August 18, 2006

Where There's Smoke...

Say g'day to Bush's new man in Australia:
Today Robert McCallum arrives as the representative of the most unconvincing US president in living memory. His old Yale pal George Bush inveigled him out of the Atlanta law firm Alston & Bird and invited him to take a political position at the Department of Justice in Washington, where eventually he became third-most senior officer. Now it's Canberra.

In his wake in Washington there is a small lake of unresolved litigation that has its source in the lengthy and expensive case that the Department of Justice started (in Bill Clinton's era) against the big cigarette manufacturers - USA v Philip Morris et al.

This was a huge action, in which the government alleged that the tobacco companies knew of the lethal consequences of their trade and yet not only sought to cover that up but to fraudulently entice young people into the habit. Originally the department sought a penalty of $US130 billion payable at $US5.2 billion a year over 24 years. The idea was that this would fund a nationwide "quit smoking" program.

At the eleventh hour, the Justice Department lawyers were instructed to ask the court for a penalty of $US10 billion at a rate of $US2 billion a year for five years.

The person who gave that instruction is America's new boy in Canberra, Robert McCallum. He has argued ever since that his intervention was not political and that his relationship with the White House and the fact that his old law firm acted for tobacco interests had nothing to do with it...
And just by coincidence, McCallum arrives on our shores just as that judgement is handed down:
A US federal judge ruled that cigarette makers were liable for a decades-long conspiracy to hide the dangers of smoking but declined to impose financial penalties on the industry.

US District Judge Gladys Kessler found that the government had proved its case that accused cigarette makers of a decades-long conspiracy to hide the dangers of smoking.

But Kessler said a previous ruling by an appeals court prevented her from slapping the companies with monetary penalties such as funding a large anti-smoking campaign, as the government had sought...

Several tobacco stocks rose in extended trading after the ruling came out.

"Although they lost, they won. It's a victory for the tobacco companies," said Tim Ghriskey, chief investment officer at Solaris Asset Management.
McCallum replaces the previous US Ambassador, Tom Schieffer, an old chum of Bush and Texas Rangers baseball team colleague, who is primarily remembered for interfering in Australian domestic politics when the Labour Party suggested withdrawing troops from Iraq.


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