british american tobacco p.l.c. sustainability report 2009 - GRIs: Society



SO1 Nature, scope and effectiveness of any programmes and practices that assess and manage the impacts of operations on communities, including entering, operating and exiting

This information is more relevant locally and we do not collate global data on it. Our approach to restructuring is covered in the People and culture section of our Sustainability Report.

SO2 Percentage and total number of business units analysed for risks related to corruption

100 per cent of all business units are analysed for risks related to corruption.

It is a fundamental Group policy, set out in our Standards of Business Conduct (available at Opens in new window), that all Group companies and all employees observe and comply with the laws and regulations applicable to them and that they act with high standards of business integrity. The Standards include specific provisions on bribery and corruption which prohibit the giving or taking of bribes to or from any person, and any other activity which contravenes any applicable anti-corruption measures, including those prohibiting corrupt practices abroad.

The Standards also include specific provisions on gifts and business entertainment, and provide employees with guidance on what they may and may not offer or accept in this regard. Gifts and business entertainment that are modest, appropriate and consistent with reasonable business practice are permissible without prior approval. Otherwise, they may only be offered or accepted with prior management approval, and must be notified to the Company Secretary or legal counsel of the company concerned and recorded in its books. Additionally, certain types of gift and entertainment are specified as unacceptable (essentially, where they would represent a bribe or otherwise involve illegality).

We are confident that our policy meets the standards of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

Our Standards of Business Conduct apply to all Group companies and all employees, and each company is required formally to adopt them or local policies embodying them.

Senior managers must report on annual compliance with the Standards with regard to all employees in the company or department for which they are responsible. All business units within the Group are covered in this way. Continuous information on performance against the Standards through the year is gathered at a global level and reported quarterly to the Board Audit Committee.

SO3 Percentage of employees trained in organisation’s anti-corruption policies and procedures

Our Standards of Business Conduct have been in place for many years. They were expanded and updated with effect from 1 January 2008 and continue to be kept under review in order to ensure they remain at the forefront of best practice. Every Group company and every employee worldwide is expected to live up to them and guidance on them, including on the specific provisions on bribery and corruption, is communicated regularly throughout the Group, including through training and awareness programmes and a dedicated site on our intranet.

An online training course on the Standards is available to UK Head Office staff and new joiners, and has also been made available to our businesses overseas for incorporation, where appropriate, into their training programmes. As part of the annual confirmation of compliance with the Standards of Business Conduct, senior managers are required to confirm that the Standards have been made available to all staff reporting to them.

SO4 Actions taken in response to incidents of corruption

In the year to 31 December 2009, 39 instances of suspected improper business conduct contrary to our Standards of Business Conduct (excluding employee fraud and theft against Group companies) were reported to the Board Audit Committee (2008: 38), including 27 brought to attention through ‘whistleblowing’ reports from employees, ex-employees, third parties or unknown individuals reporting anonymously (2008: 22).

16 were established as breaches and appropriate action was taken (2008: 19). In 22 cases, an investigation found no wrongdoing (2008: 16). In one case, the investigation continued at the year end (2008: three). No instances involved sums or matters considered material to the Group (2008: none).

The appropriate action will vary from case to case but will include, depending on the circumstances, dismissal or disciplinary action. Where criminal activity is believed to be involved, the matter will generally be reported to the relevant authorities. Where any weakness in internal controls is identified, appropriate measures are taken to strengthen them.

SO5 Public policy positions and participation in public policy development and lobbying

We are committed to responsible and transparent engagement with governments. This commitment is embodied in our Statement of Business Principles, which is publicly available at Opens in new window. In the course of normal business, our companies consult widely with officials in health, revenue, customs, agriculture and other areas. Regulatory engagement by our companies is monitored by our regional audit and CSR committees.

In 2009, our companies continued to engage with governments and regulators on matters relevant to our business. You can read examples of these in the Marketplace section of this Report. We also continued to ensure that the views and positions we advocate to regulators are reflected on Opens in new window.

SO6 Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country

Our Standards of Business Conduct set out our policy on political donations. Contributions from our companies to political parties and organisations, their officers, elected politicians and candidates for elective office are generally not encouraged, and may only be made subject to specific controls. Contributions are not permitted to be made to achieve any improper business or other advantage (such as to secure a government contract), must not be intended personally to benefit the recipient or his or her family, friends, associates or acquaintances and must be permissible under all applicable laws.

Any donation must be authorised by the board of the company making it, must be fully documented in the company’s books and, if required by local law, must be put on the public record. Details must be notified in writing each year to the Company Secretary of British American Tobacco p.l.c. and these are monitored by the Board Audit Committee. Donations to political organisations and political expenditure within the European Union may only be made out of funds previously authorised by shareholders at a General Meeting.

We collate information centrally on contributions to political parties and to individual politicians that are made for the benefit of their party. Payments in 2009 were as follows:

£ equivalent
Australia: British American Tobacco Australia Ltd.76,969

£ equivalent based on the same average currency conversion rates as used for the Group Income Statement in the Annual Report 2009 Opens in new window.

SO7 Total number of legal actions for anti-competitive behaviour, anti-trust and monopoly practices and their outcomes

For 2009, our companies reported the following matters:

  • Our company in Argentina is involved in proceedings brought by a private individual against public officers of the Ministry of Economy and representatives of the tobacco industry, which allege wrongful conduct on the basis of their entry into a revenue collection agreement.
  • Our Brazilian subsidiary Souza Cruz continues to defend an administrative proceeding brought by the Brazilian competition authority relating to merchandising and product display practices, and a case brought by a competitor which alleges breach of a previous administrative order prohibiting exclusive sales agreements with retailers. It is also defending an administrative proceeding brought by the public prosecutor, based on a complaint by a third party, alleging breach of an order prohibiting exclusivity of sales.
  • Our subsidiary Imperial Tobacco Canada is contesting a claim for C$85 million (£47.7 million) by a wholesaler which includes allegations of anti-competitive behaviour in connection with the company’s move to direct delivery to stores and introduction of new terms of trade with wholesalers. Two similar actions by wholesalers were settled to the parties’ satisfaction in 2009.
  • In Italy, proceedings continued in relation to a competition authority fine of €20 million (£17.8 million) imposed on ETI, the former state-owned tobacco company purchased by British American Tobacco in 2003, for alleged cartel activity between 1993 and 2001. In 2009, the Council of State upheld the finding in relation to the cartel but annulled the fine against ETI on the basis that ETI should not be held liable for misconduct during the period 1993 to 1998, prior to its incorporation. The competition authority is reassessing the level of the fine in light of this finding.
  • In Malta, the Commission for Fair Trading upheld a decision of the Office of Fair Trading requiring our company to open vending machine space to competitor brands and to cease paying advance sales commission on sales from vending machines. No fine or further penalty was imposed.
  • In South Africa, the competition commission ruled in favour of our company in rejecting allegations that it had abused a dominant market position, originally raised by a competitor. The competitor is appealing the decision.
  • In the USA, a class action alleging price-fixing against certain tobacco companies including British American Tobacco (Investments) Limited is continuing in the Kansas State Court.

£ equivalent based on the same average currency conversion rates as used for the Group Income Statement in the Annual Report 2009 Opens in new window.

SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations

See also EN28, SO7, PR2, PR4 and PR7.

In 2009, the following matters were reported by our companies:

  • Our company in the Democratic Republic of Congo is continuing to contest fines of £385,000 and £195,833 in relation to (respectively) alleged non-payment of taxes and an alleged incorrect price structure submission. In both cases, the company is in discussion with the authorities.
  • Our company in Italy reported that it received a fine of €2,500 (£2,226) from the health and safety authority in relation to inadequate signage. In addition, following complaints over noise levels at one of its factories, an inspection was carried out by the authorities for possible breach of noise pollution regulations. The results of the inspection are awaited.
  • Our company in Kenya is disputing the amount of an excise payment demanded by the revenue authority on the basis of a differing interpretation of the applicable regulations. The matter is pending determination in court.
  • Our company in Russia was ordered by the court to pay compensation in three labour disputes with employees totalling RUB 513,364 (£10,364).
  • Our company in Ukraine is contesting a demand by the revenue authority for payment of tax representing a proportion of advertising expenses, said to be payable under local advertising legislation. The matter is currently under appeal.

£ equivalent based on the same average currency conversion rates as used for the Group Income Statement in the Annual Report 2009 Opens in new window.