How tobacco industry attempted to influence privatisation plans of state-owned tobacco industry in Moldova

Apr 7 2005

A paper in this week’s issue of The Lancet highlights how two tobacco companies attempted to influence plans to privatise the state-owned tobacco industry in Moldova.

Moldova, a small, agriculturally dependent state of 4.3 million people is Europe’s poorest country. In October 2000, after pressure from the International Monetary Fund the Moldovan government approved a bill to privatise its tobacco industry.

Anna Gilmore (London School of Hygiene and Tropical Medicine, UK) and colleagues analysed internal tobacco industry documents on Moldova made public through litigation. The documents suggest that although a competitive tender for the state owned monopoly was later announced, British American Tobacco (BAT) and the German manufacturer Reemtsma each initially sought to secure a closed deal. BAT sought to acquire a monopoly position, bolstered by excise rules developed by the company that would uniquely favour its products. Documents suggest that BAT attempted to gain favour in various ways including donating funds in aid of flood relief and providing Moldova with agricultural machinery. Despite hoping to establish a monopoly, BAT planned intensive marketing, as if in a competitive market, aiming to target young people in cities. In doing so it predicted that smoking uptake would increase, especially among women, belying the tobacco industry claim that advertising only encourages brand switching. The documents also suggest that BAT planned to cull the cigarette-processing workforce in Moldova but present ‘sanitised’ information on future employment levels to the Moldovans.

Dr Gilmore comments: “It is evident from the tactics revealed here that countries undertaking tobacco industry privatisation and the organisations advising them need to ensure a transparent process and a truly competitive tender in order to maximise potential revenue gains. To prevent the predicted increase in consumption likely to arise through the growth of advertising and decline in prices effective tobacco control policies, particularly comprehensive advertising bans and adequate taxation rates, should be implemented before privatisation occurs.”