British American Tobacco Bangladesh (BATB)

British American Tobacco Bangladesh (BATB) is the largest manufacturer of cigarettes in Bangladesh and also the most dominant player in the tobacco market of Bangladesh. As of late 2020, BATB holds 62 percent of cigarette market and manufactures some of the most widely consumed cigarette brands in Bangladesh.[1]

History

British American Tobacco (BAT), formerly known as Imperial Tobacco, is the first multinational tobacco company in Bangladesh. The company started its operations in Bangladesh in 1910. Headquartered in Calcutta during this period, the company also launched a small branch office in Maulavi Bazar, Sylhet and had its first depot in Armanitola, Dhaka in 1947. After the independence of India and Pakistan in 1947, the company operated its activities under the name Pakistan Tobacco Company. BAT set up its first factory in Bangladesh (the then East Pakistan) in 1949 at Fauzdarhat, Chattogram. After the independence of Bangladesh on 16 December 1971, for a brief period, the properties of Pakistan Tobacco Company were declared as "abandoned property”, under the Bangladesh Abandoned Property (Control Management and Disposal) Order, 1972. Later on 24 January 1972, the majority of the shareholders of former Pakistan Tobacco Company proposed to the Government of Bangladesh that BAT be allowed to form Bangladesh Tobacco Company Limited as a joint venture company. The company was incorporated as a private limited company on 2 February 1972 under the name Bangladesh Tobacco Company Limited (BTC) with three shareholders of Taka 10.00 each- 02 (two) belonging to the UK shareholders and 01 (one) belonging to the Government of Bangladesh.[2] In 1998, BTC changed its name to British American Tobacco Bangladesh (BATB).

BATB Market Share and Brands

According to a 2018 study titled The Economics of Tobacco Taxation in Bangladesh, conducted by BRAC Institute of Governance and Development (BIGD) of BRAC University, BATB “leads the cigarette industry as a whole, but also dominates the cigarette market in every individual segment”.[3] In 2016-17, the company held 62.94 percent of share of cigarette market. Citing data from National Board of Revenue (NBR), the study also shows that BATB’s market share rose from 49.08 percent in 2006-07 to 62.94 percent in 2016-17. As per the study, before 2007, BATB used to operate only in the premium tier of the cigarette market, but later introduced products in low and medium tiers as well. By 2012, the company emerged as the dominant player in all those tiers.

BATB brands in the market are as follows (as of November 2020):

In the 2019 Annual report of BATB, the company claimed to contribute Taka 22,630 crore as government revenue between 01 January 2020 to 31 December 2019. The company also exported tobacco leafs worth USD 44.50 million and finished products worth 66.27 million in the very same year, as per the 2019 annual report.[4]  

CSR Activities and Front Groups

Anti-tobacco activists often allege that BATB uses its Corporate Social Responsibilities (CSR) activities as tools to infiltrate into policymaking, interfere into tobacco control activities and also extract benefits for the business. In its website, the company claims that through its CSR activities, it wants to contribute to the Govt.’s effort in achieving SDGs. Three of the major CSR programs of BATB are BONAYON (afforestation activities), PROBAHO (safe water and water purification activities) and DEEPTO (solar electrification activities).[5] Through different initiatives under these programs, BATB gets closer to influential personalities and institutions of both government and non-government sectors.

For example, during the months of July to September 2020, amid COVID-19 pandemic, the company has carried out extensive campaigns (at least 10 events) under ‘Bonayan’ (Plantation) program, where more than 15 influential figures including govt. officials, Minister, Members of Parliament, Vice-Chancellors of universities, local elected representatives as well as other eminent personalities were present as guests while TV, Print, and online media highlighted the BATB-sponsored events.[6] BATB representatives engaged and handed over saplings to administration officials, law enforcement agencies, received thanks from a Minister, signed MoU with Border Guard Bangladesh (BGB) and also engaged urban leaders and volunteer organizations.                            

In 2018, BATB co-founded a platform named ’Corporate Responsibility Network (CRN)' in Bangladesh. Before that, a draft technical paper regarding the formation of this Network was handed over to the former Chief SDG Coordinator of the country (SR Asia Bangladesh chapter report 2011-2017, page 5, section 2).[7] According to relevant sources, the Network would also work in finalizing the CSR policy of the government. It should be noted that the engagement of BATB in SDGs implementation violates the ‘Policy on Due Diligence and Partnership with the private sector (2013) of UNDP, the custodian authority of SDGs.[8]

Very recently, particularly, during the Covid-19 pandemic, BATB is seen using its newly founded front organization Prerona Foundation to the fullest. Prerona Foundation presents itself as a development partner of the Government of Bangladesh, claiming its mission is “to assist the government by extending full cooperation to accelerate the achievement of the UN’s Sustainable Development Goals (SDGs)”.[9] During Covid-19 pandemic, among other activities, Prerona Foundation introduced their brand of hand sanitizer, ‘Shudhdho’, and donated more than 1, 000, 00 units of it to influential government and non-government institutions.

BATB also maintains close liaison with local and international research organizations and think-tanks to influence policymaking to its favor. BATB worked with Policy Research Institute (PRI) to formulate tobacco tax proposal. PRI is an influential organization in Bangladesh that directly provides research and policy support for different ministries and other offices of the Government of Bangladesh including Ministry of Finance (MoF) and National Board of Revenue (NBR).[10] Earlier in 2012, PRI also conducted at least two studies on tobacco cultivation[11] and bidi industry which were directly commissioned by BATB.[12] Before the declaration of 2019-20 budget, Price Waterhouse Coopers (PWC) Bangladesh also made a proposal to increase tobacco tax only on low-tier cigarettes and keep the tax on high and medium tier cigarettes untouched which heavily reflected BATB’s demand from national budget.[13]                                                       

It should be kept in mind that the current tobacco control law of Bangladesh lacks any comprehensive ban on CSR activities of tobacco industry. However, as of late 2020, an amendment process of the law is ongoing which may include such ban on tobacco industry CSR.  

Influence and Interference in Tobacco Control and Policymaking

Instances where BATB influenced and interfered in policymaking, particularly those related to public health, tobacco taxation and control are plenty. Apart from its deep-rooted liaison with government bodies such as NBR, influential political figures, top echelon officials, civil society personalities, the company also utilized Bangladesh Cigarette Manufacturers’ Association (BCMA) for direct interference in policymaking as manifested during the formulation of draft National Tobacco Control Policy (NTCP). Similarly, the company also interfered heavily in the 2013 amendment of Smoking and Tobacco Products (Usage) Control Act, the tobacco control law of Bangladesh and in the subsequent formulation of Rules for the Law in 2015 which made printing Graphic Health Warning (GHW) on the top 50 percent of tobacco packs mandatory. Delegations from BATB, along with BCMA, met ministers and officials from MoHFW, MoLJPA and NBR multiple times to push for a delay in GHW implementation and to print GHW on the bottom 50 percent of tobacco packaging.[14] It should be noted that BATB Chairman Mr. Golam Mainuddin is the Vice-President of BCMA.

GoB’s Share in BATB

The Government of Bangladesh (GoB), through different bodies and institutions, holds a 9.49 percent share in British American Tobacco Bangladesh (BATB). It has been alleged by anti-tobacco control organizations of Bangladesh that the multinational company is using the govt. partnership to infiltrate administration and policymaking with a view to weakening the implementation and formulation of tobacco control measures. The GoB’s shares in BATB are distributed under 01 (one) govt. owned bank, 01 (one) non-bank financial institution, 01 (one) insurance company and also the position of the President of the People’s Republic of Bangladesh. For its share in BATB, as of early 2020, the GoB appointed 05 (five) current and retired high-level government officials as Independent Directors in BATB’s Board of Directors. The number is high, more than double, compared to GoB’s involvement in other multinational companies. For example, in IPDC Finance Limited where GoB owns 21.88 percent share, the number of Directors appointed by GoB stands at 02 (two).[15]

Infiltration into Leading Business Associations

BATB has heavily involved itself with several prestigious business organizations of Bangladesh. In an investigation conducted by Tobacco Industry Watch BD Team@PROGGA in 2018, it was revealed that a number of high officials from BATB are occupying some leading positions in top business associations, the sub-committees and wings of these associations and other institutions that deal with trade-related issues. It was found that BATB had representatives holding positions of immense importance such as the Director of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), the Vice-President of the Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) and the President of the Foreign Investors’ Chamber of Commerce and Industry (FICCI). Moreover, BATB had a representative as Director in the Infrastructure Investment Facilitation Company (IIFC), under the Economic Relations Division, Ministry of Finance. Two BATB officials have been designated as Director General and Treasurer of Intellectual Property Association of Bangladesh (IPAB). High-level representatives from different ministries of the government were also in the executive committee of IPAB.

Tax Evasion

It was revealed that in 2013, BATB intentionally miscategorized two of its high category brands as low category brand and thus evade taxes amounting to BDT 1,924 crore or GBP 170 million between 2009-10 and 2012-13. After a legal battle, the High Court of Bangladesh ordered BATB to pay the money.[16] It is revealed that Ms. Alison Blake, the British high commissioner to Bangladesh, issued a letter to the Finance Minister asking for an out-of-court settlement on this issue.[17] It should be noted that in 2018, the Supreme Court of Bangladesh released BATB from the obligation as a response to an appeal of the company where it was represented by heavyweight figures: Barrister Rokanuddin Mahmud, Advocate Amin Uddin and Barrister Sheikh Fazle Noor Taposh (then-MP).[18]

Awards-Accolades

BATB often receives awards, accolades and recognitions from different government entities and business organizations. In November 2020, BATB won the 1^st prize for the ‘Best Published Annual Report 2019’ under Manufacturing category at the 20^th ICAB National Award Ceremony. The company also won the prestigious Certificate of Merit Award for Corporate Governance Disclosures in the same ceremony.[19] In March 2020, BATB was selected for the First Prize of the ‘President’s Award for Industrial Development 2018’.[20] BATB was also awarded the Best Taxpayers Award in February 2020 by NBR. In December 2018, The Institute of Cost and Management Accountants of Bangladesh (ICMAB), a statutory organization under the Ministry of Commerce, awarded BATB with “The Best Corporate Award”. In October 2018, the company was also awarded with “Bangladesh Innovation Award” under SDG Inclusion category by Bangladesh Brand Forum. Anti-tobacco organization PROGGA has alleged that such award ceremonies brought the Finance Minister, Industries Minister and high level government officials into unnecessary direct contact with BATB and other tobacco industry executives.[21]

BATB’s Tobacco Cultivation

BATB is heavily involved in tobacco cultivation in Bangladesh in order to meet the local demand of tobacco leaf as raw material but also to export tobacco leaf from Bangladesh. In 2019, the company exported tobacco leafs worth USD 44.50 million as per the annual report 2019.[22] BATB is a member of Agriculture Pricing Advisory Committee under the Ministry of Agriculture and is invited to the Committee meeting regularly. This committee determines the price of tobacco leafs every year. BATB's predatory attitude in expanding tobacco cultivation has earned widespread criticism from anti-tobacco organizations. To induce farmers into cultivating tobacco, BATB agents often offer hard cash incentives, agro-inputs, and higher level training through IPM Club. To facilitate the expansion of tobacco cultivation, BATB often influences and manipulates officials of Department of Agricultural Extension (DAE), making the Department as one of the most vulnerable sectors to tobacco industry interference.[23]

References