Kenneth Clarke

Background

As of September 2012, Kenneth Clarke has held the cabinet position of Minister without portfolio. Between May 2010 and September 2012, Clarke was the British Secretary of State for Justice and Lord Chancellor. Before that he was Shadow Business Secretary for a year. From 1998 until 2007 he was a non-executive Deputy Chair of British American Tobacco (BAT) and had to deal with allegations of the company’s involvement in smuggling.
Clarke was a minister throughout the 18 years of successive Conservative governments from 1979 to 1997, serving in the cabinets of both Margaret Thatcher and John Major. After the Conservative defeat in the 1997 general election Clarke became a backbencher. He has contested the Conservative Party leadership three times — in 1997, 2001 and 2005 — and was defeated each time. Despite being a pro-tobacco advocate, he was appointed Health Secretary in 1988.
Back in 1993, in his budget statement as the Chancellor of the Exchequer, Clark said that increasing tobacco duties was “the most effective way to reduce smoking.”¹ Such a statement from someone with close relations to the industry, may be indicative that taxation is indeed perceived as threat to tobacco profits.

Tobacco Links

Kenneth Clarke’s career is an example of the Revolving Door, moving between politics and BAT. His positions have been intertwined, and as such, Clarke has been heavily criticised over the years for his tobacco links.
When Clarke was a candidate for the Conservative leadership in August 2005, he came under pressure to quit his position with BAT. Health groups said his non-executive post with the company threatened his credibility over key issues such as the planned smoking ban in pubs and restaurants.²
A few months later, the Commons Health committee investigated allegations that Clarke had given misleading evidence to parliament about the activities of BAT in 2000. Back then, BAT documents had revealed that large numbers of cigarettes produced in Southampton and other factories were made for the Far East, Middle East and Asia – markets which are dominated by smugglers. Clarke was under pressure to investigate the evidence that BAT exploited cigarette smuggling. He was criticised for failing to fulfil his legal duty to protect the company’s integrity.

Kevin Barron, the chairman of the all-party group on smoking and health, said: “Ken Clarke holds his position within BAT because of his past office as chancellor and health secretary. He has a wider public duty to answer what are very serious allegations about smuggling.”³

In 2000 ASH had presented Clarke with a large volume of evidence relating to BAT’s involvement in smuggling.⁴ In his reply, Clarke complained about how the Guardian and ASH were treating him. When the Commons health committee investigated the allegations that BAT had engaged in “an organised and centrally managed system of lawbreaking”, Clark testified:

There is no evidence at all which I have ever seen to suggest that BAT is participating in this smuggling … The idea that BAT was knowingly supplying that channel … is nonsense … You can buy smuggled BAT cigarettes on the streets of Colombia, but BAT have not put them there…⁵

The claims were serious enough for DTI to start an inquiry. Its findings were kept secret.
However, Clarke’s response included an ambiguous statement that BAT did not actually seek to prevent smuggling. He said the cigarette firm faced a dilemma because it wanted to keep up with its rivals. He wrote in the Guardian: “We act, completely within the law, on the basis that our brands will be available… in the smuggled as well as the legitimate market.” And he made a similar statement when he testified in parliament.⁶
But in 2001 new evidence showed the company going much further. Internal documents suggested BAT not merely colluded with smugglers in the past, but was centrally organising the process and collecting hundreds of millions of pounds worth of black market proceeds (see Smuggling).
The evidence was obtained by the International Consortium of International Journalists ⁷ through a whistle-blower. It suggested that, during Clarke’s tenure as deputy chairman, BAT had been using a Swiss subsidiary and bank account secretly to control a worldwide smuggling network. The whistle-blower was a former director of the firm’s offshore agents in the Caribbean. He said: “BAT ran the whole show” and handed over a sheaf of documents backing his claim. Clark reported that he did not know anything about this.

BAT Used Smuggling to “Grow its Market Share”

In 2005, the Guardian disclosed that a letter written by BAT’s lawyers admitted that certain allegations of BAT’s involvement in smuggling were true. When Clarke denied wrongdoing by BAT in parliament, he did so despite findings only a few days before by BAT’s lawyers. On 11 February 2000, a partner at Lovells, the City lawyers acting for BAT, wrote a confidential briefing for company bosses about the committee’s hearing after studying internal company documents.
The key sentence dealt with Colombia. The euphemism employed by BAT was DNP, for “duty not paid”, the Guardian explained. Their briefing concluded that the company had deliberately used smuggling channels to “grow its market share” in developing countries.⁸

The lawyer’s letter, written by Lovells, warned that BAT’s directors faced “potential problems” over the company’s internal documents, and needed to be careful how they testified. The letter warned in a “cautionary note” that the evidence was that BAT had deliberately used smuggling channels in Latin America “with a view to securing market share”. The key sentences said: “DNP duty not paid … does connote smuggled goods … The evidence is it BAT used DNP channels to grow its market share.”⁹

Clarke denied the allegations, claiming that the Guardian‘s selective quotations from the Lovells briefing document did not give the full picture and denied he had misled parliament. He left the company two years later, in 2007.
More on BAT Involvement in Tobacco Smuggling.
In August 2001, BAT struck a $40m (£28m) deal to process tobacco in Vietnam, just two months after BAT’s deputy chairman visited the country on a business trip. BAT played down the importance of Mr Clarke’s diplomatic skills, and claimed it was coincidence that he was there.¹⁰

CSR

One of Clarke’s tasks as the non-executive Deputy Chair of BAT was chairing its Corporate Social Responsibility (CSR) Committee. Until 2004, he was also Chairman of British American Racing. In 2005 SpinWatch published evidence from BAT’s internal documents showing that BAT’s involvement in Formula One was not only designed to circumvent advertising restrictions put in place to protect public health, but also to appeal to the “youth” market. The documents also undermined BAT’s initiative on corporate social responsibility. Clarke’s involvement made SpinWatch question whether he was fit for office. ¹¹

Attacks Plain Packaging

Clarke criticised his own government’s plans for plain packaging. He apparently “mocked” his Cabinet colleague Andrew Lansley for being a member of the “health police” over his plain packaging proposal. Clarke argued it would not stop young people taking up the habit. The Justice Secretary said: “I am surprised that people think that young boys and others take up smoking because they are attracted by the packet.” ¹²

Clarke’s CV

• May 2010 – present Secretary of State for Justice
• May 2010 – present Lord Chancellor
• 2009-10 Shadow business secretary
• 2007 Left BAT
• 2001 Tory leadership challenger

* 1998-07 Director of BAT

Non-executive Deputy Chair of British American Tobacco

Chair of the BAT Corporate Social Responsibility (CSR) Committee

• 1997 Tory leadership challenger
• 1993-97 Chancellor
• 1992-93 Home secretary
• 1990-92 Education secretary
• 1988-90 Health secretary
• 1987-88 Chancellor of the Duchy of Lancaster and minister for trade and industry

* 1980 QC

* l963 Called to the bar by Gray’s Inn

External sources

• ASH dossier on BAT and smuggling, including evidence from the Tobacco Documents Archive
• Guardian profile on BAT and smuggling in 2000
• Centre for Public Integrity most recent investigation into smuggling Tobacco Underground
• Guardian profile on Ken Clarke.
• Guardian profile on Ken Clarke up of Tory leadership in 2005
• Wikipedia profile on Clarke