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| SMOKING GUN
MARCH 20, 1997TRANSCRIPT |
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Cigarettes are additive, can cause cancer and have been marketed to minors admits the Liggett Group, the smallest of the five major U.S. tobacco companies. In an historic settlement with 22 state Attorneys General, Liggett will include a warning on its cigarette products, pay $25 million in penalities up front, and turn over an additional 25% of its pre-tax profits for the next 25 years as an additional penalty. A background report is followed by interviews with Christine Gregoire, Washington State Attorney General, and Paul Raeburn, Business Week correspondent.
ELIZABETH FARNSWORTH: For more perspective on today's developments we're joined by Paul Raeburn, who's covered the tobacco industry as a senior editor for Business Week Magazine.
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A RealAudio version of this NewsHour segment is available.
March 20, 1997:
A background report on the Liggett Group settlement and an interview with Christine Gregoire, Washington State Attorney General.
February 10, 1997:
FDA Commissioner David Kessler discusses his contentious term as commissioner of the Food and Drug Administration.
August 23, 1996:
Brennan Dawson, of the Tobacco Institute, and FDA Commissioner David Kessler debate new restrictions on tobacco sales.
May 16, 1996:
Phillip Morris Company, along with the U.S. Tobacco Company, announced proposed regulations to curb teen smoking, but President Clinton and anti-smoking groups say the offer was simply a cosmetic attempt to deflect criticism and avoid tougher government regulations.
July 5, 1996:
Political Analysts Mark Shields and Kate O'Beirne explore Sen. Bob Dole's comments that tobacco may not be addictive and his exchange with "Today Show" anchor Katie Couric.
April 1:
Congressman Henry Waxman participates in an Online NewsHour forum on the tobacco industry.
March 13, 1996:
The Liggett Group settles out of court a class-action lawsuit brought by smokers. Does it mark the end of the powerful tobacco lobby?
Browse the Online NewsHour's coverage of health issues.
Paul, why do you think--what's your personal theory about why Liggett agreed to this settlement?
PAUL RAEBURN, Business Week: It's very difficult to say. He hasn't said anything today about it. Last year he was involved--you remember, it was almost a year ago to the day last year that he--
ELIZABETH FARNSWORTH: You're talking about "he," the head of Liggett.
PAUL RAEBURN: I'm sorry. Bennett LeBow, the head of Liggett, who initiated the first proposed settlement with the attorneys general, at that time only five or six, now the twenty-two that we have now. And in that period he was involved in a very nasty fight with R. J. Reynolds in which he was trying some complicated maneuvers to try to ultimately take over the company, have R. J. Reynolds acquire Liggett, some stock swaps, and somehow arrange to be in charge of the resulting consolidation. That didn't work.
The plan there was to offer R. J. Reynolds stockholders a legal out from the lawsuits by making the settlement. What happened, in fact, was tobacco shares, with the exception of Liggett's, were battered. Stockholders were very angry and decided not to deal with LeBow. Why he's continuing and why this latest settlement? It may be that as the very smallest tobacco company he feels he has the least to lose and may somehow profit through the visibility and the initiative that he's taking. It's not clear. We can only speculate.
ELIZABETH FARNSWORTH: The documents seem to be one of the most important elements of all this. Give us some--put this in perspective. What documents are we talking about? Where do they come from? Why are they so important?
PAUL RAEBURN: There's a large series of documents that are--will reveal many of the industry's practices over the past few decades. These can be important not only in the state attorneys general suits but in various individual liability suits, product liability suits, that is, suits where people are suing for recovery of damages after they have personally developed a smoking-related disease. But the key documents are something called committee of council documents, very interesting group that's been operated by the tobacco industry for sometime, this committee of council, which is a group in which lawyers from all of the tobacco companies met regularly to plan a joint litigation strategy.
The idea was that they would move absolutely in lockstep. And this has in general been a very
effective strategy. It has kept a stone wall in front of them and really prevented any significant legal victories on the other side. However, now what's happened with LeBow's break from that fortress, is that these documents have been requested by the attorneys General. And it may be that they'll--that they will be turned over. That's what the lawsuit, or the temporary restraining order in North Carolina is all about to prevent the release of those documents.
ELIZABETH FARNSWORTH: But won't they have a pretty compelling argument? I know that Attorney General Gregoire said that the Liggett documents that have been turned over are really revealing, but the documents that involved the other four companies, won't they have a pretty compelling argument saying that they are; they should be protected because they were attorney client--these are attorneys that we're meeting, after all.
PAUL RAEBURN: That's right. The argument on one side is that this is a legal confidentiality and that's
ELIZABETH FARNSWORTH: Paul, Liggett's admitting that tobacco is addictive and that it can cause cancer. How significant is this, given the fact that there's already a little statement on every cigarette box saying smoking causes lung cancer, heart disease, emphysema, and may complicate pregnancy. That's the warning from the surgeon general.
PAUL RAEBURN: Surgeon general, right. There are a couple of points to make here, I think. No. 1, the main effect of the warnings that are now on the packages has been to give the tobacco companies some insulation against product liability suits. They were intended initially to try to persuade smokers to quit. Studies have shown, however, that they just cannot compete with the images and the glowing full color advertisements that tobacco companies produce, so the warnings have been judged to be not very effective at alerting smokers to the dangers.
Now, to add warnings that say cigarettes are addictive is certainly a victory for the industry's
ELIZABETH FARNSWORTH: And what is the current evidence showing, all of this publicity about cigarettes, is it cutting down on smoking in this country, or not?
PAUL RAEBURN: Smoking in this country has been slightly on the decline. The most effective means of encouraging the decline of smoking was a program that has been operated off and on for some years in California which involved very, very sharp television ads and also involved in a very extensive monitoring and survey program that judged the effectiveness of those ads. And for a period when those ads were running at full steam the rate of smoking in California was declining at twice the rate of decline in the rest of the country.
Now, that program in California has taken some political shots, and it's not quite as effective now as it was. But it seems that directed messages to young people in particular do seem to cut the rate of smoking. Publicity about trials, warnings on cigarette packages, there the evidence that they do
ELIZABETH FARNSWORTH: Well, Paul Raeburn, thanks for being with us.
PAUL RAEBURN: Thank you.
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