Brown & Williamson

Early years

B&W was founded in Winston (today's Winston-Salem), North Carolina, as a partnership of George T. Brown and his brother-in-law Robert Lynn Williamson, whose father was already operating two chewing tobacco manufacturing facilities. Initially, the new partnership took over one of the elder Williamson's factories. In February 1894, the new company, calling itself Brown & Williamson, hired 30 workers and began manufacturing in a leased facility.

In 1927, the Brown and Williamson families sold the business to London-based British American Tobacco. The business was reorganized as the Brown & Williamson Tobacco Corporation. Manufacturing and distribution were expanded, and work on a new B&W factory in Louisville was begun.

Acquisition

On April 26, 1994, British American Tobacco Industries, PLC announced an agreement to buy American Tobacco Company for $1 billion. A holding company, named "BATUS, Inc." was created for this purpose. On October 31, 1994, the Federal Trade Commission filed suit in federal court in Manhattan to stop the deal. An April 1995 consent order required that to prevent antitrust violations, Brown & Williamson had 12 months to sell its Reidsville, North Carolina, plant and nine of the brands acquired in the American Tobacco purchase. Lorillard Tobacco Company agreed on November 28, 1995, to buy the six discount brands (Montclair, Malibu, Riviera, Crown's, Special 10's, and Bull Durham), but not the three premium brands (Tareyton, Silva Thins, and Tall). In an out-of-court settlement in December 1995, the FTC also required Brown & Williamson to sell the Reidsville plant, but Lorillard did not want it and the company decided to close it.

The FTC rejected the Lorillard deal on April 10, 1996, and B.A.T. and Brown & Williamson agreed July 25, 1996, to sell the six discount brands to Commonwealth Tobacco, LLC, a subsidiary of Commonwealth Brands, described as "a small cigarette maker based in Bowling Green, Kentucky, specializing in low-priced, unadvertised brands." The deal would require FTC approval. Commonwealth Brands, which would also buy the Reidsville plant, started as Commonwealth Tobacco Company in 1991 and changed its name in November of that year, and is now part of Imperial Tobacco. B.A.T. and Brown & Williamson claimed that since Commonwealth was not one of the five major U.S. cigarette companies, it would meet requirements that Lorillard did not, particularly since Commonwealth would be more likely to compete as a discount manufacturer. The FTC approved the $36 million deal in October.

Controversies

Jeffrey Wigand's employment with the company

A battle in the war between the tobacco industry and smokers began with Jeffrey Wigand, a biochemist with a career focus on health issues, who became the Vice President of Research & Development at Brown & Williamson in 1989. He was hired to research safer means of delivering nicotine by reducing the harm of other tobacco compounds. At the time, both the addictiveness of nicotine and the health hazards of cigarettes were well known by the company and the industry, but were kept a fiercely guarded secret. Wigand soon found his research and recommendations discouraged, ignored and censored, leading to confrontations with the CEO, Thomas Sandefur. Thwarted and frustrated, Wigand turned his attention to improving tobacco additives, some of which were designed for "impact boosting", using chemicals like ammonia to enhance absorption of nicotine in the lungs and affect the brain and central nervous system faster. Wigand believed this process was a deliberate attempt to increase addiction to cigarettes.

Wigand's disagreements with Sandefur reached a breaking point over a flavor enhancer called coumarin, which he believed to be a lung-specific carcinogen that the company continued to use in pipe tobacco. Wigand demanded its removal, but a successful substitute had not been found and Sandefur refused on the grounds that sales would drop. This argument led Sandefur to fire Wigand in 1993 and to force him to sign an extended confidentiality agreement forbidding him to speak of anything related to his work or the company. The penalty for violating confidentiality was loss of his severance pay, potential lawsuits, and loss of medical coverage. At the time, his daughter suffered from a chronic illness which required continuous medical attention.

Soon after this incident, the seven executives of "Big Tobacco" testified during congressional hearings that they believed "nicotine is not addictive".

Marketing to children

As early as 1972, Brown & Williamson reviewed concepts for flavored "youth cigarettes", with flavors including cola and apple flavors. In one of their internal memos, Brown & Williamson advisers wrote "It’s a well-known fact that teenagers like sweet products. Honey might be considered." Brown & Williamson's Kool menthol cigarettes were deliberately marketed to teenagers, as revealed by internal documents, which has led to a lawsuit brought by 28 U.S. states plus the District of Columbia and Puerto Rico.

60 Minutes

Despite Jeffrey Wigand's commitment to honor the confidentiality agreement and his initial refusal to talk to Lowell Bergman, a producer for 60 Minutes, Wigand stated that he and his family were anonymously stalked, intimidated and threatened with death should he talk. At the time, it was thought that Brown & Williamson were behind these intimidation attempts, but, just before the movie The Insider was released, Brown & Williamson renewed its efforts to reduce Wigand's credibility, and the FBI published a search warrant that was served on Wigand's home, strongly suggesting he fabricated the threats against himself. This claim is countered by an on-the-record interview by Wigand where he points out the local FBI field office was being used by Brown & Williamson via an ex-FBI agent to do dirty work for the company.

Bergman provided him with armed bodyguards and, after legal consultation, urged him to testify for the State of Mississippi in a lawsuit against Big Tobacco brought by Mississippi Attorney General Mike Moore, a tactic designed to nullify his confidentiality agreement before revealing the truth in an interview with Mike Wallace for 60 Minutes. The tobacco companies responded by getting a Kentucky judge to issue a gag order that could have subjected Wigand to arrest upon returning to the Commonwealth should he testify in Mississippi.