Dalligate: Exit Barroso, with a toxic legacy

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Green MEP's Bart Staes and José Bové.

Green MEP's Bart Staes and José Bové.

It is almost two years to the day that Commission President José Manuel Barroso sacked his Public Health Commissioner John Dalli after a tobacco lobbying scandal. Green MEPs Bart Staes and José Bové reflect on why the Barroso Commission’s legacy will be one where lobbying, conflicts of interests and corporate interests took over European decision making. They discuss if that legacy will live on in the negotiations over TTIP.

Bart Staes and José Bové are both Members of the European Parliament for the Group of the Greens/EFA.

October 16th will be the sad and second, silent birthday of the day the European Commission president José Manuel Barroso gave in to manipulations of the Tobacco Industry by sacking Commissioner for Public Health John Dalli. A black day for European democracy from which sadly enough we have not learned the right lessons. On the contrary, lobbying, conflict of interests and corporate interests taking over on European decision making will get worse if the EU-US free trade agreement TTIP will see the day. The arbitrage mechanism ISDS, seems to be designed for multinationals like Philip Morris International (PMI).

The past two years we have tried, together with some colleagues, ngo’s and journalists, to shed some light on the real reasons behind ‘Dalligate’, which should and later will be called ‘Barrosogate’. Many have tried to wipe these reasons under the carpet, and a lot still stays there. But a few facts are clear. The OLAF report on the so called attempts by Dalli to change the Tobacco Products Directive (TPD) in exchange for cash, was manipulated, partial and biased full of lies and illegal methods.  Already in April last year Peter Paul Zammit, the then Maltese Police Commissioner and Prosecutor General, stated that “there is no criminal evidence to arraign or accuse former health commissioner John Dalli”.

We were at the time, not at all surprised by this decision by the judicial authorities in Malta not to prosecute Dalli. The various documents of OLAF, as revealed by the media, show that this inquiry was done only à charge and not a décharge.

The Swedish tobacco company Swedish Match, a PMI-daughter that started the whole affair, lied on several occasions. For example by stating that they notified the Swedish government of the alleged case of bribery, which according to Swedish officials they never did. It was through the mediation on French lawyer Michel Petite – who is defending PMI – and who informed secretary-general Catherine Day, that OLAF was instructed to start an inquiry. Petite who as head of the EC Legal Service signed the agreement with PMI in 2004. In order to stop legal proceedings for an American court by the EU, PMI agreed to pay over 1 billion euro, of which it paid so far around €840 million.       

It is very clear that these agreements are the missing link in the Dalligate-affair, explaining why the situation developed as it did. As long as the Committee of Budgetary Control does not get access to all the underlying documents and annexes of the Tobacco Agreements (4 in total) the EU should freeze the current negotiations on the renewal of these agreements.

Back to Dalli. When the OLAF report and other documents were leaked in 2013, it became more and more clear that the whole affair was a set up to get rid of commissioner Dalli and by doing so delay the TPD.  All this was clearly in the interest of companies like PMI that had set up a massive lobby campaign to weaken, delay or stop the new anti-smoking legislation.   

This week the French investigative programme Cash Investigation brought more elements to this analysis. This programme showed clearly how the tobacco industry may have manoeuvred to force the sacking of Dalli by Barroso, citing confidential documents by PMI. Some of the 600 pages of internal documents from PMI, including some dating back to 2012 are revealing.  

For example a slide titled “ISC strategy and objectives,” where the objective “target European Commissioner” is highlighted. According to this slide, the Commissioner was to be targeted through Brussels and international stakeholders, through media generated by EU-wide stakeholders, through stakeholders. And another slide called “Strategy: possible Commission reverse tactics”, shows the objective “achieve extreme measures by stealth.”

Stealth planes cannot be detected by radar. That is what PMI did by lobbying on all possible levels and thus succeeding to delay and weaken the European legislation. And indeed “achieving extreme measures” like the unjust sacking of a Commissioner public health. It was the EC itself that dropped the strange story on Dalli visiting the Bahamas in the media. Why?    

Plain packaging and ISDS

One of the ideas to curb smoking was to introduce in the EU the plain packaging, meaning no attractive packs, with warning labels featuring tar-stained lungs to replace logos. This was an absolute alarm bell for companies like PMI.     

This company is now undertaking legal actions against countries like Australia and Uruguay and possibly against France and Ireland when they adopt similar measures. In 2009 Uruguay voted a law that obliged tobacco companies to have at least 80% of their packs to be covered by health warnings. PMI now claims €25 million for loss of profits and an attack on their intellectual property rights. A petition is launched to support the government and public health of Uruguay. By the way, after the massive tobacco lobby the new EU TPD lowered the health warning to 65% of the package. In a recent article ‘Trade deals: Toxic talks’ the Financial Times described how these public health laws are being attacked by the tobacco industry via a massive legal assault on countries:

“The battle provoked by the law change has strayed in to global trade and investment policy. In June 2011, shortly after the law was agreed, tobacco group PMI provoked the dispute clause in a 1993 investment treaty between Australia and Hong Kong. Unless an “amicable settlement” could be found, it said, it would circumvent the Australian legal system and seek compensation before an international arbitration panel for what it called the government’s “expropriation” of its intellectual property.”

This weekend all over Europe, citizens are protesting free trade deals like TTIP with a focus on investor-state dispute settlements (ISDS). Under the pretext of special protection for investors, governments are being sued via opaque arbitrage courts when companies think laws harm their corporate interests.  

The FT quoted liberal economists such as Nobel laureates Joseph Stiglitz and Paul Krugman, who “argued that ISDS mechanisms undermine the sovereignty of nations. We should indeed not encourage companies like PMI to undermine legislation on public health via international free trade agreements. 700,000 Europeans that die every year of smoking in the EU and one sacked European Commissioner is enough.

Further Reading