European Tobacco-payment Probe expand

Former European Health Commissioner John Dalli met with his political associates Silvio Zammit just before Mr. Zammit first requested € 60 million ($ 78.3 million) payment from the tobacco industry lobbyists, said people familiar with the biggest corruption probe reached the top European Union’s top ranks in years.

The alleged request for money during a Feb. 10 meeting in Malta—in return for a change in tobacco legislation—sparked a probe by the European Union’s antifraud office and Mr. Dalli’s resignation last week.

The anti fraud office, office de-Lutte Anti-Fraude, or OLAF, has completed its investigation into allegations that Mr Zammit asked to pay more for Mr Dalli from Swedish Match AB SWMA.SK -1.71% to change the law prohibiting the sale and export of snus, smokeless tobacco product, in most of the 27-nation bloc. Sale of snus is allowed in Sweden.

Swedish officials have long argued that the chewing-a moist powdered tobacco sold in small mesh bags packed in round containers the size of a hockey puck, is a safe alternative than other forms of tobacco. Swedish retail association believes that ending the ban could open$ 2.3 billion market snus manufacturers.

Mr Dalli, former Maltese minister, accused of requesting money, but the EU fraud office said that “unequivocal” evidence he was aware of the claims and did nothing to stop them. OLAF refused to give Mr. Zammit, but Mr Dalli confirmed that he is the person in question.

Maltese judicial authorities say they are now hearing the case.

Mr Dalli said he was innocent of any wrongdoing and insists he was not aware of any request, Mr. Zammit for money.

Mr. Zammit has also denied any wrongdoing. Reached The Wall Street Journal on Friday, declined to comment on any of the detailed allegations.

A person familiar with the details said Mr Dalli first denied that Olaf investigators that he met with Mr. Zammit February 10, but later admitted that the meeting, which allegedly took place in his office, took place. Former Commissioner can not be achieved.

Soon after that meeting, Mr. Zammit met with local lobbyist Swedish Match was occupied. Based on notes he claimed that during his meeting with Mr Dalli, Mr Zammit said the commissioner was favorable to change the ban on snus sales, but that it could cost him his political career. He said Mr Dalli is necessary to compensate that, according to the person.

Mr Dalli has publicly denied discussing snus in any meeting with Mr Zammit in February.

A document seen The Wall Street Journal said the Maltese lobbyist told her handler Swedish Match 6 February she met Mr Dalli and Zammit on February 10.

However, according to a person familiar with the details, Mr. Zammit said to her at the last moment did not come, saying that he meet with her later. A lobbyist can not be reached by phone or email.

The second person with direct knowledge of the situation told The Wall Street Journal, Mr. Zammit met at a restaurant Mr. Zammit in his home town of Sliema on 13 February, local lobbyist and Swedish Match employee who flew to Malta. The person said Mr. Zammit posted more information about the requested € 60 million payment that day, asking what it is paid in two parts.

The first part, € 10 million will come after the meeting, Mr Dalli and Swedish official matches, which could take place “anywhere in the world,” Mr Zammit allegedly said, according to a second person with direct knowledge. Mr Dalli would undertake to change the rules of tobacco, this person said. Other € 50 million will be paid out after the law was actually changed, the second person said.

February 21, Swedish Match said Maltese lobbyist had rejected the demand for a fee, said Patrick Hildingsson, vice president of Swedish Match Communications.

The company said the Swedish government in three days, Mr. Hildingsson said, and reports information to the European Commission in May, according to the fraud office.

Mr Dalli said interviw from Malta Independent newspaper over the weekend that Mr Zammit arranged a meeting with him and Maltese lobbyist January 6 to discuss the issue of chewing.

He also said that he took part in a meeting organized by Mr Zammit in August 2010, the tobacco industry officials.

Last week, after he said he would resign, Mr Dalli said in a video interview with Novaya Gazeta Europe, Mr. Zammit “never asked me for any meeting” with representatives of the European smokeless tobacco industry.

According to two people familiar with the probe, no minutes were taken either meeting. At a meeting on January 6 was not recorded in the agenda, Mr Dalli, these people said, and no commission officials were present.

The European Commission representative said Monday that Mr. Dalli had “informal contact with several companies’ tobacco.”

“In light of the findings, it was politically unacceptable to stay in office,” said spokesman Olivier Bailly.

The rules on what meetings officials should hold place the onus on the commissioner to act responsibility and transparently. However, Frederic Vincent, an EU spokesman for the Health portfolio, said that the European Commission abides by World Health Organization related international standarts that aim to ensure contacts with tobacco industry officials

In an interview with The Wall Street Journal on Monday, Giovanni Kessler, OLAF’s general director, confirmed that there was no “conclusive evidence” that Mr Dalli was a “request for money.” But he said he believes Mr. Dalley was not upfront with investigators.

“You put it all together, you can see the possible lies … and then draw conclusions,” he said. “And then we say on this basis, we conclude he was aware of this man … to ask for money in his name.”

In the weekend interview with the Malta Independent, Mr Dalli stated that he was a victim of the capture by the tobacco industry to undermine tobacco tougher EU rules. He proposed to European Commission President Jose Manuel Barroso made his escape quickly to prevent tobacco rules proposals passing to the next stage, where they will be discussed within the Commission.

Mr Dalli said he was given only half an hour to decide whether to resign and that he was not given access to the report of OLAF, Mr Barroso.

Meanwhile, the European Commission said the Minister of Foreign Affairs of Malta, Tonio Borg, would be nominated to succeed Mr. Dalli.

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