?A&',T--'.is GROUP, :NC. ; F:Rz
UNUZAWR:7ZRS ASSOC-AT"ON; TRUCX
U'.4DxxWR--=.1AS ASSOC.ATICN;
INSUMSCZ COMPAV;
=)JUN-1. LIFIE ISSURANCZ
COMPANY: and FARMEiS NEW WORL3
LIT.--r 1USURANCZ COMPANY,
C:053-patiticners,
V.
7 RC=V-. GILLESPIE, ISSURANCZ
COMM:SS:CNZR Of THE STATZ OF
CALIFORNIA,
C:oss-Res;endent,
3. A.7 I.CUST.q1ZS p.l.c., 3ATUS
INC. and SATUS FINANC.TAL
12 Real Parties in Interest an
C:Zsx-pttition.
13
2.4
15
17
is
i9
20
21
22
23
24
2!
26
27
28
2
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OF-1 C7- ?RC0-7
The find4nq3 of the co=~-Ssicne: ef :nsu:ance of
the
4
:~ Stata of California favorable to B.A.T
Indust:ias, BArJS,
4' :.-c. and 3ATUS Fliancial Services, Inc.
(hereinafter
ex--apt as othe:wise noted) were reached at a
hearing Wh2:ein
A Farmers' evidence regarding the !=llowing
relevart su!:-ect &:eas
7 a'--har was er:eneously excluded hy the
Ct;mmissizne: a: was rat,
des;,.te the exercise of zeasonab-'a diligence,
availatle for
presentation.
N.A.T'S VT'qAXCTAT. ?.q0JTC-TCK FOR T?V
A. trvchanae Prc4-ff-4nnq.
1. Vvidefice Tn Be CC-1q4-!!~r9d. Farmers would
int:oduce
B.A.T's projections for the growth in premiums of
the T-xchanges.
Tbove pro;ections assumed various premium g:cwth
rates, includ4nq
6. 8, 10, 10.5. 12 and
2.
af Tvid-t-a. The Co='-ssione: cannot
Judge the Potential impact of the prc;csed
ac;uisitien Cn the
;clicyholdders and the Public Unless she evaluates
the 4--apact of
the acquisition or. the Exchanges. U= Farmers'
Memc:sndum at
20 88-94.)LZ/
2'
22 1/ In a recent deposition, Mr. Stever. Martin
ol B.A.T admitted
that the September 1987 report for the B.A.T.
Beard of zirectc:s
23 was based on six sensitivity analyses relating
directly to the
Zxchanges. The variables for these analyses were
premium growth,
24 ?:emium to sur;lus ratio, underwritirq cycle,
Change in combined
ratio, change in inve3tment Policy, and stock
market depreclation;
25 each variable has a material ef!ect on the
business a! the '
Exchanges. (Martin Dep. at 68; Zz!:ibit LL to
Seri* Declaration
!!Iad July 27, 1988.)
25
27 Z/ Citattons to Farme:sl memorandum in support
of c:C33-patition
and to th; Serio Declaration refer to the
corrected vers;ons of
23 those documents filed on July, 19, :988.
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cravaJistili-v c4 rviA-Ce. The Ze;&:t:ne:%t 0!
2 :nsurance =!etad B.A.T. tt produce its ton-yea:
ZZChange
1 : and 3Ur;!- ject to the exception that
3.A.T. would not have to p:ovide any documents
which we:e *price
sersitive o: *valuitioz oriented." under the guise
a! 'price
sons it lvity, I B.A.T than refused to produce jL=
of its
Exctange-ralated pzzlections; thus Farmers could
net su!:mit this
evidence to the Commissioner.
B. Martin T-vtimorv R~cardlna Far Pro4qctienff.
1. - EviA--* To so Conq4_!!arsA. Farners would
int:oduce
new evidence fz= tto deposition of Mr. Steven
Mav.in of 3.A.T
Which confirms tb4t thia pTojections submitted by
B.A.T !z: r.ar--a:s
G:=P, Inc. ("FG:*) have little a: no basis in fact
and are
Intir9lY Un:el3t--d to those actually reviewed and
:*lied on by tte
3 ca:d of B.A.T 1_-dU3tX_1es, p.l.c. wher. it
approved the
Ac-,uisition. (1= Ts-.morm' Reply at 22.)
2. T-mertantL- Of*rvida-eL-, Since B.A.T's
p:o4lections
TG1 have = !:azis In !act, then B.A.T's
projeczions &;e
inherently unraiiable and cannot he used by the
Co=issicne: t--
test the potential for prejudice to the security
o! Fa:-.ie:sl
Z2 3. JTnavalla*~ilitv of rvi_ -rce. The
Department denied
;:a-hioarinq requests to d~VOBLI Mr. Martin; thus,
his
24 ~ testimony could tc'- te presented to the
Co=i3sione:.
2!J Exhibit F to Serla Dox-lazation.)
25
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3 A R -M."4W.R 9
I Tvid~ncs To le we-;1d int::!uce
evidence tend--nq to show that, notwithstandirc;
the s--;;esti:ns in
Xr. Arentsen's testimany to the cont:ary, the
"workin;
assumptions" c-ontained in the Sertamber 1987
Board r&7c:z
7 (incl,-ding the sale of various subsidiaries of
FG! and a S7!C
dividend frcm FG: to ZATUS) were never reject:d
I:y the
Bcard Of B.A.T. This evidence is contained in the
deposition
10 testimcry of M:. Xartii, who was intimately
involved in
1! !=julating these "wo:Xinq assumptions" and who
was not aware of
any char.;es in those assumpticns by B.A.T.
(Martir. Zep. at
13 2. Intortare. ef If the "working
14 assumptions" underlying the September 1987
board repcrt we:* never
15 rM4,ected, then B.A.T may in fact plan to make
the very dramatic
15 changes in Farmers business which are suggested
by those wc:kinq
17 assum7tions tut which B.A.T denied at the
hearing. Civer, the
prejudicial effect or. Farmers policyholders which
wcu:d follow
19 ftcm such changes, such evidence is extremely
relevant.
20 3. Unavgillhilitv ef 'rvidence. As noted atcve,
the
21 Ze;ar%:zant denied Farmers' requests to depose
Mr. Martin; his
22 deposition recently was ordered by the
Washington L19;&:tnient', c!
23 Insurance.
24
2.9
27
2 S
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, I a. -_.St4_rrnnV
21 T-y~_-!G-ca -C so rar=.a:s would int::d=8
3 - y af Steven ;. Star.*.;!,L1/ a :~ar-.ber c!
Coopers & Lyt:and's
test4.n
.or
4 Herge:s and Acqu1jit4.:ns Depan=ent !o: !ive of
the last Seven
5 yea:s, or. the !o::owin; points:
6 a. B.A.Vs p:a!ectiens for SATUS do
7 net Include sufficient fac%-;a: support to be
useful for deci3ion-making ;u:posss; thus,
it is impossible to date:-_nine if they are
10 :easonable.ZA/
b. The asawngtions concerning the
12 ;:Owth rates !Or BA=S Used in B.A.T's
13 protections are fallacious; thus, the
14 ;rojections themselves are unreliable,Lj/
15
16 .1/ In the interest c! brevity, and t: attempt
to minimize the
bUZd*n i=-,C3ed upon the Court, Parme:s has not
attached copies of
17 depcsiti= t:ansc:i;ts and ce:tain other
documents referenced in
i
this of
e: o! proof but not contained in the record.
Copies of
la such doK~ents are available upon request.
19 1/ Mr. Stampf would have testified that B.A.T's
projections fail
to include items typically included in
pro-acquis4tion
20 pro3ecti:ns, such as historical marXet growth,
expected futu:*
growth, azzangzhs and weaknesses, a comparison o!
historical
2 : growth to peer company growth, a comparison of
margins and
profitat4:ity to peer company margins and
profitability, a
:
22 qualitat
, assessment of historical capital spending and
hew that
:
Capital $;
ndi ng has affected the competitive position of
the
firm, as each o! the foregoing related to BATUSI
three lines of
23 business (tol:acc*, retailin; and paper). By
contrast, the B.A.T
24 ten-year projections !or 3AnS simply start with
the ax3um;tion of
a ten ;e:cent per arnum com;ound growth rate for
net income,
25 without providing one iota a! support for that
assumption.
K/ Mr. Stamp! would have testified that the
historical
25 inior-mat'= for BA7,;S does not support the
assumptions used in
27 certain ;:eas of the projections. ?o: example,
although BATUS has
touted 4:3 projected ten pezaent compound growth
:ate in net.
2 [Foatlota continued on next page)
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B.A.-Is pr:4ect4cr.3 fail to t3ke
account of 3A=s, ;cst-acquisition need !o:
wo:k.-Mg capital..Lj/
3
4 2. 7'.-mortance of rvide-icq. :! the Depa:tment
had the
befte!1% of Mr. Stamp!,s testimony, it could not
have concluded
6 that BATUS' projections "appear reasonable.'
7 3. Unava4lalniiitv of rvidpnce. The Department
improperly excluded the testimory of Mr. Stam;f
from the hearing,
apparently accepting B.A.T's specious argument
that Mr. Stampf's
io testimony concarning the B.A.T projections
would not have been
il credible because he lacked insurance expertise.
The projections
12 for BATUS, however, have no connection with the
insurance industry
la whatsoever. Thus, the Department's exclusion of
the testimony was
i4 groundless, and the information must be
considered on rehearing.
15 ///
16
17 CFoctnote continued from previous pa;9]
income as being "conservative,* Mr. Stampf would
have identified
several factors contained in BATJS' projections
that Make it
extremely unl4kaly that 3A7JS will be able to
achieve a ton
p cent growt:. in not income ov;r each of the next
ton years.
20 K.:-mers' Memorandum at 87-94.
21 JL/ Mr. Stamp! would have testified that BATUS
previously
maintained a trade working capital (which term
excludes cash but
22 Includes trade items such as inventory,
receivables and payable,
accrued taxes, accrued salaries and other accrued
expenses) of 15%
23 of revenue. :n 1986 and 1987, however, BATUS
sold substantially
all of its accounts receivable in order to
generate cash for the
24 Farmers acquisition. As a result, in 1987 the
trade working
capital was only $100 million, or less than two
percent of sales
for the year. Based upon ordinary business
practices, one would
25 expect to see the level of working capital for
BA-.JS return to its
historical levels. To re3tcza trade working
capital to historical
26 levels could require the divers4on of funds
slated in aATIJS'
27 projections for debt service ani/or dividends
to be pail to B.A.:,
thus making t!te project4-ons unworkable in their
present !crm.
2 S
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1! C .6rantsp- --Tt4-rCnV R. yinan--i-C.
2 1 ; rv-lanca To Be (*nnsid~r-j:. Far=ers we-zl!
autmit
3 newly disc--vered evidence showing that the plan
of !4-nancinq
desc:il:ed 4.% the Form A is merely illustrative,
and teat the
actual Inan transaction will no: to st:,.;ctu:ed
until aft-r the
8 regulato:y process is czmpleted. (j= Farmers'
Memorandum at
7 86-88-)
2. T-,portanca of Evi- snca. The Co=issicrer only
can
approve a transaction if its te:::s are knewn. Mr.
Arentsen,
howeve:, ham admitted that the ;1an of financing
disc:osed in
B.A.T's To:= A is purely hy7ottstical. Thus, on
rehoa:jng the
,2 Co=issioner must be presented with and evaluate
the actual terms
13 of the financing.
'14 3. Vnavaiia~!Iiitv cf Tv1den=-. Fa=ers was
precluded
15 f:om presenting this evidence at the hearing by
the Depa:tmentls
16 imposition o! an arhit:ary, unnecessary and
improper 15-minute
17 1-4.nitaticr. on cross-examination of
witnesses./7/
19 Farmers would introduce
20 Mr. Martin's testi=cny regarding B.A.T's mass
de3t:ucticn of
21 documents :elatinq to the financ4-ng of the
acquisition and B.A.T's
22 post-acquisition plans for Fan-aars. Mr. Martin
recant1y testi!ied
23
2/ In Oregon, Mr. Arentsen admitted that the
discretionary
24 dividends Farmers presently pays te its
stockholders would be
replaced with mandatory debt se:-~?ice payments to
BATus. The next
25 hearing was in California, and du* to the
arbitrary time limits on
czass-examination, counsel could not question M:,
Arentsen further
25 in this :egard~ In Idaho, howevar, Mr. A:entsen
admit:sd that the
debt &:rangement actually L-31plenented after the
regulatory process
27- is completed might be entirely different f:om
the plan'disclosed
28 in the Form A.
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t.-at he had nainzalned all c! his
&c;ui31tizr-re1at2d notes Until
2, December :987, but he dest:=yed them i=ediate:y
zu~seqaent to a
3 discussion with BATUS' in-house c~:porate
counsel. (Martin Dep.
4 at 25-27, 169.) (Although Mr. ma:tir. has also
stated that not all
5 a! the doe-.=ants were shredded, B.A.T has yet
to ;:cduce the
6 dcc,=.ents which still exist.)
7 2. 1-mvertarce of Svif!pnna, B.A.T has failed to
a
9
10
ij
!2
-7
is
20
21-
22
23
24
25
27
29
disclose the details of its post- &:quisiti on
;lans for Farmers
(and even deniQ2 the existence of SUC12 Plans).
(?aviers
Memorandum at 51-82.) New evidence which indicates
that B.A."
systematically shredded documents describing
B.A.T's ex;ectations
for Farmers' post-acquisition financial
per!0=1ance is highly
re:avant to the credibility of B.A.T.'s
assertiorts about its
intentions. In addition, because Mr. Martin's
testimony on
shredding conflicts with that of Mr. Arentsen, it
provides new
evidence of B.A.T's lack of integrity.
3. Vriavailabilitv of Evi!!ance. The Zapanment
denied
Farmers' requests to depose Mr. Martin.
A. rvidence to he Considerpd.
wi-
ch
3 c. e
P ;*Oun,
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e
2
3 vre.- t'-e past.30
ev^. a n
essar.,
7 T~,* Result's ne 3 A. T, Reg-qf-h. 2
1
.
9 -
Z
9 zw4i. ;AdZ saculd
12
3 or.,
14
At:
att.10wel
- -- I.- I I --&--
I ! 1! --. --. -
16 .. .........
M an
-
ex
I
20 ;Maw-
MEN=
2 i .
22 at
.
23
24 B.A
21 t!%e
im-- smoke
26 c2ndensat
&used
cance:. B.A.T also
97 C"duzzed 8nd s;"3Q:!d tests 4ny c'v4--; the !:
:Cad !nha.13tior. Cf
28 Ci7a:et:9 vncke t7 -':;s, hA:-,s:q:3 and
McnkeFs, as 48:: as tests
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1 t~,e of nicctlno int: cats and :Z`81:
3n-`:na.13.
2 :he e!fac-.3 cf cil;arotte srzckin; on humars
was a'.sc ana:*Jzed.
3 B.A.77 co=cn.'y had code names !:: its thcusands
ef
4 :asea:.-- p:ojects relating to smoking and
health, suc- as ":anus'
I and B.A.T also used the ccde nano "Zo;`y:'
fi Ca=Ce: in Many research studies. A small number
Of B.A.T's
7 ItUdle3 ca smoking and health are published in
sciont-;!ic
4 ou:na:s- However, Most B.A.T research :elating
tc s=ckinq and
health is unpublished and the reports bea: legends
szch as
"Ccn!!!ential* cr 'Must Not Be Shown to
Unauthorized Pe:scnnel."
B.A.T's :esea:ch was conducted, sponsored c:
!-zaded in
12 ,.=e::%;s laboratories throughout the world,
including the B.A.T
13 Group Research and Development Cent:e in
Southamp%cn, ln;land, and
,4 3.A.'.' latorato:ies In Mcat:eal, Canada and
Hamburg, Ge=sny, as
15 Well AS a host Of Otl%9:3. B.A.T also
participated in the :osea:c!%
16 Of the TcbacC* Research Council conducted at
Harrogate
17 Latc:at::ies in ingland. B.A.T's research was
funded ~y a
cost-sha:ing ag:eement among B.A.T's worldwide
tobac=:
subsildia:ies bas ed on the volume of cigarettes
soid in a given
20 country.
2 i nq&jW& and health research was
22
? 23 of
24
25 B.A.T's smoking and health studies can be foun!
in
25 sutstAntial Part in B.A.T's library in
Southampton, -Tn;:and, whe:e
27 they are thoroughly indexed. They can also be
found in the
8 I
'it:azies of various B.A.T tobacco Subsidiaries
thrau;--Cut the
23- N. Cr- NJI
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-. Iwe:!;!, linc.udinq the and Ilegal.
da;:art=e,--. C! B:zw7:
2! WLl1ia=scn in Lcuisville, Kentucky.
3 " --- - The :03Ult3 o! the resea.-Ch conducted,
R?cnac:ed or
4 nded '~Iy 3.A. 7. indicates that cigarette smcke
is ca:cinzgenic,
n d e d
[
hat smckiiq causes cancer, that smoking can cause
ca:1-4-:vasc-41a:
h
Vd
disease, and that nicotine is addictive.
..Gib
on
h Ml= oil Indeed, B.A.T's British
1.0 operations were willing to admit long ago that
smoking caused
11 disease, bUt Brown & Williamson, B.A.T's
American subsid.-azy,
12 dictated that this did not happen because Of
concern for the lega:
13 consequences of such action in the United
States.
i4 2. a ISM!011 claaf.tte. once the research
Conducted,
2.5 sponsored or funded by B.A.T began to reveal
that amck4.nq was
id harmful to health, B.A.T embarked upon a
research prcqra= to
develo; the West cigarette ;ossible. During this
Second S,gge,
17
is B.A,T was operating under the assumptions that
cigarette amcke wa!
i9 carc,.rc;&:-.,-'c and that the public should
have availabl.e t: it the
20 Safest C*-garette which B.A.T could make.
21 Armong other reserach projects relating to the
develc;.-,enz
22 Of & Safer c4-ga:ette, B.A.T hired Battelle
Labo:ato:ies ir. Geneva,
23 Switzerland in the mid-1960's to design such a
cigarette. United
24 States Patent Ne. 3,258,015, dated June 28,
1966, is !:gl;9vgd to
2! be the cigarette designed for 3-A-T by Battelle
Laboratc:ies
26 because .". is identical to a drawing by a
B.A.T research scientist
27 Of the safe C.49arette which B.A.T develo;ed.
(1g_- zxhi~4.: R to
23 Serio Decla.-ation.) Moreover, Sir Charles
:)rurrcnd 1:143, whesg
i2
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I name &7;ea:s on the ;atenz, was a scienti!,.c
&(!v4.s:.-:. t~ B.A.: at
2 the time the ci;arette was deveic;ed- (LU
-7x.-i!:4-t 5 to Serio
3
9
.0
,2
13
14
1!
16
17
is
19
20
21.
22
23
24
23
26
27
28
Declaraticn.)
This cigarette was tested on animais In the
bicche=istry
de;arz=e.-t at Battelle Latcratories in Geneva and
was determined
to be muc.*- safer than conventional ciqa:et:es
sold ~y B.A.T.
Zssenzial:y, the ciga:ette allows the smoke: to
inhale hot a,.:,
rather than actual tobacco smoke, into his c: her
lungs. The
cigarette was never ms:ksted, however, althcugh
B.A.T, hat ente:ed
into magettations with a third party at one time
to sell the
patent. :t was suggested that M Ad.Mi3giOn "hat
one ciga:st-te was
*safer, thar. othe:s would corstitute an exVres3
admission that
B.A.T's ct!%er cigarettes were harmful.
6.u:i--g this ;eriod, the Bca:d of Di:ecto:x of
British
American Tobacco Company also adopted internal
smoking and health,
or *S and R,* policies. Th-ese policies were
designed to minimize
the h3rm!*41 effects of smeking to the public. For
example, B.A.-.
developed amoking and health policies which stated
that 3.A.T.
would not sell inhala.~le cigars or extra long
cigarettes !:acau3c
these products were more daigerouz than
conventional c4-qa:qt:es.
3. Markatina Overrl!es safatv. At a certain point
in
time in the 1970's B.A.-, changed its philosophy.
The em;hasis
shifted fz:-n safety to marketing. Many of B.A.T's
smoking and
health Policies were eli=inated for the sake of
increased sa:as,
and ;roduct3 which had previously been determined
to be too
harmful were placed on the market.
he IM
-K least c-ne majo.- laboratory and sclent--lic
13
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1
2
3
4
5
a
7
:eseazz` pos!t4-=:.,3 we:9 911.1=4-nazed this
pericd, and
resea:=~: intz t!te :e1a:icnshi; between s-mcking
and health was
signi!icantly c-.:rtailed. As c-e B.A.T research
scientist put 4-t-,
the emphasis was no lcn;er on whet-he: a Cigar was
*inhalable,l the
emphasis was an whethe: it was *Sal23b18.*
This f=.damettal chan;s in phi:asophy was brouqht
about
by two elements: (a) ;ressu:e by B.A.T.'s
marketing department,
which belleved that an admissian that smcking was
unsafe would
drastically hurt sales; and (b) concern 1-y Brown
EL Williamson that
an admission that sracking was vrzafe would
substantially ha= its
defense in tobacco prcduct Uatility acticrs.
Because 3,A.-,'s
research had lest its ;rimary ;urpose, B.A.T
decided it no longe:
needed to actively czntinue this and no :tnge: had
the geruins
1.0
11
1,2
13
i4
i5
is
17
IS
19
20
21.
22
23
24
25
26
2 7
28
interest to do so.
In orde: t: address q,--estions :elating to
smoking and
health, Brown & Williamscn. had one o: =:a
booklets a! pat answers
to questions czrcernin; smokin; and hea:tt
prepared for Use by its
senior e2llcUtivaS. FO: example, when asked
Whether smoking causes
disease, the booklet has pat responses such as "I
am not a
'Cientist' of *We don't know whether smoking
causes harm.; we need
to do more research., one such booklet was
prepared by the ;ublic
relations firm C! Wenz-Neely based in Lcuisville,
Xentucky.
Mr. A:entsen testified in Kansas 'On JU1Y 12 that
he reviewed such
a booklet before testj!yinq at the va:4c-45
insurance hearings
concerning this acquisition.
It was during this third Stage that B.A.T's Board
realized that tobacco was a declining 4-'%dU3t:Y
and thus uzde:tock
a policy of extensive diversi!icaticn. =a attempt
to acquire
14
U<
BAT Industries document for Province of British
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ra:=G:s is ;a:: C! 3.A.:13 attempt tz diversif*!
Lts t:hacco
in the United States.
In o::!er to ;=.ve these facts, Fdr--9:3 Should be
granted
disc-zvery wl-.i--.Ii was denied 1-Y the
9 10 and
CCMMi33.Zn2.-, 3PGCi!1C3'-1y Request Ncs. 6. 7,
7
4 1.
Additional discovery, based on both the
info:--&%4-cn gleaned from
Xr. Arentsen on these subjects at subsequent
h8a.-inqS (zuc!% as the
booklet he reviewed in prepa.-azion for his
tes%--mony on smoking
and health issues), as well as the p:oduct o!
Yir=ers' continuinq
ndependent investigation, is also necessa:y.
lmnnrtarcs af Tvidene-e. Thib C,
MPO ft 'sat
he financla.-T-tabillity of t.16 C Far"ners
as well as t omr..-
Xemaranclum at 41-45, 48-49, 65-71; Reply
Memc:z=du:a at 25-29.)
:ndeed, based en the in!ormazion obtained Ta=ers'
independent investigation, it
2 C4
For instance, it is out:ageous
22 that X:. Arentsen has had the time to review a
tooklet on ;at
231 answers to smoking and health issues, but has
not, and will not,
2,1! review B.A.T's internal resea:ch. at,-,dies
or s;eak with B.A.T's
i resea:ch scieMti3t3 to detevnine whether amokin;
is harm!ul. 4QAa-
2!:
2!
-er
hanj77~,.:-
Furt?er-more, in the wake oi
2-2
15
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BAT Industries document for Province of British
Columbia 6 November 1999


C--;=*-:-e, s-.;ch ~:ehavior z~uld have a
3e:--Z'.:Z f--ftInCiAl
2 u;cn BA-.-S in tol:ac=o ;roductz llatility
3, C. Unav-ailabilitv ef vv~~enc-. ra=me-.3'
Zccu=ent
4! Req-.:eszs :s~atiiq to disc=very in this area
were denied ty the
5 a-- ---.=.,a C--r=isa4-one:. Document Re;,-Sst
Scs. 6, 7, 9, 10
an:! :2.' Cther in!cr-mation was ebtained after
the Cali!::rii
71 hea:tng Iy independent investigation, which was
pe:!zr=ed vten
pi Fa:ners' atility to obtain discovery !:cra
3.A.T was denied.
3 ecause 3.A.-.'s fome: rasea, ch scientists have
not velunti:ily
i
agread -.z czme forth and test
ify about the a!: ove i:%fzr -naticn, 4W
Declarstian of David A. Battaglia, filed
ccnc'j=:o--,t1y hezewith.)
i3 Pj:thez, ra:.mers' cross-examination of Brian
Ga:raway on
these z=cki:tg and health issues was impro;erly
cut short.
Mr. Carzzway has not appeared to, testify at any
hea:iiq a!ta:
being asked tobaczo-related questions in
California, Whaz the
2,7 lda!to !tea= ing of!-"cer indicated that he
was prepared t: &::cw
Ta:=ezz zo depose Mr. Ga:raway in excharge for
&!lowing to
su!:---it into evidence Mr. Garzaway's test4-:nony
from ;:av4-:-zs
20 h*a;4.::;s, 3.A.T i=ediately decided to
withdraw .qr. carrjwjy*s
1
2 tns:j-==y to avoid having hi.-n deposed. I,-.
Illinois, who= ?&:mers
-
22, of!9:8d to depose Mr. Ga:raway anywheze in the
world at a=-
y time,
2! B-A-: 1:dentlY refused. In testimony befcre
Ccng:ess an :-,;no 29,
24 1918, :z-4nsel far B.A.T admitted that it is
part Of its
2 t st'-lze;r* t.0 ;rev Grt witnesses f:or. tein;
asked questions itout
25 B.A-7'! totaccc activit4.e3. All of this leads
to one si=-,Ie
27 what 43 B.A.T. struggling so a:d,.ousiy tC hjAe
!:C-
N)
16
Un
BAT Industries document for Province of Briti
h C
l
s
o
umbia 5 November 1999


1 Public scz-_-tiny I:% q3--nin-, a;-,rcval !cr
thi3 S4.! tilllcr.
2 t:an3actiz-0
3 IV. ~.A.T's TC 11011-9YORFR POT-T_C:T_5 AND
4 !.A.Tls ma-,Aetina a! Mcn-ST.8kinc Oiftccun-q.
a
7
1.0
1 i
12
13
14
,!
16
17
is
19
20
21
22
23
24
25
26
27
1. Tvidence To Be Cnnsidpr-el. Farmers woul-I
of!er a
document dated June 3, 1988 frem Australian Eagle
:n3u:ajce C:. to
B.A.T's Lcndcri o!!ice which indicates that
Australia% Eagle di!
not have even a single piece of marketing material
that so =--: as
mentioned that the company offered non-smoke:
disc=tts.
(Ixhibit U tz Serto Declaration; document
label!-ed Ildc not
produce.*) Australian Eagle was, at the time of
the CzI4.!zr::i1
hearing, the only Eagle Star insurance su!:sidiary
that offered
nOn-smOka: discounts- yet, E3910 Star was cited as
an exampb! ty
B.A.T at the Cali!orni a hearing for the
;rtpositian that 3.A.7.
would conzinue to actively market rarmew
non-smeker di3couz:s
following the acquisition. (The letter references
an Apr,.I ;..-- !ax
to Graha= Lockwood with attached materials which
a1sc should to
;roVided t: 7a:-
. ngrS. )
2. Immertanc- cf ?v4AAre--_ r---
policies :eq:esent the bulk of Farmers' business
and are ext:9=ely
im,;crtant to its 3UCCO35 in the insurance market.
lra:-ners has
more ncn-s=cker pelicies than all other insurance
ccmpanies
combined, and is the only major Insurance company
to of!s:
non-S-Mckez auto and homeowners policies. When the
wc:!d1s la:;est
tObaCan C=;any seeks to ac;ui:e the insurance
Industry leader in
promotin; ncn-smokinq pollcies, significant
changes to Fa:=e:sl
nOn-SMOka: discount- Program can be expected. :n6l
17
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C)
NJ
CN,
Url
-14
BAT IndustrieS document for Province of BritiSh
Columbia 5 November 1999


3 !aqle document ravea:s that B.A.T's ncn-smcker
;olicies &:a a
4 c=1;lStq sham.
5 3. cf 7-vi:!erce. The Australian Eagle
document dated :';ne 3, L;a8 was written &!ter the
California
hearirg and was ;:zvided to .7arre:s !=-a B.A.713
internal files
pursuant to disccve:y req-.~ests granted !:y the
Illinois hearing
9 officer.
10
11 1. Evi4--cs Tc Re Cnnsi4-red. Farmers would
offer
12 ntarnal memoranda from B.A.T and its a!!iliates
dated May 9,
13 May 3, April 23 and April 7, 1988 and May 1.
1986 which
14 demonstrate that B. -- ns
15 aga _Wk Pigs. (All Exh-.,tt N, 0, P
16 to Serio Declarazi=n.) The May 1, 1986
memorandum is especially
I .7 si;ni!4-cant given that De;uty Chai=an
Carraway testified under
18 oath in California :hat the Chairman's Policy
Ctmmittet did not
19 condone a boycott cf Ai: Canada, a position
that he *corrected*
20 the day the doe-=en%s were ;:cduced in
:ll!nOi3- (Zxhibit to
21 Serio Declaration.)
2.
22
Mot
23
24
leads
25
a n5~
ines
Indeed, not cnly ftes
27
28 B.A.T support such ections, tut it does so "as
a matte: of high
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BAT Industries document for Province of British
Columbia 5 November 1999


acc-3:ding t: a 3::wn d.4:ac%i--q
2 a !=yCott against No:thwes% This C183:1Y ShCWS
the
d-4:ec% con!llc% butween 3.A.7'3 9rZ-t3!:8CCC and
ra:=&:s leada:ship in the non-smcka: ins-uranca
!le:d, d4-:eczly
X contradicting the testimony of Chai::%an Sheshy
tha: no such
*cznflictl exists. (Cal. Ex. 311, Sheehy De;o. at
44.) (Chai=an
7 Sheehy has been ordered by the Kansas Znsu:ance
:epa:tmert to
tas-,-,'!y rega:d-.;ng the proposed av;uisition
when the Kansas hearing
resumes or. August 24, and the Cali!o:nia
Ccmmissicne: should
consider this testimany upon rehearing since Mr.
Sheehy did not
testify in California. fir_- C:der at Kansas
De;artnient of
:nsuranca, -uly 29, 1988, 1zhibit A to this Offer
of P:zof.) ?or
a =re thorough discussion of the 4-naportance of
these doc=ents,
i.4 see Farmers' Memorandum at 38-41, S3-54,
57-59, 97-104 and
is Farmers' Reply Memorandt= at 24-25, 43-44,
3. Un-110--i'tv cf Tvic!erea. The k..A.T
rum ---41. M e14 A.T's
7 Nk % 1;~p
same dovzmenz request had been Impropezly, denied
2 C by the California Ccn=issioner. (It_- Exhibit
j to Seric
22. Declaration, Document Request No, 13; and
?_%hibit F to Se:io
22 Oecla:ation.) in this respect, ra:-aers'
dcc=ent req-aests 7(c), 9
23 and 11, which were imp:operly denied by the
24 Co=is3ionar, should be granted.
25 V. B.A.T's SOU"I ATI'-C!Aq AC-777!T--vS.
25 A. Tvidence -0 '4~ Cnnffila-d. Farmers would
offer a
27 letter fror. the.Bril-ish De;a:zment of Trade
and :.-.dust:y (":Tz")
29 tc 3.A.-. dated June 2, 1989 wtiv: -was
int:oduced j:%to evidence in
N. M- 19
BAT Industries document for Province of British
Columbia 5 November 1999


1 1 -.1-111.-Cls and states ex;licltly that the
r7: does ne: :ate
2 llndiv;-!~;a 1. czr.~anies f z-. ccnpliance with
the Ezzc cz-,~ . (Lc--
7 x!%i!:.t 3 to this C!!ez a! ?:oo!) .Thus,
B.A.T's that
the DT: heliaves that B.A.T Is cur:antly in
c=mpliance with the
a EEC C~:de was a sa:4.ous mis:s;resentation to
the Cali!::nja
Ccr%missioner. (11m BATUS Ex. So. ZA; Exhibit CC
to Serio
7 Declaration at 18-19, Investigative Report at
14.)
a 3. Imuorl-ance Cf Evidence. B.A.T acnslatently
claimed
9 in the Califtrnia proceeding that it was in
Compliance with the
10
,
-ZC Code of Conduct in South Mrica, and the
Calift:nia
U Co=is3ioner relied upon these representations
1:1 1118Z
12 ZaveStigative Report. Yet, well before the
Cali!o:nia hearing, in
13 support of its demand for =:a discovery,
1ra".ars submitted the
Wrjiva:ent of an Offer of Proof indicating that
B.A.T was grossly
15 out Of compliance with the wage provisions of
the ZSC Code.
3,,5 L to Serio Declaration.) Indeed, Tarme:s had
17 C=issioned an independent ethical inv03tr14r-t
service in London
ia to evaluate B.A.T's wages in South Africa, And
it Concluded that
19 at least 20%, and probably 30%, Of B.A.T's
South A!:ican black
20 employees were paid well below the-minimu.-a
wage -.equl.:ed by the
21 EXC Ccde. Ud- at 11-2C.) Farmers has also had a
rencwned
22 Catholic priest in England, an sx;ert on wage
rates for black
23 South Africans, evaluate B.A.7's-current W9993
to blacks; he
24 =,-Ciudad that B.A.T was paring "starvation
wages- and had rot
25 signi!icantly improved its conduct over the
past ter. years.
26 Farmers requested discovery concerning 3.A.7'3
South
27 A!:ican activities in O:der to dete=nine
whether B.A.7 was in
28 CcM?!-43ftC8 with the E---C Ccde. (C81- F-2-
252.) This discove:y
20 r1j
CD
BAT Industries document for Province of British
Columbia 5 November 1999


asked !o.- the de;-.s!t1.or of a witness
know'.ed;esb:9 about B.A.T's
21 extensive South Mrizan o;erat-4:n3 (:-.ecause
all 3.A.7 exec-u-tives
3 deposed by Farmers had re firsthand knowledge),
and also asked fc:
4 doc--ments indicating the wages of blacks and
whites empl:yed by
r S.A.7 to determine both whether B.A.T was paying
the mini=tlrm wage
and whether any race discrimination existed. Both
discovery
7 :equest3 were denied by the California
C,~=jssioner. yet, at the
hearing, B.A.T was allowed to submit evidence that
it was it
compliance with the EIC Code and was acting
responsibly jr. Bouth
2.0 Africa. The Co=issioner relied an these
representations in
21 deter=ining that B.A.T possessed the requisite
integrity, ant
12 relied on Farmers' lack of evidence in this
respect (despite the
*3 fact that the CO=i33ioner had denied Farmers
the discovery
14 necessary to disprove B.A.T's representations).
(3= F&:-jg:s,
15 Hamo:and= at 46-48, 113-116; Fa:mersl Reply at
20, 30-31, 44.)
16 C. ;;navailabilitv of Tvieence. Ira:-je:s'
discovery
17 :equests relating to South Africa were denied
by the
is Commissioner. While Farmers wan offered the
oppert-anity, to put on
19 one South African witness at the hearing,
Favmers chose not to put
20 On & witnOss to testify concerning B.A.T'%
Compliance with the ZEC
22. C:de because B.A.T had claimed that the
analysis c! the ethical
22
.. MOnt service Farmers' .7 had
`1 Ve3t- retained was erroneous since B.A
23 recently .changed its Wage Practices in South
Af:i:a. (B.A.T,S
24 Opposition to rarmera' Docxrent Requests,
zxhibit CC tt ge;ic
2! Declaration at 18-20.) Without the ability to
question a
26 knowledgeable B.A.T employee about these
changes, and without
27 cur:ent i-.%!="aticn regarding the wages ;aid
by S.A.,: to black and
22 white workers in South Africa, Fa:Mers could
not ts;ii tc prepare
r1 Q
21 CZ)
Uli
BAT Industries document for Province of British
Columbia 5 November 1999


case. it should te n:tad that the wa;e rats& c!
&1! of
'.-aCk and whIts wc-.ke.-3 In. South A!Zias are
pul:11'shed
3' In B.A.T's EXC Coda Re;orts to the 3:4.tish
gove:nment, and 3.A.T.
has refused to produce this info=ation to at-hical
irvestment
;:tu;s even before the pr:;csed Far=e:s'
ac;uisiticn.
B.A.-s T4TvR!?AT'-?0NA7-
7 A. B.A.T's Third Werl-4
12
13
14
i5
-17
18
19
20
21
22
23
24
25
26
27
28
i. 7v'4---- Te 8- Dr. Grsqcr,! N. Connolly,
the World Health Organization ("W'dC*) of the
United Nations,
was not allowed tz testi!y in the Cali!o=ia
;:oceedinq,
D:. Connolly would have testigied concerning
B.A.T's tcbacco
C;e:atio=S in more than 1!0 countries throughout
the world and
we-zid have stressed that B.A.T has completely
i9no:ad the
's ZZabl13h6d Policy of the United Nations by
selling and grovidiig
cigarettes in Third World countries in ways in
whiz!: it is
;::hibLt9d from acting in the United States.
2. rMne-lanc- n! rvi~!~nca. B.A.T is acting
contrary to
the established policy of the WHO by vigorously
*=;andinq its;
tc~acc* operations in the Third World and is
acting with a double
standard in undardoveloFed countries. This
tasti=cny is relevant
to a dote:ninstion of B.A.T*s integrity and was
admitted in
0 :490n, Idaho, Illinois and Chic (to date),
cocument Request No. 8 was designed to dots:mina
the
dl!!erentia: tar and nicotine levels in B.A.T
cigarettes sold in
va:ious Places throughout the world, (B.A.T
challenged
D:. Connolly's knowledge on this subject Area at
the Oregon
hearing.) (5&2 irar-ne:3, Brief or. Miscovery,
Exhiti-
DQC1A:1tiCn at 43-44.)
22
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BAT Industries document for Province of British
Columbia 5 November 1999


7
10
12
I!
16
17
2.8
19
20
21
22
23
24
25
28
27
25
Un avi RL"- 11 tv 1! Evt:!-nf9. The zesti=cny of
Mr. Cznnc::y was ru-'ed i:relevant In Cali!c:nia
at the May :5,
1983 ;rs-s-saring ccn!e:ence and Docurrent Request
1%. 9 was !en-jed
by the Ca:1!oz=4.a Ccmmissioner.
3. Activ4t~el.
77 ~4-nf~ To So cnnsiAar-A. Occument Request
Nos. 20-2: concerning B.A.T's aqre=ert with the
Sandiiisza
government and the actual ewnership of B.A.T's
t:baccc au!:sidia.-y,
Tatacale:& Nica:aquanese should have beer.
q:antod.
Fa=a:s s%;tmitted the equivalent of an Of!e: of
Proof to the
Cali!o:niz CC=isSione: =nCer-Ming B.A.T's
Si:araquan activities
at the s=* time it justified the relevance of its
loc=ent
requests. (So* Zzhibit C to th13 Of!~Z of Fzzcf),
z T-90!'tareo 6f T-Vic!PnCa. The document requests
we:&
tailored to discover information which Chairman
Sheehy denied c:
did not know. (Cal. Ex. 311, Sheehy Depa. at
33-37.)
Mr. Sheehy's testimony direct1y conflicts with
press repo:ts that
T-UCC has entered into an agreement to prop up the
Sandinista
government In excharge for 1a:;9 sums of cash.
rhi3 in!or:naz6i:n
di:oct:y illust:ates how B.A.T.Is profit-on1y
loc-43 allows it t:
act with:-zz regard for human rights. To the
extant that the !acts
directly =nflict with Chairman Sheehy*s testimony,
his
c:edibi:j-ty is implicated.
3. Vrava"ahilitv nt' Evidence, Tarmers has
dili;ent-ly
gathers! all the information it could publicly
find on s.A.,:,s
relatienshl; with the Sandi-%-43ta r6giMe, ane.
extensive contact
with the =nited States embassy in Managua has
failed to lead t:
23
U-j
BAT Industries document for Province of British
Columbia 5 November 1999


2.~ liszzvery c! t*.-.e in!=maticn czntained in
razme:v !==ent
2 req-zests.
3 k' OWN--'q5M!":3
4 A. TvidL-c- to bp C=nmlderse, were the Ccurt to
(1) li3agree Wit!% the single-share rule as an
int9:7:eta:4.cn ci
Section 699.5 of the :nsurance Code (*the Code'),
and
,7 (2) determine that the evidence in the record
toes nct sup;o:t a
denial of B.A.T's ap;lication. based upon another
inte:p:9tatict c!
9 Section 699.5 (1,p_ a U Tini-ris threshold, as
sug;ested by
10 respondent's brief, p. 9; a reasonableness
test; 10% test,
11. etc.),41/ the following evidence set forth in
the paragraphs belcw
12 eh:uld be considered at a new hearing. This is
evilence which
13 cculd have been p:oduced at the hearing for the
reasons set
14 fc:th in Farme:sl Opposition at pp. 31-33 and
note lC therein, but
which is relevant to A dgCi3i.On, requiring a
remand under the
t8 =3 Of C.C.P. 5 1094.5(0):
17 1. S'~&reholderg' Sactlen 212 Resmorses. It was
not
Until this man-damus proceeding that B.A.T was
compelled to make
19 :eq*-'63ts to 35 of its :e9istered shareholders
under Section 212 c!
20 the U.K. Companies Act as to their gover=ental
beneficial
21 owners. 3.A.T received responses f rom them in
:uly. (jU
22
23 1/ The !indings in the record upon which the
denial of B.A.T's
application fcr control was based were: *There are
governmental
24 r1tities or agencies that are included in
B.A.T's list of
:hareholder3. No single qover=ental ownership
GXC*fd3 21 of
25 t:tal OUt3t3ndinq StCCk of B.A.T; however,
total governmental
ownershi; incllud:nq the pension plans and
nationalized industr4as
26 !xceeds 10%." (Investigative Report, Finding
11(a)(3).i Any
ef into:;--etations of Section 699.5, including.
any holdinqs
27 cv~r & di rln-uff threshold or even a 10% rule,
would te supported
6 y this record,
29
cum bm A C 24
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BAT Industries document for Province of British
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B.A.T. The de;csition
testi=ny of Anthony Holliman, B.A.T's assistant
Secretary,
disr-,zssod the coordination of various British
gove:=erzal
entities (County Councils) through the *World
Cevelc;=ezz
Xave=emt* to pass resolutions at B.A.T's
shareholde:3- =setinqs
And ct2:s:wise to influence 3.A.T's policies.
(lg_- Far:-~e:z-
0 ;;csizi~n, at 34-35; Holliman De;. at 15 1. 21 -
19 1. 25, 24-26,
27 1. :: - 28 1. 19, 29 1. 8-2:, 32 1. 11-19 and
Exhibits I and 2
the:etz.) Further, various county councils and
other qzvernmantal
entities have questioned or brought pressure U'Pon
B.A.T stout Its
business policies, Particularly as to its business
presence in
South Mzica. U&I zu2mA and Zxhibit 3 to a.A.7-S
inte::Zqatozy
res;ctses attached as Exhibit 3 to Kolkey
Declaration.)
lec.3:azicr. of Danial M. Xc]kay, C.% :Uly 22,
1383, !!!f 2-3,
7.) Tte :eqzex-.s and :as;onses are, fz: the most
;ar-., c=ntained*
in 15-27 of the Holli=ar. De;csiticn lodged in
this
9 :Ccee!ing and s-==a:ized - alteit incorrectly at
t-*=as
B.A.: EX-h-jbit I to its Responses to First Set a!
Znt&r::;atO:i43 0! FarMOZ3 Group, :nc. served on
july !:, 1988 and
-4
7 att3c*- d as Exhibit 0 to the KO:k&Y
Occla:sticn-
These responses revealed at least thirtY-nine
additional
gever=antal entities with shareholdings beyond
those 4.:: the
,0 adminisz:ative record and additional
shareholdings !o: at lgss-~
seven ;:sviously known gover-umental entities. Any
new
12 intsr;:st-atior. o! Section 699.5 should
consider these additional
-3
1'. 2. Gdva-"ntai In!!uarc- on
I
I
I
1
I
2
2
22
23
24
25
26
27 3. Ca2omcv- List tf Governmental
.urthe: ;cvernmental shareholders of B.A.T (of
which B.A.7 was
23
25
BAT Industries document for Province of British
Columbia 5 November 1999


i awa:e, '---= rarme:3 and the ' e;a."t=an: were
nct at tho t,.;=e of the
2 hea:ir;,'- are found in the list of temeficial
owners ;:e;a:ad by
3 Cazencvv & Co. for B.A.T. While the list is net
=n;1ote, it does
4 discicso !urthe: governmental sha:eholdings,
such as thOSS of the
5 Saudi A:i!:!&.n Monetary Authority, of which
.--a:,ne:s and the
a Depart=emz were unaware. Tris. in!o=ation was
first revealed
7 during discovery in this mandamus Proceeding.
(MU fthibit 1 to
the Res;cnze to rnterrogato:y No. I in *Res;cnses
of BATIUS :.-.c.,
S.A.: :-1uztries, and BATUS Financial Services
irc. to jr!.-.st Set
10 of Ints:=qatories of Farmers Group, inc."
se:ved an July !1, 1988
11 (attached as Exhibit D to Xolkoy Declaration
filed on July 22,
12 1988) AZd also Exhibits 4-12 of the Holli=ar.
Deposition.)
4. a A.T's Knowlaeqa Vial, he nocart-norit was
uraware of
14 all TtR 115--mental 91hara)-clAiries. Zvidence
that B.A.T Ian that
there were gover=antal shareholdings which
Fa:--..ezs had no% been
able to 4.denti!y at the hearing and about which
B.A.T ramaizzed
1.7 silent --ile the Department was att8r.Pti-'2q
to deter.-nine t!:e ozzent
of B.A.7's governmental shareholdings was first
zavealed i--
discove:7 herein. (JU Exhibits 4-12 of the
Folliman De;csit-joz,
20 which &:2 internal lists of beneficia: owners
of shares that
21 Cazenove I Co. prepared for B.A.T as early as
January, 1928 (even
22 before :-'-a For-m A ap;lication denying
9Cve:=snt ownershi; was
23 filed i= California on March 3, 19-88) . )
Given B.A.T's counsel's
24 (James Woods') knowledge that the Depa:t.-nent
construed
25 Section !99.5 strictly, B.A.T's apparently
considered decision not
26 to Point cut those additional gover=ental
shareholdings 1: the
27 Commissi:%ez bears on their integ:4-ty and
competence to to
28 admitted as an insurer.
26
CD
r\-)
(-12
BAT Industries document for Province of British
Columbia 5 November 1999


dti
A7. 2-
UT :"Ustx." via Loia swim
10 TL4=i& Itzmat bwamebui
Z40doa Owu 117*
1 = CIM
Dow W 01 213 3030
GW,d
YM R(
nerg app4ass to be go" dispuza about Ut
capaztMent's lost&.-
a.8 3 My. '.his 24%'.&Z W44 PUSU&d With 24
YOUSIdAy MA1.1111 :Y
a as lawyer :&,id lataqlia wto : subsequently
found out was
amplayed by ft:sees.
IM a f ollawizq points were raised S
a) TU fitstas of !yb!sst*z of 3 May. : utplalAed
slat I%
was not a 4f*r2 lattar t U&S it tentaized wording
wbiall had
b n qssd 91simhers (eq 0& tarv* tax goods is a
paxasa %sod
quantly by VAAiSt*.Ts). Is asked M- If @USX
Identical IstUrs
M
had boas seat and : Said Z. t4e4ht not. : have had
a change ta
clock this WSALAq &.54 Gas Confirm no LASA%Ical
letters have b64A
lant but without checking GA41488 files : cannot
confirm Z have
not signed age oz two siailar cass LA sy two &Ad a
half years 44
"is Post.
b) 14 8%qlastad that tU 01: had not &MAIK844.
coswy
raverts since 1179. : was AbI4 %a put him 11, %Ali
you kniew, N)
the minister fax Trade lays a czapleta Anslylls
;ad Summary
before Parliazant 040h x4rct. n supporting,
MazzariAl an which
t-11is Mazarial 1A bax4d is AvallAbis for
OxwUnatiom LA til :T:
1 wa:Y,
BAT Industries document for Province of British
Columbia 5 November 1999


3
4
5
6
7
12
.1
14
7
2.3
3.9
20
21
22
23
24
25
25
S. Cth-r 2'2 A-Rmnn3es. Secticn 212 lnqui:i83
to ncminees hcldin; B.A.:'s sha:es -- beyond the
35- which B.A.:
made as part of disccvery in this mandamus
;:cceedin; -- shou:!
have been but were nct arder2d hy the Co=issioner,
despite
Far=azz' May 2, 1989 letter [3A-.;3 lxhibit L, at.
81 requesting
that Section 212 requests he irade to all
shamhol!e:s. A list of
these nominees (which includes the 35 nominees to
which
Section 212 inquiries were sent) is attached as
Exhibit 2 to this
Offer of Proof.
S. Cans4-q--nt Arell=atlnr 5f geet4nn 690.!.
Evidence
can be presented that the Cepa:znentls practice
has beer.
consistently, and is currently, to request an
applicant to affi=
that it has no gove:=ental ownership. When the
Department his
had concerns over tte issue, it has requested that
the ;arty
disclose its sharchc1ding3 (such that Sectic-.
a99.5 of the Code is
enforced an to all applicants),
B. Cf rVi!!gnea. If the Court were to place
another interpretation on Section 699.5 such that
the record cc
Lange: Supports a denial of 3.A.7's &;plicati:n,
evidence as to
all gove=sntal sha:ehollings a! B.A.T shoul! be
;:esented to the
Insurance Comm4ggione: so that she can detezmine
whether a
complete and thorough record supports a denial of
B.A.T,s
application. (HcwGve:, FA="Ors' Position is that
the denial of
B.A.T's application car. be upheld upon any nu=ber
of
interpretations of Section 699.5 on the basis of
the p:esent
ract:d finding that over 10% of B.A.T's shares &:a
governmentally
27 owned.)
23
27
BAT Industries document for Province of British
Columbia 5 November 1999


C C! 7V~de-fL-, The 1n3--;z3.-.Qa C:=i33:-:ner
tzl order 3,A,7 10 1.3ko loction III in;'Ji:iol t~
it,
3 re;.ste:ed sharehcIders (whereby the
sha:ehcIde:s wc-;:d idenzi!y
4. any gove:=enta: bens!icial owners), as
requested by in
5! its May 2, 1988 letter to the co=i3sioner, Uf--
ra:-10:31
81 Oppcsitt:n, at 31-32 and BATJS ZXhibit L, at
8.) ThUS, at t!e
71 hes:i=q, ?avners and the Co=issioner worn
li:rited t: what cvuld
8 ; ba deto=ired frCM 3,A.-,'S less th&n r9vRalin;
list o! :sgistored
91 zha:ohc:dazs. As ShCWn in discovery in the
mandamus proceeding,
B.A.T X=aw of ot!%er governmental shareholdings,
has made
Sec:.jc= inquiries to its shareholda:s, and can
make aldiziona!
2 inqu.-:ies. These inquiries have already
revealed ad!itiona:
13 gcvo:r=enzal sha:eholdiftq3. The issue is
whether B.A.T ca= avoid
14 a;plica:iza C.' Section 699.5, hcwevt:
st:t--tly it is !.%ts:;:eted,
16
i7
is
21.1
22
23
24
2!
2!
27
25
28
NJ
C--
rQ
L;1~
r\2
BAT Industries document for Province of British
Columbia 5 November 1999


I ty :e!:ainin; !:cm prcducing evidence c! its
;cve:n:nentz:
2 sha:eholdin;s, despite its a1:111tY to cttal',
evider-2 t!16:*C! ir
3 ing 1 and.
4 DA71:): August 1, 1988 GZBSCNI DUNN & Ci*:7CxzR
WAYNE W. SH17H
5 ROBERT H. TA:RBANX
GAIL E. LEES
6 ROBERT F. 5V-R:O
DAVID A. 3A'-!*T1NG,*6.:A
7
By:
9 Wayne W. SmIth
i0 BARGER & WOLEEN.
RICHARDS D. BARGZ.1
ROBERT W. HCOZ3C.Cm
i2
PARKER, MILL:XZN, CLARK,
.3 OHARA & SAMZ:':A1
KARL M. SAMUT.L:A-li
CLAIRE D. JOHNSON
is Attorneys for TA12OWS GROUP,
INC., MID-Cz NTU Ry INSURANCE
COMPANY, XN.VESTCRS GUAAA-ITY
LIFE INSL-AANC-- C-.M?AN--, FAR~=---
NEW WORLD LIFE INSLjWCr
;
COMPANY, FIRE UN-.!RWRjT
-RS
ASSOCZAT:ON and n.UCX
U`NDERW`R:-1zRS ASSCC:ATION
i9
20 484d.X
21
22
23
24
25
25
27
28
29
BAT Industries document for Province of British
Columbia 5 November 1999


i PROOF 07 SZ2VICE BY MAIL - 10133, 2015.5 C.C.P.
2' BARBARA A-10 GRAZXNI, declares as follows:
31 1 am employed in the County of Los Angeles,
State of
4 Cali!o:nia; I am eve: the age of eighteen years
and an. not a party
5 to this action; my business address is 333 South
Grand Avenue,
a Los Angeles, in said County and State; on the
Ist day day of
7 August, 1988, Z served the within:
OYTIER OF PROOF IN SUPPORT Or AZU.IMED VERIFIED
CROSS-PLPT:T:0N
FCR WRIT 07 ADMINISTRATIVE MANDAMUS
an t." party listed below in thL3 action by
placing a true copy
io thereof in a sealed envelope addressed to their
attc:neys of
1 I r2CO:d addressed an follows:
12 Hugh Steven Wilson, Isq. Leonard 0. Venqer,
Esq.
13 Latham & Watkins Buchalter, Nemer, Yields L
Younger
555 South Flower Street 700 South ?lower Street,
Suits 700
14 Los JLngeles, CA 90071 Los Angeles, CA 90017
1.5 Mark Paul Richelson, !sq.
Justice Department
id Office of Attorney General
3590 Wilshire Boulevard, 9th Floor
17 Los Anqales, CA 900!0
and by then sealing said envelope and depositing
the same, with
19 postage thereon fully prepaid, in the mail at
Los Angaies,
20 California; that there is a :09-414:
communication' between the
21 place Of mailing and the place to addressed.
22 1 declare und er penalty of perjury that the
fO:890ing is
23 true and correct and %hat this decla:ation was
executet on ti%is
24 lst day of August, 198a, at Los Angeles,
California.
25
26
BARBARA ANN
27
28
C
BAT Industries document for Province of British
Columbia 5 November 1999