Tobacco firm gained secret access to Blair
Documents obtained by the Guardian disclose how BAT pressured Tony Blair and a cabinet minister who wanted to hold an inquiry into the firm. Read the documents online: 1, 2, 3, 4, 5, 6, 7 and 8
Rob Evans, David Leigh and Kevin Maguire
Documents obtained by the Guardian disclose today how one of the world's biggest tobacco companies, British American Tobacco, was able to put private pressure on Tony Blair and a cabinet minister who wanted to hold an inquiry into allegations that the firm was colluding with criminals.
Behind the back of parliament and public, the head of British American Tobacco (BAT), Martin Broughton, obtained access to Mr Blair at a private breakfast, followed by an equally private meeting with the then trade secretary, Stephen Byers.
These unpublicised privileges were granted despite the fact that his company stood accused of colluding in cigarette smuggling on an unprecedented scale.
Two former senior Department of Trade and Industry (DTI) officials on BAT's payroll were also used to approach their former departmental colleagues.
After this behind-the-scenes lobbying, Mr Byers' own plan for an inquiry, which could have published a highly damaging report, was dropped.
Instead, MPs were told that a watered-down inquiry would be conducted in secret. Its activities were "buried" for almost four years, after which it emerged that no action was to be taken. BAT was so pleased with the eventual form the inquiry took that their lobbyists described it, in a private note, as "not a problem".
The Guardian is publishing the documents on its website today.
The papers, obtained partly thanks to Whitehall's moves towards freedom of information, and partly from BAT's archives, record how powerful the private influence of large corporations can be.
This power is evident today as BAT and other tobacco companies lobby against moves to force them to put graphic photographs, such as smoke-damaged organs and clogged arteries, on their cigarette packets to warn of the dangers of smoking.
Four years ago, pressure mounted on Mr Broughton, the £1.4m-a-year chairman of BAT, after this newspaper published documents detailing how the London-based corporation condoned tax evasion in a global effort to boost sales.
According to the documents, BAT arranged to supply massive numbers of cigarettes to wholesalers and distributors, expecting that they would find their way into crooked hands and on to the black markets of developing countries after being smuggled across national borders, without duty being paid.
Stephen Byers was threatening to set up an inquiry into the world's second biggest tobacco firm and publish the results.
Such a report might be highly damaging for BAT, opening the door to lawsuits from foreign governments cheated of taxes and unable to enforce public health standards.
In early 2000, BAT's lobbyists tracked sessions of a House of Commons all-party health committee inquiry into smoking, reporting back to the company's Thames-side headquarters that the then health secretary, Alan Milburn, was unsympathetic.
"He showed little interest in working with tobacco companies ... suggesting distrust of the companies' motives," warned a lobbyist in February 2000. Another noted: "Milburn had read the serious allegations in the Guardian article and commented that the government abhors this behaviour".
Mr Broughton's first reaction was to approach Mr Milburn's colleague, Stephen Byers, privately. "A constructive working relationship," was required, said Mr Broughton, a non-smoker, adding: "I am writing therefore to ask for a meeting with you".
BAT, with the former Tory chancellor Ken Clarke on its board, hoped the DTI, in its role as "sponsor" of British industry, might provide a more sympathetic channel than the health department.
But Mr Broughton got the cold shoulder. Mr Byers was close to the anti-smoking Alan Milburn, and refused to grant the tobacco chief an audience.
A DTI minute stated: "The company has made a number of attempts to meet DTI ministers since the election, but until now all requests have been declined."
One of BAT's inhouse lobbyists, Simon Millson, made contact with the official heading the DTI's tobacco desk, Julian Ebsworth: "I tried to pursue the issue on whether we would get a meeting. He said that was for the minister to decide 'given all the other issues' ... I sense some buck-passing going on".
In March, Mr Byers signalled that he planned to set up an inquiry under section 432 of the Companies Act, allowing files to be seized, employees to be questioned on oath, and - crucially - permitted Mr Byers to "cause any such report to be ... published".
A few days later, however, everything changed. Mr Broughton was able to go over Mr Byers' head, as a member of a shadowy group of privileged lobbyists - the "multinational chairman's group", whose members include BP, Shell, the drinks firm Diageo, Unilever, and Vodafone.
Mr Broughton was on the shortlist of those invited to eat bacon and eggs with the prime minister in the Downing Street stateroom overlooking the rose garden.
Mr Byers, too, had been summoned to the breakfast table by Mr Blair on March 14. The company chairman seized the opportunity, button-holing the minister who had been avoiding him. After shaking hands in No 10, Mr Byers was left with no alternative but to change his tune. "In the margins of that breakfast briefing," as an official note records, "the secretary of state agreed to [a] meeting".
That afternoon, BAT's lobbyists rang the department in triumph: "Mr Broughton has secured a meeting with the secretary of state".
Mr Millson later boasted : "It was said we have been very successful in getting the one-to-one meeting with Byers ... There are few companies that have achieved this."
"Dear Martin", Mr Byers wrote back, in warmer nomenclature than before. He apologised for the "error" in redirecting his earlier letter.
The secretary of state had been pressured into a private meeting with a firm into which he was trying to order an official inquiry. By contrast, ASH, the anti-smoking campaigners, say they asked for a similar meeting with Mr Byers, and were refused.
Mr Broughton followed up with intensive lobbying of No 10, sending Mr Blair a long letter demanding that he cut taxes on cigarettes, and hinting that smuggling would continue unabated into Britain if he did not cooperate: "The chosen tax policy contains within it the seeds of its own destruction."
In April, he told BAT shareholders at the annual general meeting: "There is really no need for a DTI investigation."
Whitehall refuses to release the minutes of the subsequent meeting with Mr Byers. But we obtained BAT's version from their archive, which they have been forced to disclose in settlement of a US lawsuit.
Mr Byers, with Julian Ebsworth at his side, appeared to accept that his department's job was to support the tobacco industry "stating the DTI was a sponsor of the arms industry and that, although many did not like it 'we had to deal with it'."
Mr Broughton demanded the DTI back BAT in its legal fight against the government of Colombia, which was bringing a lawsuit in the US over the smuggling allegations. BAT's minute claims: "On Colombia litigation, Byers was unequivocal; he will do whatever he can".
Afterwards, BAT used its private links to Mr Byers' officials to get some background. Nicola Shears, who had spent eight years at the DTI, was on BAT's payroll. So was Ray Mingay, recent former head of export promotion at the DTI. Both talked to officials on BAT's behalf, according to the documents.
Mr Byers himself, according to associates, had no idea that Mr Mingay was now working for BAT. He was shocked when told the former civil servant had been contacting his senior officials behind his back.
"Subsequent to the [Byers] meeting," Mr Millson wrote, "Nicola Shears and myself have learned that Byers and the two civil servants present felt the meeting went well. They were impressed with Martin ... who put his points across clearly and succinctly".
Significantly, Mr Millson wrote: "It was also recognised that BAT is one of Britain's 'world-class' companies".
This is one of the terms repeatedly used by the DTI and by Downing Street to justify explicitly business-friendly policies.
The threatened inquiry ran into the sand after that. Friends of Mr Byers say his civil servants tried to persuade him to cancel it, claiming there was insufficient evidence.
Mr Byers insisted it go ahead, maintaining he had no alternative when the health committee were calling for an investigation.
Yet Mr Byers was persuaded to make a crucial change. Instead of ordering an inquiry under Section 432, which would have led to a public report, he agreed to use Section 447 of the Companies Act which, crucially for the company, prohibited publication.
One of BAT's lobbyists, John Roberts, subsequently emailed a colleague dismissively: "The DTI inquiry is a distraction, not a problem."
And so it proved to be. The DTI buried their "inquiry" for an extraordinary length of time - almost four years, during which they released no information whatever, and Mr Byers left the scene.
When protests mounted, officials finally announced, under a new trade secretary, Patricia Hewitt, that they had found insufficient evidence for legal action. Campaigners point out that the blanket secrecy guarantees no one can check the genuineness of their work.
A spokesman for BAT said lst night: "We have always maintained we acted legally."
He denied that the two ex-DTI employees had had "undue influence over the DTI".
[Additional documents shown by The Guardian have not been included]