Tobacco Documents Online

- POFiNDIIHiCAA-AP Cigarette-company officials swear they didn't manipulate nicotine levels: Appearing before a House subcommittee in 1994 A Whiff of Smoking Guns Cigarettes: New probes dig deeper into what executives knew about nicotine I N APRIL 1994, THE TOP EXECUTIVES OF the cigarette industry were called before Congress to defend their products. One by one, the heads of the nation's seven largest tobacco companies testified that they did not manipulate levels of nicotine in their cigarettes; that they did not be- lieve nicotine was addictive, and that they did not believe that the evidence showed that cigarettes ca.used cancer. `Z really don't accept that smoking is addic- tive," testified William I. Campbell, who was then the president of Philip Morris. Now the Justice Department, armed with documents from the companies' own re- search on nicotine, is set to challenge the industry. Last week federal prosecutors in New York opened a criminal investiga- tion into possible securities-fraud charges against Philip Morris. Reportedly, a second grand-jury probe in Washington is expected to investigate perjury charges against at least one executive. Contacted by NEws- wEEK for comment, Philip Morris acknowl- edged that company records have been sub- poenaed for the New York probe; the other companies either declined to answer ques- tions or said they had no knowledge of an investigation. NEWSWEEK has learned that President Clinton, searching for a campaign hot button, has tentatively decided to push the FDA to regulate cigarettes, a move the companies have fought bitterly. An an- nouncement may come as early as this week. These are just the latest blows to hit the tobacco industry-and these moves suggest that the controversies surrounding nico- tine may be its toughest battle yet. In the past, opponents attacked cigarettes for causing cancer and heart disease-as many as 400,000 deaths a year in the United States. But for four decades, and through more than 400 lawsuits, nobody ever col- lected a penny on these grounds. Either plaintiffs ran out of money or juries thought that smokers chose to smoke and were able to quit. Then early last year ABC's "Day One" alleged that cigarette companies had deliberately manipulated nicotine in the manufacturing process. The companies de- nied this, and Philip Morris brought a libel suit, still pending, against ABC. At the same time, FDA Commissioner David Kessler announced that the agency would consider trying to regulate cigarettes as a drug. Leaked documents from the research files of Brown & Williamson, the nation's third largest tobacco company, provided ammunition for congressional pressure and a handful of large class-action suits-and now, criminal investigations. Last week still more damaging papers surfaced, calling into question what the to- bacco companies knew about nicotine and when. One Philip Morris document, en- tered into the Congressional Record by Rep. Henry Waxman of California, advised the board as early as 1969 that the craving created by tobacco was so powerful that cigarettes "will even pre-empt food in times of scarcity on the smoker's priority list." It continued that "the ultimate explanation for the perpetuated cigarette habit resides in the pharmacological effect of smoke upon the body of the smoker." A document from R.J. Reynolds,•obtained by The New York Times, described nicotine as "a potent drug with a variety of physiological effects." Human tests: Also unsettling were ac- counts of company tests on humans. Onc Philip Morris study, entitled "Me hyperac- tive child as prospective smoker," trackec more than 6,000 hyperactive students- starting with third graders-to see if theN were more prone to smoke. Noting tha such kids were often treated with stimu lants, the researchers questioned "vhethe, such children may not eventually becomc cigarette smokers in their teenage years a they discover the advantage of self-stimu lation via nicotine." The report addec "Needless to say, we will not propose gi\ ing cigarettes to children." 66 NEI1'Sw'EEK AUGUST 7, 1995 2001"6136476

Other papers described an experiment in which Philip Morris researchers adminis- tered electric shocks to college students- with their consent - to see if "people smoke more under stress: " The idea was to see if they puffed more when advised they were about to receive an electric jolt, because of the caln'li ng properties of nicotine. Wrote one researcher. "The shock will be painful, but tolerable." Not tolerable enough: the experiment was later scrapped because "fear of shock is scaring away some of our more valuable subjects." Even with these documents, legal ex- perts say the grand JmT probes may not amount to much. Prosecutors will have to prove that the tobacco executives knew that nicotine was addictive, and that they delib- erately withheld the information or lied about it. The New York investigation reportedly also involves a novel reading of securities law: that Phil- ip Morris executives knew of a po- tential liability and withheld the in- formation to protect stock prices. Philip Morris issued a statement denying any wrongdoing and de- clined to comment further. PotttiCat question: In Washing- ton, the question of how zealously to fight tobacco is political, not le- gal. The cigarette companies do- ; nate most heavily to the Republican __ Party. But the industry's sway ex-~` tends beyond the GOP. In meetings at the White House last week, Dem- ocratic Reps. Charlie Rose ofNorth Carolina and Ron Wyden of Ore- gon urged top Clinton aides Leon Panetta and Harold Ickes not to let the FDA regulate tobacco. Instead, they pushed for mild voluntary re- stra.ints. "Ifyou all go forward with this," Rose told Panetta and Ickes, `you can write off what's left of the House for the next election." In truth, the beleaguered FDA in- When Business Met Harry Trade: The arrest of the 'Chinese Indiana Jones' has some firms worried about the future D OING BUSINESS IN CHINA FOR MORE than 10 years, Paul Yang has seen rocky times. A former oil-industry executive who now runs his own consult- ing business, Yang helped clients through the touch-and-go days of China s early transition to capitalism. What exasperates him now can be summed up in two words: Harry Wu. Chinese border police arrested Wu, a former prison-camp inmate and and Ford to form a minivan venture with South China Motor Corp., a $1 billion con- tract that went to Mercedes-Benz last month. Last year the United States did $48 billion in two-way trade with China-its sixth biggest trading partner. For a top ex- ecutive at a major sports manufacturing company, China represents his firni s main market for short-term growth worldwide. So, "trouble there goes straight to our bot- • Threat to the China biz: Wu in last week's prona2'anda video tends only to ban cigarette sales from vend- ing machines, to limit access to minors; these '~ accotmt for a minuscule share of overall sales. Late last week the negotiations for voluntary measures fell apart. Clinton was leaning toward FDA regulation. Though this might hurt Democratic can- didates for the House, it could be a boon for Clinton. Democratic consultants have : argued that a hard line against an unpopu- lar lar industry may be even more beneficial ~ than his recent attacks on the NRA. In the end, tobacco executives may or may not be ~ nmdicted. But their opponents have picked on nicotine as the industry's Achilles' heel. : And in civil courts, in Washington-and ' now potentially in criminal courts-they are turning up the heat. JOHN LELAND Wtl}i MICHAEL ISIKOFF and MARK HOSENBALL IIt S{pshittglort now a U.S. citizen, trying to enter the country on June 19. Last week they re- leased a ham-handed videotape entitled "Just see the lies of Wu Hongda" (his Chinese name). His crusade to expose Chi- na's prison abuses has made Wu many friends on Capitol Hill but precious few in the business communi2} "This guy is a Chinese Indiana Jones, trying to challenge authority," fumes Yang, an American citi- zen. "He could do some serious damage to the China business." Why is business so mad at Harry Wu? In large part, he's become a lightning rod for anxieties about the parlous state of U.S.-China relations, now mired in dis- putes over Taiwan, Chinese missile sales and human-rights abuses. Some business people worry that the political salvos are sinking big deals -like the bids of Chrysler tom line. The scariest thing in China right now is not the infla- tion rate or whether [para- mount leader] Deng Xiaoping is dying," he says. It's the vola- tility in U.S.-China relations. "Harry Wu gives us real cause for concern." Ve'lH get you': Wu's arrest is perhaps most unsettling to the Chinese business coul- munity overseas. Like Harry «'u, many Chinese-An nseiican businessmen have citizenship of recent vintage. "Basically, what the Chinese government is saying is, your passport doesn't matter," says a U.S. trader in Beijing. "We'll get you if we u-a.nt you." Wu certainly has some sympathizers among business people. But even those supporters worry about the effects of Wu's obsessive mis- sion against the Communist regime. °`No crusade by a single person should affect the sta- bility of U.S.-China relations," says Stan- ley Lubman, a San Francisco lawryer and China specialist. Recently the U.S.-China Business Coun- cil took the unusual step of pressing the Chinese Foreign Ministry to set Wu free- something they haven't done for other dis- sidents. They've also been to call on the Chinese Embassy in Washington, D.C., as reluctant crusaders for N'Vu. They don't ar- gue his case in the name of human rights but in the name of mutual profit. The business community is hoping that Secretary of State Warren Christopher will smooth the wa- ters when he meets with Chinese Foreign Minister Qian Qichen this week in Brunei. No matter how mad they are at him, things won't get better for U.S. business until they get better for Harry Ivl'u. CARROLL BOGERT o AUGUST 7, 1995 N'ER'St4'EEK 67