DAY 89: Szymanczyk Grilled on Corporate Responsibility Initiative
April 7, 2005 12:43 pm by Gene BorioApr 7, 2005, 8:19 PM.
Updated to reflect the fact that Thursday was Day 89, not 90, and Mr. Szymanczyk’s height is closer to 6′8″, not a measley 6′5″
DOJ attorney Sharon Eubanks is stuggling mightily to get PM USA CEO Michael Szymanczyk to admit that Philip Morris’ $100 Million/year corporate responsibility program is basically a PR stunt meant to maintain corporate value and to impress jurors and legislators.
Ms. Eubanks has tried to nail Mr. Szymanczyk on
–Whether Philip Morris was acting fraudulently previous to its reformed corporate mission and core values statements–which Mr. Szymanczyk first wrote in 1998.
–What could possibly stop Philip Morris from engaging in wrongful conduct in the future.
–Company or TI public statements that contradict his opinions that Philip Morris, since he has been there, has not tried to mislead the public on causation or addiction.
–The chart in his written direct, which is meant to show that top management at Philip Morris has changed. The dates of their appointments are listed, Actually, all the people in the chart have been senior employees with the company for 10-30 years.
Mr. Szymanczyk admitted that his “ultimate legal requirement is to build the value of the corporation.”
“We have determined that having society view us as a responsible company is the best way to build value in the business. . . That is the legal requirement we have as stewards of someone else’s business.”
Ms. Eubanks introduced a Philip Morris Cos. memo — sent “to all employees” by Steve Parrish–which quoted approving comments on the program by a number of top financial analysts. The analysts–who apparently were briefed on it before its actual start– appraised it from an investor/financial viewpoint, ie, concentrated on the use of the program in business goals, especially in “moderat[ing] juror anger.”
Mr. Szymanczyk is quite large, about 6-8 and a bit overweight; he smiles easily and in fact looks a lot like Ed Koch, if Ed Koch were 6′8″. For all his bulk, he is surprisingly nimble at slipping past the lunges of Ms. Eubanks’ epée.
April 7th, 2005 at 5:02 pm
The business press makes no bones about the purpose and aims of Philip Morris’s “corporate responsibility” program:
“In the wake of two surprise courtroom losses in the US that have sent its stock reeling, Philip Morris Cos. Chief Executive Geoffrey Bible tackled Wall Street’s tobacco liability worries head-on, saying the company is already taking ‘immense’ steps to repair its tarnished image and manage its litigation risks.”
http://expressindia.com/fe/daily/19990707/fco07053.html
The Asian Wall Street Journal, July 7, 1999
Some related references:
Philip Morris Launches Campaign that Promotes Industry Image
http://www.health.ri.gov/media/981222b.php
Behind the Smokescreen: Philip Morris Philanthropy
http://tobaccofreekids.org/reports/smokescreen/philanthropy.shtml
Altria Means Tobacco: Philip Morris’s Identity Crisis
American Journal of Public Health, April 2003
http://www.infact.org/ajph403.html
Philip Morris Attempts to Re-define Image
http://www.tobaccofreedom.org/issues/documents/image/index.html
Philip Morris Puts Up Good Citizen Smokscreen
Alternet, November 27, 2000
“Cigarette maker Philip Morris recently spent $2 million on domestic violence programs nationally and $108 million on the advertising campaign to tell us about it.”
Philip Morris Money
The American Prospect, March 27 2000
http://www.prospect.org/web/page.ww?section=root&name=ViewPrint&articleId=4291
Industry’s “Youth Programs” Help Avoid Regulation
http://www.tobacco.org/Documents/dd/ddindyyouthprograms.html
Tobacco Industry “Prevention” Programs
http://www.no-smoke.org/htmlpage.php?id=74
April 7th, 2005 at 11:49 pm
This is all so very interesting, and so very irrelevent. Youth marketing is not racketeering, regardless of whether it is being done or not. Any competent judge would never have even wasted time and money talking about things that are irrelevent to the case. Racketeering requires an association of people or organizations that work together to commit crime. What individual companies do or don’t do on their own is irrelevent to RICO laws. It may violate other laws, but not RICO. As far as I know, the government has not charged the tobacco companies with conspiring together to market to underage smokers. And it is pretty silly to think that they would, rather than do it on their own to try and hook kids on their own brands.
Of course the bulk of this whole trial is nothing other than another hugely expensive ‘baseball steroid hearing’. It is a chance to scold and talk about how bad tobacco guys are, when they have not violated the law or rule that they are charging them with.
If Congress wants to regulate or outlaw cigarettes, pass a bill or law that does it, and quit trying to stretch other laws in ways that don’t make sense.
This charade is a meaningless waste of time and taxpayer dollars.
April 8th, 2005 at 10:03 am
“as far as I know, the government has not charged the tobacco companies with conspiring together to market to underage smokers”
DOJ alleges the Defendants engaged in RICO violations in a number of specific ways…
E. The Defendants have targeted youth in their marketing campaigns despite laws making it illegal to sell cigarettes to minors. Defendants continue to “advertise in youth oriented publications; employ imagery and messages that they know are appealing to teenagers; increasingly concentrate their marketing in places where they know youth will frequent such as convenience stores; engage in strategic pricing to attract youth.” DOJ FPFF ES page 24.
http://tobacco.neu.edu/litigation/cases/Backgrounders/DOJ_pre_trial.htm#allegations_
The relevance of industry image campaigns is not limited to youth marketing, however. It also includes Big Tobacco’s corporate philanthropy, sponsorship, and straight PR campaigns.
The point here is all of the above are aimed at boosting the stock price and reducing court losses through polishing the corporate image, not at any substantive change in behavior.
April 8th, 2005 at 11:08 am
The relevance of industry image campaigns is not limited to youth marketing, however. It also includes Big Tobacco’s corporate philanthropy, sponsorship, and straight PR campaigns.
The point here is all of the above are aimed at boosting the stock price and reducing court losses through polishing the corporate image, not at any substantive change in behavior.
***
Yes, everything the tobacco companies do is evil, immoral, and illegal. Why should they be allowed to polish their corporate image, is that it?
The “point” is that none of those things are RICO violations either, and pretending that they are is frankly disingenous.
Just because the gov’t is posturing that “youth marketing” is a RICO violation, that doesn’t mean it is. Remember, the gov’ts definition of “youth” also includes legal adult smokers above the age of 18!
The gov’t also regulates the labelling of cigarettes via the FTC, including labelling of “light” cigarettes, yet at the same time they simultaneously claim in this lawsuit that labelling cigarettes “light” constitutes racketeering!
In terms of other legally questionable claims, remember the bulk of the gov’ts original case (all the medicare recovery portion) was dismissed at the onset as legally baseless.
April 8th, 2005 at 12:18 pm
“The Defendants have targeted youth in their marketing campaigns despite laws making it illegal to sell cigarettes to minors.”
Then bring them up on criminal charges under the laws that make it illegal to sell cigarettes to minors.
Once again, that has nothing to do with racketeering. Racketeering requires an ‘association’ of people or companies conspiring together to commit crimes. Illegal acts committed by a single company on their own is not racketeering.
It is the equivalent of two thieves, one in Boston and one in Florida, both robbing a liquor store on the same night. You can charge them both with theft of property, but you can’t convict them of racketeering unless you can prove they were working together in an organized fashion. And as I said before, it makes no sense that the large tobacco companies were ‘working together’ in marketing to underage smokers. They are in a huge competition to fight each other for youth smokers.
Any first-year law student could see the vast majority of the governments claims have nothing to do with racketeering (’lights’, underage marketing, company statements on addiction, etc.). The few claims that support racketeering are the industry associations that the tobacco companies formed. Which have been a small part of the case since they were disbanded by the tobacco companies.
Judge Kessler’s handling of the trial has wasted months and years covering non-racketeering charges. It shows her to either be incompetent, or simply conducting a sham trial to allow the government and press to scold the tobacco companies.
April 8th, 2005 at 12:50 pm
I know just what you mean. Big Tobacco is in court today for singing too loud in church.
Once again, for some reason I’m reminded of legal analysis by financial analysts:
“Tobacco analysts are a unique and distinctive group on Wall Street. For one thing, they would to a man preferto flack for the tobacco industry than actually make a correct investment recommendation and be seen to make one.”
“The other unique feature of the tobacco analysts is that they are all keen students of law, as they must be since their industry’s outlook is completely dominated by its legal issues. But they always seem to read the law very narrowly, in the way that favors their clients, er, I mean companies.”
Wake-Up Call / The Tobacco Tar Pit, David Smith, July 17, 2000
April 8th, 2005 at 5:52 pm
“Once again, for some reason I’m reminded of legal analysis by financial analysts”. . .
=========
As opposed to say, “legal” analysis by senior members of tobacco-banning organizations, like this one?
Matt Myers, [himself a lawyer, and ACLU staff member] executive vice president of the Washington-based Campaign for Tobacco Free Kids, said that the Justice Department’s lawsuit poses a great potential financial threat to the industry. “The true reality is this will be a difficult case. No one knows how this lawsuit’s going to come out. For the tobacco industry, this is Russian roulette. If they lose, they lose big.”
Source: Washington Post, 22 September 1999
So we all know what happened to the “great potential financial threat” predicted by Mr. [Dr?] Myers. It was recently tossed in the trash by the DC circuit court of appeals. Speaking of which. . .
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“Tobacco analysts are a unique and distinctive group on Wall Street. For one thing, they would to a man preferto flack for the tobacco industry than actually make a correct investment recommendation and be seen to make one.”
====
Let’s see. . .would THIS count as being seen to make a correct legal analysis?
http://www.forbes.com/forbes/2005/0328/085.html
Adelman writes and speaks in clear, fact-laced phrases that ably convey nuances in court cases and subtle market shifts. He has twice testified before Senate committees on tobacco litigation.
He makes up for a lack of formal legal training by inhaling turgid court opinions and chatting up lawyers from both sides. “At this point he can answer tort questions that lawyers may not be able to answer,” says Victor Schwartz, general counsel for the American Tort Reform Association. . .
Adelman’s prescience has made him a very well-regarded analyst. Take the Department of Justice’s lawsuit against the industry for allegedly deceiving consumers about the health risks of smoking. This was Washington’s bid to move in for the kill, filed a year after the large tobacco makers’ 1998 agreement to pay the states $246 billion over the next 25 years. Charging that Big Tobacco had violated the Racketeer Influenced & Corrupt Organization Act, Justice sought another $280 billion.
***A week after Justice’s announcement, Adelman wrote a report saying the federal RICO tactic wouldn’t pass judicial muster. A big reason: [civil] RICO [1964a] was crafted to prevent future wrongdoing, not to punish past conduct. And just last month, as Adelman predicted, an appellate court ruled that the feds couldn’t exact such a massive monetary penalty.***
So presumeably Mr. Adelman (who again, unlike Matt Myers, is not a lawyer) recommended a “buy” on the tobacco sector last year, which I’m guessing was the “correct” investment decision. So much for the analysts, huh?
April 8th, 2005 at 8:26 pm
“tobacco-banning organizations”
When did the Campaign for Tobacco Free Kids call for a ban on tobacco?
April 13th, 2005 at 6:05 pm
Well, maybe I can help here. The fact is, the Campaign for Tobacco Free Kids has never called for a ban on tobacco.
Once again I’m reminded of legal analyses by financial analysts: they get the facts wrong.
Example: December 16th, 2002: Fitch analyst Judi Malter says “Major tobacco firms consistently appeal adverse verdicts and they have not lost a case on appeal which resulted in a payout”. Except they had. March 2001: Brown and Williamson, having lost its final appeal, paid $1,087,191 to Grady Carter.
Which brings us to March 21, 2005: Philip Morris lost its final appeal in the Henley case and must pay $16 million. Were investors informed by financial analyst Malter that this sure could happen, had already happened? Nope; Malter got the facts wrong, and misinformed investors.
“Tobacco analysts are a unique and distinctive group on
Wall Street…As a result of being so wrong for so long, Wall Street’s tobacco analysts have probably cost investors
as much money as anyone engaged in lawful activities
there ever has…”
David Smith / Columnist
Wake-Up Call / The Tobacco Tar Pit
Monday July 17, 2000