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BAT hit for $850K and counting

BAT hit for $850K and counting

BRITISH American Tobacco (BAT), the behemoth cigarette manufacturer at the centre of an infamous and ongoing global document shredding scandal, has been fined almost $1 million for contempt of…

BRITISH American Tobacco (BAT), the behemoth cigarette manufacturer at the centre of an infamous and ongoing global document shredding scandal, has been fined almost $1 million for contempt of court.

The penalty arises pursuant to a ruling of the US District of Columbia District Court, which found British American Tobacco Investments (BATCo) in contempt of previous orders to produce sensitive documents to the Federal Justice Department.

Handed down early last month, Justice Gladys Kessler’s orders stipulated that BATCo pay the Court US$25,000 ($33,336) per day from 17 October 2003 until it either produced, or logged as privileged, the documents in question. When Lawyers Weekly went to print the balance stood at US$600,000 ($848,531).

At the heart of the dispute are documents understood to be possessed by Australian subsidiary BATAS, which the US believes outline a plan devised by the tobacco giant and its lawyers to destroy incriminating evidence detailing the health hazards of smoking.

The Justice Department wants the documents to assist in a US$289 ($408) billion fraud and racketeering lawsuit it is running on behalf of US citizens against tobacco companies. Proceedings were launched last year, only months after the Supreme Court of Victoria created an international storm by ruling BAT had shredded potentially damaging evidence, and remain on foot despite the fact that decision has since been overturned by superior Australian courts.

In its defence before the District Court, BATCo contended that obtaining the sought documents from BATAS was a “factual and legal impossibility”. In rejecting that central argument, Kessler said BATCo had not made a “good faith effort” to request that BATAS produce the documents, or alternatively to enlist parent company BAT plc. to persuade its Australian subsidiary to do so.

A London-based BAT spokesperson told Lawyers Weekly that the fine was being paid daily as “it falls due” and confirmed that BATAS sought to intervene last week.

“BATCo believes this will purge the contempt order,” she said.

BATAS declined to comment on the nature of any part it may play in the case. Sources close to the proceedings, however, tip that BATAS will point to the privileged status of the documents under Australian law as reason for their not being produced.

Asked whether or not the documents at the centre of the case still, in fact, existed, the BAT spokesperson replied: “As far as we know.”

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