FILE PHOTO: Philip Morris International's operational headquarters are pictured in Lausanne August 19, 2009. REUTERS/Denis Balibouse/File Photo
CAIRO – 26 February 2019: Members of the Egyptian Parliament are preparing to launch a thorough investigation into the activities of Philip Morris Misr LLC after several allegations are made of the tobacco company attempts to sack Egypt’s national industry of Cigarettes.
Two years ago, Egypt’s Eastern Company has reached a new agreement with Philip Morris Misr LLC, in which the Egyptian company agreed to present a modified form of the manufacturing agreement with Philip Morris Misr due to the Egyptian Central Bank’s call to float the Egyptian pound on November 2016.
André Calantzopoulos the CEO of tobacco company Philip Morris International (PMI)
“Due to the change in the exchange rate of the US dollar by more than 150 percent, a step that severely harmed the commercial interests of both Philip Morris International (PMI) and Philip Morris Misr, both companies have all the right to renegotiate their agreement with Eastern Company to restore the economic balance. The modified form of the agreement was approved Eastern Company’s general assembly,” Eastern Company’s statement then to justify the new developments.
The Eastern Company was pressured by PMI to settle to $5.8 as the manufacturing fees of 1000 cigarettes among Zero to 15 billion cigarettes and $6.2 for 1000 cigarettes among 15 to 22 billion cigarettes.
PMI has unfairly insisted to pay its dues to the Eastern Company in the local currency instead of the US or any other foreign currencies which have caused severe damage to the Egyptian economy eager to increase its FX reserves.
PMI has delayed the payment of what estimated to be $200mn to the Eastern Company in return for the manufacturing fees of cigarettes. Eastern Company has gone through massive financial losses with its export revenues reduced to $14mn.
Several members of the Egyptian parliament currently mount a campaign to cast an eye over the violations of PMI, accusing the company of destroying a significant national industry through corrupted behavior. Egypt’s parliament accused PMI of standing behind the unreasonable hike in cigarettes prices besides numerous violations against the environment.
The parliament urges all the State’s institutions to intervene in order to protect the Egyptian market and the fair arrangements of investment. Member of the parliament, Mustafa Bakry, said in a press statement that the Eastern company represents a huge deal in Egypt’s national industry, which obliges the government to enhance the company’s performance and protect it.
According to the contract, PMI has agreed to pay 40 percent of its debts to Eastern Company in US dollars, however, Phillip Morris International insisted to pay in local currency.
In the same context, Egypt’s Consumer Protection Agency (CPA) has received several complaints about PMI’s role in increasing prices of cigarettes and its involvement in tax evasion incidents.
English health institution “Cancer research UK” has accused PMI on October 23 of hypocrisy as the latter was running a PR campaign to encourage people into quitting smoking, while it sustains its industry in other countries.
“It’s staggering hypocrisy, where this tobacco giant is running a PR campaign in the UK to promote its own ‘quit smoking’ products, all the while continuing to promote its deadly tobacco products in countries where it’s still legal to do so,” Cancer Research UK report said.
The Cancer Research UK also reported that In 2011, Philip Morris International launched its ‘Be Marlboro’ campaign, which has been strongly criticized for deliberately targeting young people and encouraging them to take up smoking.
And in 2015, the company filed a lawsuit against the UK Government over its plan to introduce plain packaging for tobacco products, a measure to make cigarettes less appealing to children.
Philip Morris Misr LLC. was established in 2013 and are the licensee for Philip Morris International (PMI) products in Egypt. In 1985, PMI signed a manufacturing agreement with the local state monopoly, Eastern Company, to produce PMI brands.