Dalligate – MEPs want transparency on EU-Olaf tobacco agreements

Unless all documents and annexes of the Tobacco Agreements in are published, the European Union should freeze the current negotiations on the renewal of these agreements, Green MEPs Bart Staes and José Bové said.

Ahead of the second anniversary since the sacking of John Dalli as European Commissioner for Health, the two MEPs flag the shortcomings in the inquiry by OLAF – the EU’s anti-fraud office – into allegations of bribery to influence the EU tobacco law.

Writing in EurActiv.com, Staes and Bové argue that outgoing European Commission president José Manuel Barroso gave in to manipulations of the Tobacco Industry by sacking 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 two opined.

Dalli was forced to resign by Barroso on the strength of a covering letter to the OLAF investigation, which however stated it had no direct evidence but circumstantial evidence that Dalli was aware of a €60 million bribe to reverse the EU ban on smokeless tobacco.

The saga became known as ‘Dalligate’ and Staes, Bové and MEP Ingeborg Grässle, were asked by investigating Judge Van Aspen to sit for interviews with him. The communication of this request to the MEPs was however delayed by European Parliament President Martin Schulz by five months, delaying the investigtation.

“The past two years we have tried, together with some colleagues, NGOs 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’”.

The two MEPs admitted to not having been surprised by the decision of the Maltese judicial authorities 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.”

In Malta, the controversy surrounding the former police commissioner’s decision continued to fuel heated debates in parliament, ending before a parliamentary committee after a breach of privilege complaint filed by Prime Minister Joseph Muscat against Opposition leader Simon Busuttil. The complaint was filed by Muscat after Busuttil accused the prime minister of interfering in the police investigation against Dalli.

Staes and Bové said that the Swedish tobacco company Swedish Match, a PMI-daughter that started the whole affair, lied on several occasions.

By way of example, the two recount how Swedish Match claimed it had notified the Swedish government of the alleged case of bribery. But 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.”

Staes and Bové argue that 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,” they insist.

“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. According to the MEPs, the programme showed clearly how the tobacco industry might 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,” Staes and Bové add. “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?”    

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.

But to companies like PMI, this was an absolute alarm bell.    

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. 

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.  

“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.”