perfectly responsive to
2 MR. SMITH: The questicn was
3 XUDGE BRITT: Let's not take any ti=e ar-guing
4 it. Just try to respond to the question as
briefiv
5 as possible.
6 THE WITNESS: Yes, you= Honor.
7 Q. BY MR. SMITH: You heard Mr. Clark testify the
only
8 line an the cash-flow projections !or B.A.T
wit-1
9 respect to capital expenditures was for
ex-pendit-ures
with respect to existing B.A.T businesses and that
11 there is no account taken for additional
12 acquisitions, did you not?
i3 A. I did hear him say that this morning.
i4 Let me just go on and perhaps answer your
i5 question a different way, Mr. Smith. We believe
that
within the strong cash flow and financing
capability
'7 of the group, as shown in those figures, that
there
la would be room for other acquisiticns over the
period
19 of time.
20 Let me explain again that they are not
21 determined at this present -- as cf today.
22 Q. To whom will the president of Far--ers
report after
23 the acquisition?
24 A. To Hank Frigan, as president of BA7.US and
chief
25 executive officer of BATUS.
EXHIBIT
BAT IndustrieS document for Province of BritiSh
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a99
Q. Is it true, Mr. Garraway, t-tat neither B.A.T
nor none
2 of its affiliates have any reserves on their
books
2 for potential liability arising out of tobacco
products liability suits?
A. That is correct.
6 Is it also true that neilther B.A.T nor any of
its
affiliates have any-insurance for judg--ents
arising
cut of tobacco products liability suits?
9 A. That is correct.
ic Q. Has B.A.T ever studied t2he potential
liability which
could result from tobacco products liabil-itj
suits?
12 A. No, sir, we have not.
Have there been any discussions within B.A.T as to
the possibility of having Farmers insure Brown
15 Williamson or any other tobacco subsidiaries
after an
16 acquisition?
17 A. There's been no discussion of that, none
whatsoever,
13 Mr. Smith, that I can recall.
19 Q. Have you heard the question before, Mr.
Garraway,
20 does smoking cause zephyr?
21 A. I'm sorry. No, I don't recall that
exp=ession.
22 Q. You do not know, Mr. Garraway, that zephyr
is the
23 B.A.T code name for cancer used in its in-house
21, research?
25 A. No, sir, I do not know ttat.
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I Q - Co ycu. a1sc nct k.-icw that janus is the
cade na=e fcr
2 mouse skin pain test?
3 A. No, sir, I did not k-now t-hat.
4 Q. Mr. Carraway, ycu*testified in Oregon t!iat
5 post- acqu -4s -4t-; on, Farmers would be
required tc
6 conduct what you call responsible advertising.
Do
7 you recall that testimony?
a A. I don't recall the precise words of it, but
T- can
9 recall something along those lines.
10 Q. And you indicated 1-hat the factual
statements on the
11 back of what has been marked in these
proceed4nqs as
12 Farmers Exhibit 2, 'Facts about Smoking," are
not
13 true, did you not?
.14 MR. KrLLSON: I object to t-he form of that
question.
16 )M. SHM: Would you like me to read t~:e
17 statements to you?
is jUDGZ BRITT: No, overruled, if you can answer
19 it.
20 Do you understand the question?
21 THE WITNESS: I would prefer it be repeated.
22 BY MR. SMITH: The statements are, one,
"Statistical
23 studies and periodic reviews confirm t-hat
s=cking
24 contributes to earlier death." You testified
t-hat
25 t-hose facts are untrue, did you not?
BAT Industries document for Province of British
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24
25
A
Q.
A.
Q.
A.
A.
Q.
A.
7- said I did not believe -- we did not Izelieve
t!:=se
facts were t=-ae-
"We" being B.A.T?
7 hat's correct, sir.
*The increased death rate from smoking as a result
of
t-he effect of smoking on all parts of the body,
sz=e
zcre than ot-hers," you testified you do not
believe
that to be true?
: think I made the same response.
"The rate of increase in death rate is deter=ined
tv
amounts smoked daily, degree of inhalation,
duratizn
of smoking and age when smoking began," you
si=ilazly
state.that you do not believe t!%ose to be true?
Yes. I think what I said about the pa=;hlet, K--.
Smith, is we would have -- we would not be able t=
zermit Farmers to use that pam=hlet.
And do you believe that these statements
constitute
irresponsible advertising?
I said that I think that we would have a proble=
wit-1.
that statement being issued or any state=ent
to it as that we did not believe that t-le
state=ezts
in that brochure were true.
The question is, Mr. Garraway, do you ccnsider
--1=se.
state=ents as a part of this brzchu=e t= be
advertising?
r1)
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, ~ .4
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2
3
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A. Can 7- repeat again what I have `ust said, Kr.
S=ith?
I'd like you to answer my questicn, if you would.
E~'INGS CFFICER: 00 you c-_nsider it
irresponsible advertising, sir?
THE WITNESS: Can I just ex-vlain what I meant by
that --
Q.
A.
Q.
A.
A.
Z7 UDGZ BRITT: Why don't you answer the question,
and then you can explain it.
THM W17NESS : I think there is -- so.-=. Fxcuse
me. I think they are irrespons-4!;Ie insofar as we
do
not believe those statements are trae.
BY F-R. SMIMM: You indicated in Oregon that you
objected to this brochure because you categorized
it
as proselytizing an anti-s=oking program, did you
not?
I believe I did use the word proselytizing, yes.
And you said you could net or would not allow
Fa=ers
to przselytize an anti-smoking ;rogram, did you
net?
That made statements similar to those in that
pamphlet.
When B.A.T acquired Eagle Star, along with it ca=e
Grovewood Securities, did it not?
Yes, it did.
And you disposed of Grovewccd Securities, did you
net?
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A. We disposed cf =cst of the -- let me ex-p-lain.
2 Grzvewccd Securities was an industrial holding
3 campany with a range of a number of different
4 businesses. After, I think, about Is mcntlhs, we
did
sell most of those businesses except two, which we
6 retained.
7 Q. And Grovewccd Securities was involved in
nonsmoking
8 ciinics, was it not?
.7.
9
A.
it was, in a health farm or something like a
healt-h
farm near 14ndon, yes.
What did you do wit.11 that?
12 A. That was sold to the Guinness organization.
13 Shortly after you acquired -- you, B.A.r
acquired --
14 Wigqins-Teate Paper in Beaconsfield, England,
the
is employees had an anti-smoking campaign --
com=enced
one, did they not?
17 A. I I= sorry, 1 did not know that.
is a. You are aware of the warnings issued by the
Surgeon
i9 General of the United States, are you not?
20 A . The warnings contained on the packets in
advertising,
21 Mxr. Smith, yes.
22 Do you recognize this as a Brown & willia=son
23 product, Carri?
24 A. Yes, I do.
25 Q. And the label an this is, "Quitting s=oking
ncw
BAT Industries document for Province of British
Columbia 5 November 1999


9 C4
greatly reduces serious risks to your health. 11
:a
2 you disagree wi-th that?
3 A. I believe t!iat's a correct statement of what
t!7.e
4 Surgeon General has required and is required by
law
5 to be contained on the packets of cigarettes
sold in
6 this country.
7 Q. 13 it factually accurate?
a A. would you read it again to me, please.
9 Q. "Quitting s=oking now greatly reduces serious
risks
10 to your health."
11 A. I don't believe that is a true statement. We
do not
12 believe that is a true statement.
13 Q. Capri is designed and marketed for women, is
it not?
14 A. I believe it's a cigarette that has a
particular
is appeal to lady s=okers, yes.
is Q. The warning on this pack says, "Smoking-
causes I%ing
17 cancer, heart disease, emphysema and may
complicate
is pregnancy." Do you disagree that it is
factually
19 correct that smokng may complicate pregnancy?
20 MR. MT-LIZCN: Object to the form of that
21 question because it is unintelligible.
22 XUDGE BRITT: Let's see if Mr. Garraway
23 uriderstand it.
24 Do you understand it?
25 THE W-;.'.N7-SS: Maybe it could be repeated.
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905
1 Scr-.I, your Honor.
2 Q. Do you disagree w-4t.1i the statement an
t~,.at pack that
3 s=ck-'ng may complicate pregnancy?
4 A. I wculd say that, again, it's a state=ent
which we
5 would not agree with.
6 a. In executive order D62-87, t-he governor of
the State
7 of California has stated that cigarette smoking
-;s
8 the most significant cause of premature and
9 preventable death in the United States today.
10 Do you believe the governor of California is
11 incorrect in so stating?
12 A. I believe that it'-s possible that may be a
well and
13 honestly held view, but it is one we would
disagree
14 with.
is Q. You disagree that that is correct?
16 A. Yes, Sir.
17 C. The governor of t-he State of California
similarly
states that cigarette smoking also releases
harmful
19 substances into the air, including carbon
monoxide,
20 nicotine, tar and dangerous airborne
carcinogens. Do
21 you believe that is correct?
22 A. I'm not sure. That gets me into an area of
23 scientific knowledge which, frankly, I don't
have,
24 Mr. S=ith.
25 Q. You don't know whether that's t",e?
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BAT Industries document for Province of British
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906
1 A. I do noz know whet!ier that's true.
2 Q. The California .0e;az-t=ent of insurance has
adcpted
3 policy statement number 24, in which it is
stated:
4 'Inasmuch as s=cking is a leading cont=ibutory
factor
5 in many cases of death in California, the
department
6 hereby adapts a polic,
y t-hat promotes ncnsmoking at
7 the wor"ite."
a Do you disagree with the statement that smoking
9 is a leading contributory factor in many cases
of
10 death?
11 A. Yes, sir, I do.
12 IQ. Do you consider yourself a responsible
businessman,
13 Mr. Garraway?
14 A. Absolutely, Mr. Szitlll.
15 Q. What have you done to determine whether or
not there
16 is a scientific link between smoking and cancer
as a
17 member of the chairman's policy cc=ittee of the
is world's largest private tobacco ccmpany?
19 MR. MILLSON: I object to this whole line of
20 inquiry. I don't see that it has anything to do
with
21 the proceedings we are having here.
22 JUDGE BRITT: Well, it's evidence that we've
23 taken or similar to evidence we've taken in
before,
24 and this is an investigative hearing and not a
23 hearing on the merits of the application
itself.
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I MR. M::~:ZCN: scrri. : wasn't ob'Jecting tc
2 the prier line. : -was asking, si=ilar to the
3 objection you sustained this mo--n-4nq- I don't
th-;.,Lk
4 that --
5 JUDGE BRI71": Well, let me explain -- and V=
6 sure there's a lot af people here who probably
feel
7 that this is inconsistent, allowing this witness
to
a testify about his beliefs, yet.t2te last witness
was
9 precluded frzm testifying about his belief ever
t-le
10 objection.
11 This witness is a principal officer of the
12 parent corporation and can speak for B.A.T and
13 perhaps BATUS, and the last witness was a
managing
14 officer, so to speak, of an insurance
subsidiary.
is I find quite a spread between those t-do
16 responsibilities, and this witness will be
per=-4tted
17 to testify about his belief and t~.,e
corporation's
is general policy and belief.
19 MR. SMITH: Thank you, your Honor.
20 Q. BY MR. SMITH: Mr. Ga=away, as a member of
the
21 chairman's policy cc=ittee of B.A.T Industries,
what
22 have you done to inform yourself about the link
23 between smoking and disease?
24 A. This is not an area of =y direct expertise,
Mr.
25 Smith. V= generally aware of what the B.A.T
V-1
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9 ca
I Industries and BATUS g-.cup's views and beliefs
are crn
2 these issues, &nd these are the ones !I=
reflecting
3 this afternoon.
4 Q. Dr. James Green was the director of research
and
5 development for B.A.T an smoking and health
issues
6 between 1960 and 1979, was he not?
7 A. I do recall. If that's Jim Green, yes,
indeed.
And he was on the board of directors of B.A.T
9 Industries, the ulti=ate parent, between 1970
and
10 19 -- 1974 and 1979, was he not?
11 A. No, he was not.
12 Q. Was he on the board of directors of B.A.T
Industries?
13 A. No, he was not.
14 What board was he on?
is A. He was an the board of the subsidia-ry
ccmpany,
16 British American Tobacco Company.
1-1 British American Tobacco Company. And he
was-on the
is bcard of directors of that company?
19 A. Yes, but not of the holding company.
20 MR. MILLSON: Your Honor, I note we've been
21 going 17 minutes now.
22 MR. SMITH: I need about five more minutes,
you--
23 Honor.
24 JUDGE BRITT: All right.
25 MR. MILLSON: Cces that come out of the
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SG9
Exchanges' t4=e, your Honor?
JTJOGZ BRITT: Let's ask Mr. Xaric.
Will you donate five minutes of yczr time, sir?
4 MR. KARIC: If absolutely necessary.
5 J7JDGZ BRITT: It may become necessary.
6 MR. SMITH: I would point out this is a four and
7 a half billion dollar transaction and this is
cur one
a chance to question a member of the cha-4=an's
pc-*-4c*l
9 committee.
10 MR. MILLSON: This is your fourt-h chance tc
11 examine him.
12 MR. SMITH: It's our first chance !:efore
t!~.-*s
13 body.
14 BY MR. SMITH: Do you know Mr. Green ;ersonally?
15 A. I was acquainted with Dr. Green, yes.
16 Q. And Dr. L.C.F. Blackman was the direc--zr of
research
17 and development an issues relating to smoking
and
is health between 179 to 185, correct?
19 A. I believe he succeeded Jim Green, yes.
20 Q. And he was succeeded by Richard Binns?
21 A. That's not a na=e I recall.
22 Q. B.A.T has a group research and develc;=ent
center in
23 Southampton, England, doesn't it?
24 A. Th, ere is an organization of that kind in
Scutha==ton,
25 England, yes.
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5 -^~
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3
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5
6
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10
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13
14
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20
21
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24
25
Q
A.
Q.
A.
Q.
A.
Q.
A.
Q.
A.
Q -
And it has a large supply or a large al=cst
warahcuse
full cf studies. ccncerning links between s=ckinq
and
disease, does it not?
Mr. S=ith, I'm not familiar with that.
Do you )Lnow that B.A.T has supported research, at
the
Harrzgate Labs in Yorkshire, Lockstead in
Ka--'-urg,
and Battelle Labs in Geneva and Frankfurt?
I'm nct aware of those things.
Do you know that B.A.T has supported research
bet-ween
the Hurtington Lab in England and the BIBRA LAbs
in
Surrey, England?
Could yeu repeat?
BIBRA, British Industrial Biological Research~
Association.
I'm not aware of those, Mr. Smith.
Do you know that B.A.T has conducted research that
includes painting tar solutions on the skin cf
mice?
No.
Do you know that B.A.T has conducted research that
involves cutting mice open and painting a tar
scluticn on their lungs?
MR. MILLSON: There is a limit, your Hcncr.
TUDGE BRITT: Yes. I'm not sure how far you are
going in this.
?M. SMITH: I think this relates, your Wcnor,
BAT Industries document for Province of British
Columbia 5 November 1999


911
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3
4
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12
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16
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20
21
22
23
24
25
direc-tly to integrity. It is alleged that s=ckinq
causes the deat.1; of 350,OCO people a year in the
United States alone. We have the governor of the
State of California and this depa--,,r-,=ent
deter=ininq
that it's a leading cause of death in California,
and
1 think it's very important that we find out, when
the chairman's policy committee of B.A.T*
:ndt:stries
sits back and says there is no evidence that
s=ckinq
causes health risks, that we find out whether
these
gentlemen have done anything to avail the=salves
of
the massive body of research that's available on
the
subject.
MR. MILLSON: I would note t-hat Mr. Smith seems
to be having a campaign to have smoking declared
illegal, and I'm not sure that that's what this
proceeding is about.
JUDGE BRITT: As to your last few questions,
have you information that B.A.T Industries have
labs
operating on the issue of whether or not nicotine
and
cigarette smoking is harmful?
MR. SMITH: Yes, your Honor. We will be happy
to offer --
JUDGE BRITT: Well, no. Then it would seem, at
least, you are attempting to make a
deter=-4nat-4on if
11-hey have labs working on the project.
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1 M-R. WCCCS: Thank you, your Honor.
2 JLIDGE %-R:=: So I think we will cut cut as far
3 as that line of questioning goes.
4 ?M. SMZT-H: We-Jl, they may be making an effort,
5 but the executives that are making the decisions
are
6 making absolutely no effort to inform
themselves, is
-7 my point.
?M. MILLSON: That is an irresponsible
9 statement, Mr. Smith.
10 =DGZ BRITT: This witness has testified that he
11 is not aware of those research projects.
12 Q. BY MR. SMZT.q: What have you done, Mr.
Ga=away, tz
13 familiarize yourself with the research being
14 conducted by B.A.T industries?
15 A. Let me explain that t2he work is conducted
where it -;s
16 done by our tobacco companies, which are our
17 subsidiaries of B.A.T Industzieso and the work
is
is conducted within those companies such as it is,
and
,.r3 19 am not personally familiar with that work.
20 You've worked in those companies for many
years,
21 haven't you?
22 A. I have worked in par-, of then in --
strictly in the
23 financial areas.
24 But you worked in the tobacco companies for
most of
25 your career, did you not?
BAT Industries document for Province of British
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91-3
1
2
3
4
5
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8
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10
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12
13
14
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21
22
23
24
25
A.
A.
Q.
A.
Q.
A.
A.
For part =f =y career, yes.
The cha-4=an's ;ciicy cc=-4ttee adapts smoking and
health pc*. -4=ies kncwn within B.A.T as S & H
policies,
does it nct?
I did not -- I have to -- sor--j- I cannot recall
whether --Icse are ones adopted -- I think the
ward
you used, adzpted, hy the CPC or whether they are
adopted by the tcbacco companies themselves.
But there are such policies?
Such polic-'es on s=ckinq and health must exist,
yes.
Didn't B.A.T for =any years have a smoking and
health
policy aga-4-st t-Its marketing of inhalable
cigars?
I'm sorry, r- cannat -- I'm not aware of that, Mr.
Smith.
KR. They have now had an additional
five minutes, ycur Honor.
j"UDG'-2' B.R=.: They're going into Mr. Karic's
time.
KR. S~CTH: I'm really getting close.
KR. *KURIC: I will donate some of my time.
BY KR. SM:TH: Are you aware that B.A.T research
supports the conclusion that smoking can and does
cause har=7
Just make sure I answer that fairly, Kr. Smith,
could
you repeat the question again.
rQ
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BAT Industries document for Province of British
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9 ill
Are you aware thaz B.A.T research su=ccz-ts the
2 conclusion that s--ckinq can and does cause
har=?
3 A. I am not aware cf that conclusion.
4 Q. Are you aware tham B.A.T research supports a
5 conclusion that =cking is a major fact-or in
causing
6 lung cancer?
7 A. I am not aware c! that.
Are you aware thaz B.A.T research indicates that
if
9 there were a decrease in the prevalence of
smoking,
10 there would be a decrease in the incidence of
lung
ii cancer?
12 A. I am not aware of that finding or research.
13 Didn't Dr. Green, --he head of B.A.T research
for 19
14 years and a memhe= of the board of directors of
15 British American :cbacca Company, expressly
state
16 those three conc:usions based upon his research
at
17 B.A.T publicly in England?
is A. I wasn't aware he had done that.
19 Q. Didn't he make thcse statements an the BBC?
20 A. I recall there was a program on television
-- this
21 quite some years ago -- in which he ap=eared,
but 1
22 quite frankly do not recall the words he used.
23 (A pc=-;on of a videotape was played.)
24 MR. MILLSON: I object to whatever this is.
25 JUDGE BRITT: Would you turn it off for just a
Q;IJ
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BAT Industries document for Province of British
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915
1 moment?
2 If ycu are' going to video, let's have scme --
3 Q. - BY M3R. SIR--7H: isn't that Dr. Green?
4 JUDGE BRITT: Just a moment.
5 BY MR. SM7-7H: Isn't that Dr. Green?
6 JUDGE BRITT: Just a moment, Mr. Smith. The
7 videotape, apparentl'y' came an and it shcwed
something, and I'm not sure the reporter ever got
9 what was said.
10 MR. SMITH: I'd be more than hatcy to back it
11 up, you-- Honor.
12 JUDGE BRITT: Why don't we warn everybody what
13 is going on.
14 A-re you going to show a videotape?
is MR. SMITH: I want to show about 20 seconds of
16 Dr. Green Cn BBC television.
17 JUDGE BRITT: Okay.
Kr. Garraway, if you would, would ycu watch the
19 screen.
20 (The following statement ap;eared cn a
21 videotape:
22 Most smokers can smoke all their lives without
23 any apparent harm, but if they do, I believe
that
24 smoking can cause harm. I'm quite sure it can
and
25 does. In fact, I'm quite sure it's a majjcr
factor in
BAT Industries document for Province of British
ColUrnbia 5 Novernber 1999


lung cancer in cur society, for eya=ple, and
=erha;s
2 1 can express it hetter by saying t-his: :.n =y
3 opinicn, if we could get a decrease in the
;revalence
4 of smoking, we would get a decrease in t!7:e
incidence
5 of lung cancer.)
6 Q. BY MR. SMITH: That's Dr. Green, is it not?
7 A. It certainly looks lika Dr. Green. I'm sure
it is.
The director of B.A.T research into smoking and
9 health for 19 years?
10 A. Yes, but not, I see, from the caption
t!,.ere at the
time he made that -- gave that interview.
12 Q. I agree with that. It was a year after he
retired.
13 Can you tell me, Mr. Garraway, what you have
14 done to familiarize yourself with the results
of the
is studies conducted by Dr. Green?
is A. I thought I made it clear. I am not aware of
the
17 detail. I am not a scientific or medical
expert. 1
13 am not aware of the material series of which
you
i9 described, including that which may or may not
have
20 been done by or. Green.
21 Q. Wasn't Dr. Green a scientific expert?
22 A. I assume he was.
23 Q. Did you ask him what conclusions he reached?
24 A. I never had a conversation of that nature
with Dr.
25 Green.
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MR. SM:TH: Thank you, Mr. Garraway.
-:CGZ BR:77 : Mr. Karic, Ycu have about six
=inutas.
!OR. M:=ZCN: Four minuzes.
J-,DGZ BR:77: Let's cc=r-r==-4se a,: f-4,.,e.
CRCSS - -7M%M:NA:: CN
3-7
BY W-R. K;L-R::C:
M=. Ga=away, is BA7US cr Brcwr. & W-J-1lia=sc,- a
defendant in any tobacco product liability
lawsuits?
A. There are a nu=J:ez cf -- I believe it's about
23, cf
i2 pending tobacco liatility lawsuits outstand-4mg
at the
i3 moment for Brown & Williamson, and Br-.-.r. &
Willia=scn
14 is not -- there is not currently a case in
process
13 where Brown & Wil-liamscn is a defendant.
15 Have you or anybody else at BA7:S had any
discussicns
17 reSard-ing the possible admissi!:ility into
evidence
18 against BATUS or Brown & Willla=scri in tobacco
19
liab-;Iit-.r lawsuits cf the nonsmoking d4scouzts
20 currently offered by Far=ers, should it he
acquired,
21 in life, auto and homeowners policies?
22 A. No, sir, not in t1hose te-;,ms. We are
satisfied that
2-1 the Farmers organization, with its ncns=cke:-
24 discounts for both its life and P & C business,
could
25 cc-ex--st successfully within cur grouz,
wit~:in wh-;,-'
BAT Industries document for Province of British
Columbia 5 November 1999