Examination of Witnesses(Questions 480-499)
MR GARETH
DAVIS, MR
BRUCE DAVIDSON
AND MR
JOHN DIBBLE
WEDNESDAY 19 JUNE 2002
480. What did you do?
(Mr Davis) We ceased trading.
481. Mr Wells, could you state which countries
you asked Imperial to stop exporting to and whether they immediately
complied with your request?
(Mr Wells) We issued red cards in respect of customers
in a number of different countries. I think the number of red
cards was 15, one of which we withdrew, that leaves 14. They are
in a variety of different countries, they include Afghanistan,
Moldova and Latvia. In a number of cases supply continued for
some considerable time after those red cards were issued.
482. How much longer?
(Mr Wells) 10 months, of that sort of order.
483. So that product was leaving UK factories
for ten months after you had asked them for it to stop?
(Mr Wells) I think in the case of Latvia and Moldova
cards were issued in February 2000 and supplies continued until
September and November 2000 and 2001 respectively.
484. Why did you, Mr Davis, carry on supplying?
(Mr Davis) I am not quite sure that is absolutely
accurate.
(Mr Dibble) I think the facts are wrong with the dates,
red cards, yellow cards and when did we stop. The bulk of the
cards were issued to us in February 2001 and, looking up Customs'
own submission, there seems to be a suggestion that we ignored
them and kept supplying. In fact from their own figures and their
own table, they point out that in most of these countries we stopped
supplying far in front of the issue of the card. If you take the
last one, bottom of the list, Uzbekistan, card issued 21 February
2001, supplies continued to be made after the issue of the yellow
card, last supplied in March 2001, which I make about eight days
after the card was issued. I do not think we could have responded
much more quickly in these cases. We, as Mr Wells rightly pointed
out, were issued with cards. One was a red card which was later
withdrawn because it was issued on erroneous or very spurious
information which Customs had, so that was a bad basis on which
to issue it. With the other cards, we went in ourselves, we made
our own market checks, we know our distributors, we investigated
the markets. On the Afghanistan one we had two seizures from Afghanistan
when the card was issued to us; two in a whole year. Very, very
low volumes, a very, very small proportion of what we sent there,
nonetheless we went into Afghanistan—not myself, I hasten
to say—we investigated, and the proof of the pudding is
in the eating, we have stopped trading.
Mr Bacon: I have run out of time, I will
have to leave it there. Thank you.
Mr Williams
485. Mr Davis, I was disappointed to
hear you say you were surprised, disappointed and concerned—they
were your words—at the allegations made at the last Committee
of Public Accounts. We do not usually like to malign our witnesses.
That is not a question, just an observation. Can I take you back
to the quote from your manager of external affairs, Mr Sadler.
What he said was, "We do not want only foreign brands to
be imported into the UK", now that can only mean he wanted
your brands to be imported into the UK. That is straight forward
language, no slips of tongue, it is clear, is it not? Or are you
going to try and put some slightly topsy-turvy interpretation
on it?
(Mr Davis) No, I do not wish to put a topsy-turvy
interpretation on it.
486. In that case, as we have got that guarantee,
let's go to the second bit. "It's important that whatever
is going on, our brands are not excluded from it." That is
pretty explicit, is it not?
(Mr Davis) Indeed and this is in the context—
487. It is simple and straight forward, you
want a share of the action.
(Mr Davis) It is in the context of British smugglers
bringing product back from Spain and countries like that. Yes,
we want our brands to be bought in Spain by British consumers
who are going to buy—
488. No, this was not bought in Spain, no, no.
Don't try and side-step. This is imported back into the UK, that
is what he said, and you just said you agree with him. Do you
agree with him or do you not agree with him? Yes or no?
(Mr Davis) I also said earlier to a previous question
on the same subject that I think Mr Sadler was taken very much
out of context—
489. You cannot put it out of context. You must
live in a dream world. We understand the language here. You cannot
be more explicit than to say, "We do not want only foreign
brands to be imported", we want our brands to be imported,
in other words, and, "Whatever is going on it is important
our brands are not excluded", even if it is illegal. That
is what he is saying.
(Mr Davis) No, he does not say that at all, sir, with
respect.
490. To me it sounds as if it is almost an admission
of complicitness in a criminal activity.
(Mr Davis) With respect, sir, it was in the context
of people bringing cigarettes back from EU duty-paid markets—
491. We are not talking about that. That is
not importing.
(Mr Davis) That was the context—
492. That is not importing. He is one of your
top external managers and he does not understand what constitutes
an import. Are you telling us that?
(Mr Davis) What I am saying, and I think I have outlined
today what the company's policy is and it has our total support,
and the interpretation you are putting on Mr Sadler's remarks
is not correct and does not comply with the company's policy.
I cannot say fairer than that, I do not think.
493. You have just repeated what you have said
and you agreed with what he said and what he said is clear. I
remember an occasion when a civil servant became notorious for
his claim he had been economical with the truth, I think you are
being positively parsimonious with the truth as far as this Committee
is concerned. Let us go back to the period when you were not co-operating,
you have admitted you were not co-operating—
(Mr Davis) No, I have not admitted we were not co-operating
at all.
494. Yes, you did, you said in the early years—
(Mr Davis) No, I did not.
495.—and you are putting things right.
(Mr Davis) No. What I said quite clearly is we were
surprised and disappointed, as I was, at the meeting with Mr Byrne
on 16 April at the charge of lack of co-operation, or "co-operation
could be better" as it was put, because we considered we
had a long track record over decades of close co-operation with
Customs, and that is why I was so disappointed. What I said quite
openly is, if there are areas where they feel there could be more
co-operation, we are more than happy to do that.
496. Can I ask Customs again, I know this has
been referred to already, but you said you had less than full
co-operation, what is it specifically? They claim they cannot
find any difference in their co-operation and other people's.
What specifically are the other companies doing or have they been
doing which Imperial is not?
(Mr Wells) If I can give you some examples. In the
note which Imperial have given to the Committee, they acknowledged
that last year their responses to the tracking and tracing requests
took about nine weeks. They acknowledge, and it is certainly the
case, that recently that has speeded up. Nonetheless, that was
a good deal slower than we had from other companies.
497. Did that hinder your activities?
(Mr Wells) Certainly the speed with which we can track
and trace product is obviously helpful in then being able to identify
where the customer and suspect areas are. Equally, we find the
highest proportion of returns to us which do not lend us to differentiate
a particular company, in other words the response is that it is
not possible to identify the particular customers to whom the
goods were supplied, is just under a third in the case of Imperial,
and that is higher than in respect of other companies with whom
we undertake tracking and tracing. That is one example. I know
your time is limited so perhaps I can leave it at that for the
time being.
498. So by not co-operating with you, they were
quite unintentionally co-operating with the smugglers?
(Mr Wells) I do not wish to ascribe a reason as to
why the tracking and tracing was slower, I simply say it was slower.
499. Okay. We have heard a lot from you, Mr
Davis, about your triple whammy and our heart bleeds for you because
we realise you are suffering. It does not show in your profit
figures though. Your profit figures over the last five years have
varied very little at all, they are relatively constant. Before
you say, "Ah, they would have gone up massively if it had
not been for the smuggling", one has to say, in that case,
why did they not go up massively before the smuggling?
(Mr Davis) You have quoted our profits over the last
five years and Imperial's profits have grown steadily since the
1980s, be it under independence or under Hanson ownership. So
our profits—
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