How a tobacco giant gamed Australian laws and won

THE Federal Health Department has conceded it will not be taking any action against Imperial Tobacco for breaching Australia's plain packaging legislation.

While court action which could see penalties worth more than a million dollars imposed on the tobacco giant is available, the Department has instead chosen to take what it calls "conciliatory" approach.

In July last year this journalist revealed the Imperial Tobacco was selling packets of 20 Peter Stuyvesant cigarettes with a lift out soft pack inside the olive boxes mandated by the Rudd/Gillard Government in 2011.

Imperial said at the time packaging was intended to ensure the cigarettes were "fresh" - not a deliberate attempt to enable purchasers to carry around a more aesthetically pleasing pack of smokes.

Imperial Tobacco is inserting soft packs inside its packets of Peter Stuyvesant cigarettes to get around the Federal Government's plain packaging legislation.
Last year Imperial Tobacco was inserting soft packs inside its packets of Peter Stuyvesant cigarettes to get around the Federal Government's plain packaging legislation.

In July it appeared the Department was not aware Imperial Tobacco had been breaching the Act.

Today the Department revealed, for the first time, it knew what the tobacco company was doing for six months but imposed no fines and took no court action.

"For your information, the Department was provided some information about the inner foil pack by a non-media source in late February 2016," a spokeswoman said this morning.

"More comprehensive information was provided by another non-media source in April 2016."

The issue was raised last week during a Senate estimates, by Queensland Labor Senator Murray Watt.

"So we have one of the biggest tobacco manufacturers in the world, quite deliberately circumventing these laws and nothing happens apart from an undertaking and that's after several steps in the chain?" Mr Watt asked the Health Department's deputy secretary Wendy Southern.

To which Ms Watt replied: "The department engaged with the manufacturer through correspondence and basically the company undertook to remove the product from the market."

Under the Plain Packaging Act the Commonwealth is able to pursue tobacco companies for small fines in the first instance then civil penalties - which can amount to millions of dollars and finally criminal prosecution - if companies wilfully break the laws.

The civil penalties alone can result in court orders to pay more than a million dollars to the taxpayer.

However last year, when questioned on why no such action was being pursued against Imperial Tobacco a spokeswoman for Federal Health said: "No instances of non-compliance with the Act have been identified by the Department that warrant the initiation of Court proceedings in the first instance, and without attempting alternative dispute resolution to achieve compliance."

In December last year the office of then Health Minister Sussan Ley refused to answer questions on whether she agreed with the decision not to chase Imperial Tobacco through the courts, on the grounds this journalist has filed a number of Freedom of Information requests in relation to the matter.

"We understand that the Department of Health is in the process of undertaking a number of Freedom of Information requests from you on the same subject and until these are completed we would not be in a position to provide any further information or comment," a spokeswoman said.

Last week some of the information requested was made public after question were asked by Senator Watt.

In the past three financial years there have been 135 breaches of plain packaging legislation with only fine being imposed.