Ben Hills reports

In the global battleground of smoking litigation, an obscure middle-aged English lawyer living in retirement in Sydney’s leafy Lane Cove has become the world’s most wanted witness.

Nicholas Basil Cannar is his name, and he holds in his head so the United States Justice Department believes the secrets of how the tobacco industry for decades concealed what it knew of the dangers of cigarettes, deceived millions of people into disease and premature death, and planned the destruction of documents that could have delivered them justice in the courts.

Cannar recently retired as managing director in Australia of Imperial Tobacco, part of the global empire of British American Tobacco, the world’s second-largest tobacco company, a colossus which operates in more than 100 countries and has sales of more than $US30 billion ($45 billion) a year.

However, it is what he was involved in 20 years ago when he was head of the BAT legal team in Britain and, more recently, of its subsidiary W. D. & H. O. Wills in Australia that is of gripping interest to lawyers representing smoking victims worldwide, and governments concerned about the tobacco toll.

It emerged in evidence and documentary exhibits in a court case in Melbourne last year that Cannar was one of the architects of a policy under which evidence which might have been of crucial importance to people trying to sue the company for the damage caused by its products was dealt with under the Orwellianly named “document retention policy”.

The Melbourne case involved a woman, Rolah McCabe, who died last year of tobacco-caused cancer after being awarded $700,000 in a landmark case against BAT.

Researching the case in vast document depositories in Minnesota in the US and Guildford, England, for hundreds of hours, a young law clerk from the Melbourne firm Slater and Gordon discovered previously overlooked evidence of the policy which was produced at the trial.

In his judgement in the Victorian Supreme Court, Justice Geoffrey Eames struck out BAT’s defence on the grounds that the company had destroyed thousands of documents, which had denied McCabe a fair trial. The judge found that from 1985 the company faced a rising tide of lawsuits from smokers, and it employed “an army of litigation lawyers” in the US and Britain to implement the document retention policy. Its purpose: “to provide a means of destroying damaging documents under the cover of an apparently innocent housekeeping arrangement”.

Eames went on to point the finger at Cannar. “The role of Cannar is of considerable importance and his absence from the witness box is glaring,” he said. “He was involved in the document retention policy from at least 1990 … His name emerges constantly.” That judgement was subsequently and controversially overturned on appeal, with the court saying Justice Eames had gone too far in striking out the defence on the basis of BAT and its lawyers not properly disclosing the destruction of the documents.

A further appeal by McCabe’s lawyers to the High Court is expected later this year. But across the Pacific in Washington, DC, lawyers at the Department of Justice pricked up their ears when they heard about the case, and decided that what Cannar knows could be vital to a mega-case they are running against Big Tobacco.EVEN after a series of astronomical judgements in the US courts, a glance at the balance sheets of the five largest players shows a tobacco industry that is expanding, diversifying, confident and highly profitable.

Altria (formerly Philip Morris), R. J. Reynolds Tobacco Holdings, BAT’s Brown and Williamson Tobacco, Loews subsidiary Lorillard Tobacco Company, and Vector Group’s Liggett unit have been making record profits, pushing full tilt into poor countries to counter declining sales in the rich world.

Altria, for instance the world’s biggest tobacco company and (through Kraft) its second-biggest food company increased profits 29 per cent to a staggering $US11 billion and opened a new $US300 million factory in the Philippines. Its chairman and chief executive, Louis C. Camilleri, crowed that, “Business fundamentals remained strong, and that litigation risks faced by Philip Morris USA are manageable.”

Under the so-called Master Settlement Agreement of 1998, the biggest court verdict in history, Big Tobacco agreed to pay US states about $US250 billion to compensate for the costs of treating tobacco-related illness. Stupefying as the award sounds, it is payable over 25 years, and amounts to a surcharge of only about 20 cents on each packet of cigarettes sold in the US every year.

On top of that settlement, there was a record-breaking damages case in Florida in July 2000 the so-called Engle case in which a class of up to 700,000 smokers was awarded $US145 billion for tobacco-related illness. However, in May an appeals court threw out that verdict, saying that it would bankrupt the companies.

But before the champagne could go flat in the boardrooms of the victorious tobacco companies, there came signs that the US Justice Department was determined to press ahead with a case originally launched by the Clinton administration, but losing momentum since George Bush came to office that could be the most important development in the war on tobacco since the US Surgeon-General declared smoking a health hazard 40 years ago next January.

The federal lawsuit is being run under the RICO legislation. It is a massive indictment which seeks to recover the $US20 billion a year the US spends treating tobacco-related illness.

The tobacco companies have thrown enormous resources into fighting this case, which anti-smoking campaigners optimistically have dubbed the end-game for the industry.

The indictment documents what it claims is a history of the tobacco industry’s conspiracy to conceal the addictiveness and the harmful effects of tobacco, going back to a landmark meeting in December 1953 at New York’s Plaza Hotel of the chief executives of four of America’s largest tobacco companies.

At this meeting, a long-term strategy was devised “to combat emerging scientific evidence [of the dangers of smoking], defend their profits, expand the market and respond with … deception”.

As part of the strategy an organisation called the Tobacco Industry Research Council was formed, which in January 1954 published newspaper advertisements which declared: “There is no proof that cigarette smoking is one of the causes [of lung cancer]. For more than 300 years tobacco has given solace, relaxation and enjoyment to mankind.”

And that, the indictment alleges, is pretty much the position that the tobacco companies have taken to this day, in spite of the condemnation of smoking by every medical organisation, almost every government, and international bodies such as the World Health Assembly, which estimates that smoking causes about 5 million premature deaths every year.

There has been a dramatic reduction of smoking in Australia, largely due to the success of campaigns by organisations such as QUIT after World War II half the population smoked; today it is fewer than one in five.

Australia’s share of the worldwide toll was recalculated only last year in a major study commissioned by the Federal Government which listed a scary 41 conditions linked with smoking not just lung cancer, heart attacks and strokes, but anal cancer, Parkinson’s disease and Sudden Infant Death syndrome. It estimated that 20,000 people died every year of smoking-caused illness.

In calculating the economic costs of smoking, the report included absenteeism, fires ($80 million worth of buildings burnt down by cigarettes, about a dozen people killed) as well as the massive costs to government of health care and pensions. The bottom line: in 1998-99 smoking cost Australia $21 billion, a staggering 1.7 per cent of gross domestic product.JUST what, if anything, Cannar knows about this half-century-old global conspiracy is what the US Justice Department is seeking to establish.

Late last year the US District Court for the District of Columbia where the case is to be tried took the highly unusual step of issuing a “letter of request” to the NSW Supreme Court for assistance in obtaining a statement from him.

The Justice Department claims that Cannar was responsible for BAT’s worldwide policies for the “management, retention and destruction of documents” needed as evidence by people claiming damages for health-related injuries caused by tobacco. It claims he “participated in policies and practices that resulted in the destruction of relevant documents” in the US, Britain and Australia.

Cannar has refused to co-operate, claiming that if he gives evidence “he may expose himself to the risk of criminal prosecution and civil liability” although the Justice Department has since given him an indemnity against prosecution. He did not return calls from the Herald.

A measure of the importance both sides attach to Cannar’s knowledge can be gauged by the fact that the case is being fought fiercely and expensively before Justice Virginia Bell in the NSW Supreme Court by up to five teams of lawyers, including two from BAT companies seeking to intervene in the case. Bell has reserved her decision.

If Justice Bell rules for the Justice Department, Cannar will be required to give evidence before an “examiner” appointed by the court, Moreton Rolfe, QC, and from the documents that have been made publicly available, the reluctant Cannar could prove to be the most important witness yet in the global war on tobacco.

Publishing info

Pub: Sydney Morning Herald
Pub date: Saturday 28 June 2003
Edition: Late
Section: News And Features
Sub section: News Review
Page: 35
Word count: 1612
Classification: Health/Smoking Law/Cases
Geographic area: Sydney Australia
Photo: Tom Cliff
Caption: Truth is out there … Nicholas Cannar is holding mum on the alleged policy of making evidence against the tobacco industry `go away’.