Abstract
This memo describes a discussion between Maurice C. Kaplan (a Philip Morris stockholder and member of the Board of the University of California San Diego Cancer Center Foundation), and Chuck Wall, Vice President and Associate General Counsel for Philip Morris. Mr. Kaplan considered the public relations needs of the cigarette maker while working to convince PM to make a huge grant to fund research into chronic disease at his university (UCSD). The memo describes the breadth and value of public relations benefits a cigarette company derives from funding medical research at such an institution.. Kaplan argued the "public attitude toward the tobacco industry has rapidly deteriorated" and that "the announcement of a major research commitment will improve the public attitude (and the stock value)" for PM. Kaplan also suggested that "such a financial commitment will do much to improve employee morale and productivity." Kaplan sympathized with the plight of PM employees when he said to Wall,
"...employees must find it difficult to listen to the constant and consistent attacks upon the company without having their pride and morale significantly effected. How can they be proud of working for a company that is accused of making a product which causes hundreds of thousands of deaths each year? [Kaplan] argues that the company owes it to the employees to give them something about which to be proud."
Kaplan proposed that PM first test the waters by making a $50,000 commitment to UCSD over 10 years to fund research in cellular medicine. "If this commitment is well received in the scientific community," Kaplan suggested, "Philip Morris [should] follow with a $450,000,000 commitment over 10 years to other institutions in the same field."
Mr. Wall expressed concern that such a grant would draw additional accusations that the company was misleading the public into believing there is still doubt about whether cigarette smoking causes cancer. He was concerned that the institutions might refuse the money. He wondered to Kaplan whether UCSD scientists would be willing to speak out favorably about the commitment and defend Philip Morris against attacks.
Mr. Kaplan assured Mr. Wall that "the institutions and scientists will take the money because they desperately need it." He said he was confident that UCSD scientists, including a Nobel Laureate on staff there, would defend PM and the award. Kaplan further suggested that money for the grant should "come out of [PM's] advertising budget" because it would "be the best advertising of all."
This memo demonstrates the double-edged sword that universities walk when taking tobacco industry funding: While a university may desperately need the money, taking it confers a host of benefits --including increased stock value--upon the cigarette maker, and in practice constitutes a de facto form of advertising for the company, both within and outside its walls. The memo also shows the sticky dilemma created when a key figure in a university holds stock interest in a cigarette company, prompting him to advocate for the cigarette company while advocating for the university.
Fields
- Company
- Philip Morris
- Author
- Wall, Charles R. (PM VP & Assoc. Gen. Counsel, c. 1994)
Vice President and Associate General Counsel for Philip Morris 1994-94 (may have been longer; this info was gleaned from documents); formerly worked for Shook, Hardy and Bacon.
- Recipient
- Maxwell, Hamish (PM President c.1984)
Took over at time of Cippolone. Cleaned house. Carried company into a strong defensive position.
RegionUnited States
Named Organization*Council for Tobacco Research-- U.S.A. Inc. CTR (Formerly Tobacco Industry Research Committee (TIRC))Created and funded by the tobacco industry to award grants to study of the link between smoking and disease. Part of a four decade effort to cast doubt on the links between smoking and disease.
University of California, San Diego
LitigationOkag/Privilege Withdrawn
Okag/Produced
Named PersonKaplan, Maury (Philip Morris stockholder; VP UCSD Cancer Ctr Fdn)Vice President, Univ. of Calif, San Diego Cancer Center Foundation Board, 2001.
Palade, G.
Resnik, Frank Edward (Vice Pres., then Pres. and Chairman of Bd, Philip Morris)TI Executive Committee. Prot駩 of Clifford Goldsmith. Vice President Philip Morris, Inc. from 1979 to 1984. President in 1984 and served on the Board of Directors from 1985 to 1989.
TypeMEMO, MEMORANDUM
MINU, MINUTES
Subjectfunding
funding source
industry influence
industry sponsored research
industry strategy
research activity
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PiiIUP MORRIS COMPANIES INC. INTER-OFFICE CORRESPONDENCE
120 PARK AVENUE, NEW YORK, N.Y 10017
r©' Hamish Maxwell DAiE: June 15, 1990
FROM:
subJECL
Charles R. Wall
Meeting with Maurice C. Kaplan
On Wednesday June 6 I met with Maurice Kaplan
for an hour to discuss his views on the funding by Philip
Morris of research in the area of molecular and cellular
medicine. What follows is the substance of his views
some of which he put in his letters to you of May 26 and
June 1.
Mr. Kaplan believes that as a good corporate
citizen Philip Morris should be willing to make a
significant commitment to funding research into the
fundamental causes of chronic human diseases, some of
which are associated with the use of our products. In
Mr. Kaplan's view, and presumably that of UCSD faculty
members, now is a particularly opportune moment to
support such research because science is in a
revolutionary state with profound and dramatic
discoveries occuring, almost daily, especially in the
field of cellular and molecular biology. Consequently,
money given now will be more beneficial than money given
5 years ago or 5 years hence. It is Kaplan's view that
science is on the verge of discovering the biological
mechanisms of a number of chronic human diseases and
Philip Morris will benefit by being there "at just the
right time" with research money. Kaplan also points out
that much of the current federal funding for the sciences
is going to major projects such as AIDS, mapping the
human genome and space exploration, leaving other
research to private funding.
Kaplan also argues that the public attitude
toward the tobacco industry has rapidly deteriorated,
especially in the last six months. He fears that without
some affirmative action the tobacco business has 8 - 10
years to go before it substantially disappears. Kaplan
cites the federal legislation, media attention to the ETS
issue and the movement to sell tobacco stocks as evidence
of the worsening public climate. The result is that the
stock is considerably undervalued, according to Kaplan,
and the P/E ratio is under what he thinks it should be
given the profitability of the company. Kaplan believes
the announcement of a major research commitment will
improve the public attitude (and the stock value) and
perhaps eventually lead to an answer to the question of
what are the mechanisms that cause chronic diseases in
humans. In any event, he adds, such a commitment could
hardly leave the company worse off than it is.
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. .
k
Finally, Kaplan suggests that such a financial
commitment will do much to improve employee morale and
productivity.. Kaplan feels that,employees must find it
difficult to listen to the constant and consistent
attacks upon the company without having their pride and
morale significantly affected. How can they be proud
working for a company that is accused of making a product
which causes hundreds of thousands of deaths each year?
He argues that the company owes it to the employees to
give them something about which to be proud.
What does Kaplan propose? He suggests that
Philip Morris make a$50,000,000 commitment over 10 years
to UCSD to be used in the field of . cellular and molecular
medicine. If this commitment is well received in the
scientific community, as he anticipates, he proposes that
Philip Morris follow with a $450,000,000 commitment over
10 years to other institutions in the same field. Both
grants would focus on the company's commitment to
discovering the basic causes of chronic human diseases
at this most opportune time in a scientific revolution.
I asked Kaplan the following questions:
1. Wouldn't the announcement draw still more
fire from the media accusing us of (a) further trying to
mislead the public into believing that there is still
doubt as to whether cigararette smoking causes cancer;
(b) offering too little money and much too late, (c)
trying to buy respectability with money tainted by the
deaths of former smokers? Won't the result.be a worse
public image?
2. Will the institutions take the money?
After all some in the scientific community have raised
the question of accepting CTR grants.
3. Will the UCSD scientists be willing to
speak out favorably about the commitment? Will they be
willing to defend within the scientific community Philip
Morris's commitment as timely and of considerable
scientific benefit?
4. How will the investment community react
to such a large charitable contribution?
Kaplan said that institutions and scientists
will take the money because they desparately need it.
He is confident the Trustees of the California university
system and the Chancellor and faculty of UCSD will
welcome the commitment and will speak out favorably. He
added that this is obviously an assurance Philip Morris
will need before making any commitment. Kaplan added
that he is confident that at least some of the media will
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react adversely to the announcement, but countering,that
will be the outspoken support of scientists at UCSD
including George Palade, a Nobel Laureate, who now heads
the department of molecular and cellular research at the
university.
Kaplan said he thinks the investment community
will react favorably. Kaplan reasoned that to the extent
the public's perception of the company improved, it might
stem the divestment movement. To the extent the
commitment offered hope that a scientific solution to the
smoking and health problem would be found, investors
would begin to look at an extension of the life of the
industry; instead of profits for only the next decade,
perhaps they will be viewed as continuing considerably
beyond that. This commitment, according to Kaplan, while
significant is not large when compared with the company's
net profits or its advertising budget. In fact Kaplan
suggested the money could come out of the advertising
budget and "be the best advertising of all."
The meeting was at all times extremely cordial
and I thanked Mr. Kaplan for taking the time to talk with
me. I told him that I knew both you and Frank were
interested in the topic of scientific research and that
someone will be in contact with him in the near future.
cc: Frank E. Resnik
