through the agreement in question – which the public but independent National Public Health Institute has deemed in violation of the World Health Organisation (WHO) Framework Convention on Tobacco Control – the Mexican government pledged not to raise taxes on this sector in return for tobacco industry donations to a government health care fund.

The agreement was initially scheduled to remain in force until 2006.

Countries that are parties to the WHO Convention, signed by Mexico in 2003, have an obligation to implement tough tax and price policies aimed at curbing tobacco consumption. The treaty also establishes restrictions on advertising and tobacco company sponsorship of cultural and sporting events.

The fact that the deal struck between the Mexican government and tobacco companies makes industry donations tax deductible constitutes a violation of the WHO Convention, in the view of the National Public Health Institute.

Between taxes and donations, the tobacco companies provide Mexican state coffers with around 1.415 billion dollars a year – an amount just slightly over one half of the 2.753 billion dollars spent annually by the public health care system on smoking-related diseases.

According to official statistics, these diseases claim the lives of between 114 and 122 people in Mexico every day.

“It is a serious error not to raise taxes on cigarettes, because it is the only way we can curb consumption and get tobacco companies to contribute more to health care,” said Velasco.

Over the last few weeks, he reported, tobacco industry representatives appeared before the Chamber of Deputies to present “biased figures” and argue that increased taxes could push them into bankruptcy, which would then translate into unemployment for the peasant farmers who grow tobacco leaves.

They also maintained that with the current level of taxation, tobacco consumption is markedly falling in Mexico, a statement that “from our point of view is absolutely false,” added the Green Party lawmaker.

“They pulled out all the stops, but I can’t confirm whether they actually paid for trips and bribes,” he commented.

Internal tobacco company documents from the 1990s, examined as part of a study commissioned by the Pan American Health Organisation (PAHO), revealed that the industry had actively carried out a range of strategies throughout Latin America to undermine efforts to curb cigarette smoking.

According to a 2002 study titled “Profits Over People”, British American Tobacco and Philip Morris International, which together control most of the cigarette market in the region, acted with little or no ethics in actively promoting tobacco consumption.

The PAHO study showed that tobacco companies secretly hired scientific researchers in Latin America and the Caribbean to misrepresent the scientific evidence linking secondhand smoke to serious diseases, and attempted to co-opt the media by paying the travel costs for journalists to cover this purported research.

They also designed “youth smoking prevention” campaigns and programmes that were basically public relations exercises, while continuing to target young people in their advertising.

Moreover, the report revealed, despite publicly opposing illegal cigarette sales, the tobacco companies “had detailed knowledge of smuggling networks and markets and actively sought to increase their share of the illegal market by structuring marketing campaigns and distribution routes around it,” PAHO added.