DAY 91: Brooker to Willard: YSP Program “a Sham”

April 12, 2005 11:19 pm by Gene Borio

Apr 12, 2005, 10:07 PM

DOJ attorney Renee Brooker seems to have done some damage to the testimony of Howard Willard, Philip Morris USA’s Senior Vice President, Youth Smoking Prevention and Corporate Responsibility

She attacked PM-USA’s “YSP Partition Policy,” which is intended to wall off the YSP department’s teen smoking information from the rest of the company. For a policy meant to avoid even “even an appearance of improper use of that information (on youth),” it’s no “Chinese Wall,” Ms. Brooker said.

“It’s a sham, isn’t it?,” she asked Mr. Willard. And at first the accusation seemed unnecessarily dramatic. But then she showed at least 3 major sources of leaks:

Senior Team meetings

These weekly meets among the senior VPs and CEO Michael Szymanczyk are events at which department heads can keep up with developments company-wide. Presentations and problem-solving are common. There exists within the culture and within the meetings, according to Mr. Willard, “a fairly collaborative decision-making process.” The sales and marketing departments and PM-USA general counsel Denise Keane are all kept up-to-date on YSP developments. YSP TV commercials are typically screened before airing.

MS. BROOKER: So Craig Johnson, head of sales, and Nancy Lund, head of marketing, would have input on YSP ads?

MR. WILLARD: Yes, there is an opportunity to see the ads and provide feedback.

Finally, Ms. Brooker summed up the case as she saw it:

MS. BROOKER: Clearly, there is a flow of information [from the YSP Department] on a regular basis from you to other senior team members throughout the entire company.

Mr. Willard said he disagreed, there is “not a regular flow of information,” but only “on occasion we will discuss our programs.” He said only high-level strategies of the program are shared, and certainly not teen smoking data. Such low-level information is prohibited by the Partition Policy.

Ms. Brooker tried to make the point that the information could actually flow both ways: ie, when Sr. VP of Marketing Nancy Lund, who is the foremost person responsible for the marketing of Marlboro –the #1 underage brand–presents new marketing ideas for Marlboro to the board, Mr. Willard could offer his input. Apparently, he has not offered any YSP-oriented suggestions for any such campaigns.

Particularly damaging was Mr. Willard’s answer to a series of questions surrounding the idea that senior management might want PM to make money.

MS. BROOKER: Your goal is to maximize profits, right?

MR. WILLARD: No. . . . We try to balance many factors….

MS. BROOKER: Your goal is to be as profitable a company as Philip Morris can be, right?

MR. WILLARD: No, that’s not the case.

Not addressing what Altria shareholders might think of such an executive position, Ms. Brooker wound up this lengthy section of questioning with,

MS. BROOKER: And no one else in the Senior Team is an expert at YSP?

MR. WILLARD: No

MS. BROOKER: Including you?

MR. WILLARD: I’ve had 3 years experience, but I don’t consider myself an expert.

**———————————————————

YSP ROTATION

As we learned during the Dr. Carolyn Levyand Jeanne Bonhomme testimonies, Philip Morris USA’s YSP department rotates personnel, ostensibly so that everyone in the company comes to understand how important YSP is. Former members of the department get the YSP religion and spread the word at their next posts.

Presumably, that’s what is happening today with Ms. Bonhomme herself. Ms. Brooker pointed out that she had spent her career in cigarette brand marketing before coming to YSP, and now, after 3 years in YSP, is back in cigarette brand research–proselytizing away, presumably, her knowledge of teen smoking behavior safely tucked away behind the partition back at YSP.

**———————————————————

THE CORPORATE RESPONSIBILITY GROUP

In March, 2004, Mr. Willard assumed control over Philip Morris USA’s Corporate Responsibility Group also. Though there is supposed to be a “partition” around the work of the YSP, the two groups exist on the same floor of the same building, employees intermingle, there are meetings of both groups, and at times, the CR group commissions research on reactions to YSP initiatives.

**———————————————————

YSP and Cigarette Marketing

Ms. Brooker, in a section she headlined, “What YSP does NOT do,” had Mr. Willard so tied up in knots you felt sorry for him. Her basic point was that Mr. Willard, even having read the Surgeon General’s Reports on youth smoking which find that cigarette marketing influences youth smoking, refuses to let his department even consider such a scenario in its programs.

MS. BROOKER: So even with your knowledge of the 1994 Surgeon General’s Report, you think YSP should not address the influence of cigarette marketing on young people?

MR. WILLARD: We made some decisions….

MS. BROOKER: You’ve made a decision, even knowing what the 1994 Report concluded, to NOT focus on influence of marketing?

MR. WILLARD: Yes

MS. BROOKER: Was that your decision?

MR. WILLARD: I think I make the decisions in YSP, yes.

**———————————————————

TABS

Ms. Brooker then addressed Philip Morris USA’s massive TABS data, which is available on the PM-USA website. (www.philipmorrisusa.com/e…)

From Mr. Willard’s Written Direct Testimony (www.altria.com/download/p…):

A. TABS is YSP’s study of youth smoking prevalence and youth attitudes toward smoking. It is a comprehensive, continuous telephone survey of youth aged 11 to 17 conducted by an independent research firm on behalf of YSP. TABS includes information from approximately 20,000 respondents each year.

Q: When did Philip Morris USA begin conducting the TABS research?

A. February 1999.

Q: What is the cost to Philip Morris USA to conduct the TABS research?

A. In 2004, we spent about $3 million.

Q: Why does YSP study youth smoking prevalence and youth attitudes toward
smoking?

A. In order to develop the most effective youth smoking prevention programs, we need timely information on why kids smoke. We also have to be aware of new and changing trends on this issue. TABS research enables YSP to understand what may differentiate youth who don’t smoke from those who do. That provides key insight into what types of messages and programs may be effective in preventing youth smoking.

Ms. Brooker pointed out that the 3 survey questions on the influence of advertising all took the direct approach, ie, one answer to the question, “How much do you agree that the following statements describe why you currently smoke cigarettes?” is “Because of the advertising in the store.”

Ms. Brooker referenced Dr. Krugman’s testimony on how such direct questions are the absolute worst way of finding out such answers, as “consumers are generally reluctant to overtly admit being influenced by advertising. . . . Consumers are inclined to be critical of advertising and/or deny that it plays any role in their choice of products.”

**———————————————————

In all, Mr. Willard seemed way, way over his head here. Ms. Brooker seriously took him to task for researching his new position by reading public health documents–and then refusing to apply those findings to his department’s activities.

Philip Morris’ Ted Wells has his work cut out for him in Redirect. He has indicated he needs more than he had thought–possibly 2+ hours–to try to repair the damage.

But that will have to wait. Because of his schedule, economist Dr. James J. Heckman will testify tomorrow, refuting Dr. Michael Eriksen’s position on advertising and marketing as “substantial contributing factors” to youth smoking initiation.

Dr. Heckman’s testimony: www.altria.com/download/p…

4 Responses to “DAY 91: Brooker to Willard: YSP Program “a Sham””

  1. krueger Says:

    What they say here:

    DOJ: Your goal is to maximize profits, right?

    Philip Morris: No. . . . We try to balance many factors….

    What they say there:

    “Altria Group has a single overriding objective — to deliver superior returns to our shareholders”
    Louis C Camilleri, Chairman and CEO, November 4, 2004
    http://www.altria.com/download/pdf/Investors_LCRemaks_MorganStanley4Nov04.pdf

  2. tobacco observer Says:

    Umm. . .

    Apart from the fact that “maximum profits” (ie maximum corporate earnings) is NOT the same thing as “superior returns” (ie stock outperforming the broad market). . .

    Mr. Willard doesn’t even work for Altria group!

    He works for PMUSA, which isn’t even a publically traded company.

    But hey, they’re all just a bunch of crooks anyway, right? Why let the facts get in the way of a good anti-corporate rant! How dare these companies try and make money!

  3. tobacco observer Says:

    The point is this, every American corporation’s responsibility to its shareholders is to maximize earnings.

    In that respect the tobacco companies are no different than beer companies, car companies, insurance companies, drug companies, software companies, fast food companies, or any other large (”evil”) corporation. Unless you think there is something wrong with making money by providing goods and services there is nothing wrong with that.

    Given the imperative to make money, by extension, every corporation also has some temptation to bend or break the law to do it. But merely having a motive to break the law doesn’t mean they *are* doing it, and it certainly isn’t evidence of wrongdoing.

    In this particular case the burden of proof rests upon the gov’t to show that tobacco is lying about not advertising to minors and is more likely than not to continue to lie about it short of additional gov’t intervention. At this point, talking about motivation is puffery.

  4. krueger Says:

    “doesn’t work for Altria, he works for PMUSA”

    I get it; Altria doesn’t mean tobacco.

    Oh wait, it does:

    http://www.altriameanstobacco.com/

    “every American corporation’s responsibility”

    You bet. One tiny difference, hardly worth mentioning: every other corporation’s product, used as intended, doesn’t addict, maim, and kill the customer.

    “the burden of proof”

    Again I’m reminded of legal analysis by financial analysts, for some reason.

    I’m not myself offering legal analysis here. In this case I think Big Tobacco’s own words make the point pretty well:

    “Altria Group has a single overriding objective — to deliver superior returns to our shareholders”

    When Big Tobacco is projecting an image of corporate “responsibility” the tune is different:

    DOJ: Your goal is to maximize profits, right?

    Philip Morris: No. . . . We try to balance many factors….

    Oh gosh no. We wouldn’t put profits before human life. Golly.

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