TPD: Dalligate

On 16 October 2012, EU Health Commissioner John Dalli was forced to resign as a result of a “cash for influence” lobbying scandal dubbed by some media as ‘Dalligate’.¹
The scandal has also been referred to as ‘Barrosogate’ and ‘Olafgate’.²³

Background

Dalli’s resignation occurred only days before he was due to launch the much anticipated, and strongly contested,⁴ proposal for a strengthened EU Tobacco Products Directive (TPD).
Visit our TPD: Dalligate Timeline page, for a detailed breakdown of events leading up to Dalli’s resignation.

Formal Complaint by Swedish Match

On 21 May 2012, the European Commission received a letter from snus manufacturer Swedish Match claiming that in February 2012 Maltese businessman and political canvasser for Dalli, Silvio Zammit, had used his contacts with Dalli to try to elicit €60 million from the company in return for lifting the EU ban on selling snus.⁵ It was also alleged that Zammit had made a second bribery offer to the European Smokeless Tobacco Council (ESTOC) in March 2012.⁶

The Commission’s Response

EU’s Anti-Fraud Office OLAF was requested to investigate the charges. Following a five month investigation, OLAF concluded that there were “a number of unambiguous and converging circumstantial evidences gathered in the course of the investigation” that suggested that Dalli “was aware of this bribery attempt and did nothing to block, stop or report these events”.⁷
Based on OLAF’s findings, Dalli was asked to resign by José Manuel Barroso, President of the Commission. In its official press statement, the Commission stated that the OLAF investigation had substantiated the bribery claims, but that “no transaction was concluded between the company and the entrepreneur Zammit and no payment was made”.⁸ “The OLAF report did not find any conclusive evidence of the direct participation of Dalli but did consider that he was aware of these events”.⁸

OLAF Investigation Strongly Criticised

The OLAF report was leaked to Maltese press in April 2013.⁶ Its findings, and OLAF’s investigation techniques, have since been widely criticised. Corporate Europe Observatory (CEO), a non-profit research and campaign group seeking to expose corporate lobbying on EU policy making, commented that although the report had shown several attempts by Zammit to solicit money from Swedish Match, it presented “…no direct evidence that Dalli was being aware of these attempts”.⁹ CEO continued: “It looks as if OLAF has selectively compiled arguments to support that Dalli had behaved inappropriately, without considering the credibility of the witnesses”.⁹ This sentiment was echoed in Parliament where Ingeborg Grässle MEP told reporters that “The report opens up more questions than it provides answers”¹⁰. OLAF’s own Supervisory Committee published a report in April 2013, concluding that OLAF’s investigation had “violated its mandate and broken EU rules”.³
For more information on OLAF’s controversial role in ‘Dalligate’, see our pages on OLAF and its Director General, Giovanni Kessler.

Dalli’s Response

Dalli has always vehemently denied the charges, calling the affair “a systematic plan of entrapment”,¹¹ claiming “there are elements within the Commission who are not happy with this directive. And naturally, there is the tobacco industry….I am stating facts”.¹²
In December 2012, Dalli lodged a case with the European Court of Justice, seeking damages and an annulment of the Commission’s decision to force him to resign.¹³ These claims were dismissed in May 2015, when the Court ruled that “Dalli had resigned voluntarily”.¹⁴
Dalli also filed a defamation case in the Belgian court against Swedish Match.¹⁵¹⁶
More about this case below.

Failure to Implement the Framework Convention on Tobacco Control

Despite evidence of Dalli’s knowledge about the bribery attempts being weak and circumstantial, Dalli had two undisclosed meetings with tobacco industry representatives lobbying on the EU Ban on Snus Sales.⁶ Dalli failed to implement rules of the Framework Convention on Tobacco Control (FCTC), to which the EU is a signatory, and which obliges parties to protect public health policy from the commercial and other vested interests of the tobacco industry.¹⁷
Dalli defended his tobacco industry meetings by arguing that politicians should be accessible to people: “One of the criticisms I receive today is that I am too accessible. But I do not think this is a bad thing for a politician. I am very accessible to everyone. Whoever phones me, I tell him to come and see me, if possible there and then. Therefore when Silvio Zammit told me that he had someone who wanted to speak to me, as many other people tell me, I accepted.”¹⁸
Dalli’s argument, however, ignores that the FCTC outlines that “there is a fundamental and irreconcilable conflict between the tobacco industry’s interests and public health policy interests”.¹⁷

Meeting 1: ESTOC/Dalli, 20 August 2010

Whilst on holiday in his homeland of Malta, Dalli met with Tomas Hammargren, British American Tobacco employee and Chair of ESTOC.⁶
Hammargren’s meeting notes report that the meeting had been “off the record” as “JD John Dalli has been strongly advised by other part of the Commission (Barroso office or just the services, C6?sic) not to meet or be lobbied by tobacco companies”.⁶
The notes also suggest that this meeting was not to be a one-off, but part of a wider tobacco industry lobbying strategy aimed at influencing Commission officials to lift the ban on snus.⁶

Image 1: Screengrab from Kimberley’s email to Swedish Match (taken from final OLAF report) showing that her connection with Swedish Match was purposively hidden

Meeting 2: Swedish Match Lobbyist/Dalli, 6 January 2012

In January 2012, Dalli met with Maltese internal market lawyer Gayle Kimberley in Malta. Like Meeting 1, this meeting had been brokered by Zammit.
Swedish Match paid Kimberley €5000 to meet with Dalli, but she intentionally kept her connection with Swedish Match hidden.
Image 1 shows an email sent by Kimberley to Johan Gabrielsson (Director of Public Affairs Swedish Match), shortly after her meeting with Dalli, reiterating that she had been “in no way” connected to Swedish Match, instead giving the “objective opinion of snus producers and users”.⁶

Other Meetings: Non-Health Elements of Commission and Tobacco Industry

Dalli wasn’t alone in failing to implement FCTC rules. Evidence shows that senior staff in the highest echelons of the Commission, notably the Secretariat-General, the Legal Service and Barroso’s own Cabinet, met no less than 12 times with tobacco industry representatives.⁴¹⁹
None of these meetings were publicly disclosed, but in contrast to Dalli, none of these officials were formally sanctioned.
See EU Tobacco Products Directive Revision for more details on the tobacco industry’s access to Commission officials and the impact it had on the progress of the revision of the TPD.

Swedish Match Opaque Lobbying Practices

While much focus in this ‘cash for influence’ scandal has centred on Dalli’s misconduct, the tactics used by Swedish Match to undermine EU regulation received considerably less attention. Despite the company’s attempts in the aftermath of the scandal to rehabilitate its image and present itself as an innocent whistle-blower and victim,²⁰ the controversy exposed arguably unethical conduct by the company.

Failure to Adhere to Transparency Register Code of Conduct

As an interested party trying to influence EU policy making, Swedish Match has been registered with the EU’s Transparency Register since 2000.²¹
The ‘Dalligate’ controversy revealed the company’s failure to comply with the Register’s Code of Conduct on two counts:
1 “Always identify themselves registrant by name and, by registration number, and if applicable, by the entity or entities they work for or represent; declare the interests, objectives, aims they promote and, where applicable, specify the clients or members who they represent”²²

Although Swedish Match is registered on the Transparency Register, its lobbyist Kimberley is not. Swedish Match’s Register entry does not disclose the company’s relationship with Kimberley. ²¹ In addition, Kimberley intentionally concealed her relationship with the tobacco company in her interaction with Dalli.⁶

2 “Not obtain or try to obtain information or decisions dishonestly or by use of undue pressure or inappropriate behaviour”²²

Swedish Match inappropriately sought access to a Commissioner in his private domain in Malta, arguably away from ‘parts of the Commission that had advised Dalli strongly not to meet with tobacco companies’, as per Hammargren’s meeting notes.⁶

Perpetuating Untruthful Version of Events: ‘OLAF Told Us So’

In the aftermath of the scandal, there was confusion about how many times Dalli had met with Kimberley.
Dalli maintained that he had met Kimberley only once, whereas Swedish Match claimed there had been two meetings.
Swedish Match Vice President Public Affairs, Patrik Hildingsson, told Europolitics in an ‘exclusive interview’²³ shortly after Dalli’s resignation, that Kimberley and Dalli had met in January 2012, and again in February that year. Furthermore, he claimed that Zammit had made the bribery offer at that meeting, after the Commissioner had left the room:

“He Zammit continued the meeting and asked why Dalli would take a suicidal political decision without gaining anything. The solution was simple: we had to pay”.²³

However, at the time of interview, Hildingsson was aware that no second meeting had taken place.⁶
Although the meeting had been scheduled to take place, the meeting was rescheduled to 10 February due to adverse weather. At the last minute, Zammit had decided to meet with Dalli alone, taking a list of questions prepared by Kimberley.⁶ The alleged bribery offer was made by Zammit to Kimberley when Zammit came back from meeting Dalli.
Swedish Match’s deception came to light when Swedish Match’s Gabrielsson met with Jose Bové MEP in March 2013.
Gabrielsson confessed that OLAF had informed him on one of the two occasions he was interviewed (2 June and 19 September 2012)⁶ that Kimberley had lied about the second meeting, and that she had not been present. ²⁴ As such, Swedish Match had not only willingly deceived the press in October 2012, it also had lied about events when the company was invited to tell its side of the ‘Dalligate’ controversy at a ‘Brussels Network’ event at the European Parliament.²⁵
When asked by Bové why Swedish Match had continued to stick to an incorrect version of events, Gabrielsson replied that OLAF had instructed him so:

“They OLAF said like this, we can’t give you any orders how you, because you have done nothing wrong in this, but we have done an investigation, there is Maltese investigations, it would be preferably that this is not disturbed and this will definitely not help certain things that come out.”²⁴

OLAF denied this allegation.

Impact of ‘Dalligate’

Tobacco Products Directive

The tobacco industry lobbying efforts to lift the snus export ban failed.
Published three months after Dalli’s resignation, the Commission’s revised TPD proposal²⁶ maintained the snus ban, was approved by Parliament and Council, and enacted in April 2014.
Evidence suggests that ‘Dalligate’ backfired on the tobacco industry. It changed the EU political landscape, if only temporarily.⁴
The scandal placed transparency of EU policy making and undue tobacco industry influence at the heart of political debate. Heightened scrutiny made previously amenable EU officials less inclined to engage with tobacco companies. In Parliament, Dalli’s departure and exposure of tobacco industry interference resulted in rare, all-party support to move the TPD forward.⁴
The rapid response from Parliament and Council were instrumental in getting the TPD adopted in time for the Parliamentary elections in May 2014.

Lawsuits

In 2012, OLAF referred its ‘Dalligate’ report to Maltese authorities for further investigation. In June 2013, the Maltese Police Commissioner announced that “Malta does not have enough evidence to start criminal proceedings against former EU Health Commissioner John Dalli in a bribery case”.²⁷
Silvio Zammit however was charged with bribery and trading in influence. This lawsuit is still ongoing (January 2017).
Dalli lost his European Court of Justice case against the Commission, but also filed a lawsuit in the Belgian Courts against Swedish Match, which is still ongoing (January 2017). At some stage this lawsuit was extended to include OLAF, and in spring 2015 media reported that Belgian prosecutors had started a criminal investigation into claims of illegal wiretapping by OLAF during the Dalli investigation, and that prosecutors had requested the Commission to lift the diplomatic immunity of OLAF officials involved.¹⁴²⁸ The Commission refused several requests, but in in July 2015 granted the request to lift Kessler’s immunity.²⁹
Kessler has filed a case with the European Court of Justice, seeking reversal of the Commission’s decision to lift his immunity, claiming that if he were to be put on trial, “it would imperil Olaf’s independence and investigations”.³⁰ In January 2017 this court case was still ongoing.

European Ombudsman investigation

In 2014 the European Ombudsman, Emily O’Reilly, opened an investigation into the alleged failure of the Commission to implement FCTC rules with tobacco lobbyists.³¹ She found that the Commission’s approach to publicising meetings with tobacco lobbyists was, with the exception of DG Health, inadequate. She recommended that the Commission apply DG Health’s proactive transparency policy to all Commission services and officials, irrespective of seniority.³²
The Commission disagreed, insisting that the ethical and transparency rules in place already prevent undue influence from the tobacco industry. Based on its response, the Ombudsman then concluded that there was “maladministration on the part of the Commission”³².
The Ombudsman lacks the formal power to take further action.

TobaccoTactics Resources

• EU Tobacco Products Directive Revision
• TPD: Pictorial Warnings and Standardised, Plain Packaging
• TPD: Delaying the Process of Consultation
• TPD: Tobacco industry lobbying a violation of Article 5.3
• TPD: Burglaries
• TPD: Revolving Door Cases
• Snus: EU Ban on Snus Sales and Illegal Sales of Snus via the Internet

Relevant Links

• Corporate Europe Observatory, Dalligate: Smokescreen or Smoking Gun? Scandal exposes deep problem of corporate influence over Commission decision-making, 25 Oct 2012.
• Corporate Europe Observatory, Mapping the Tobacco Lobby in Brussels: a smoky business, 6 Nov 2012.

TCRG Research

• How online sales and promotion of snus contravenes current European Union legislation, S. Peeters, A.B. Gilmore, 2013, Tobacco Control, 22:266-273
• The revision of the 2014 European tobacco products directive: an analysis of the tobacco industry’s attempts to ‘break the health silo’, S. Peeters, H. Costa, D. Stuckler, M. McKee, A.B. Gilmore, 2016, Tobacco Control; 25:108-117
• Quantifying the influence of tobacco industry on EU governance: automated content analysis of the EU Tobacco Products Directive, H. Costa, A.B. Gilmore, S. Peeters, M. McKee, D. Stuckler, 2014, Tobacco Control; 23:473-478