144 



I did not make an accusation as was represented in your state- 

 ment, Mr. Sandefur, when you were here on April 14 of this year 

 with the other CEO's from the tobacco companies, the panelists — 

 your panel of CEO's seemed to feel strongly that nicotine was in 

 cigarettes for taste. And I want to ask you about this this morning. 



Does Brown & Williamson believe that nicotine is present for 

 taste or is it in cigarettes for its drug-like qualities? 



Mr. Sandefur. Mr. Chairman, we very strongly believe that nic- 

 otine is a very important constituent in the cigarette smoke for 

 taste. Yes, sir. I would further add that the consumer tells us that 

 when asked why they didn't smoke a denicotized cigarette that 

 Philip Morris marketed, the reason they didn't smoke it is because 

 it doesn't taste very good. Now, that's what the consumer says. 



Mr. Waxman. Now, just so we have the record clear, you have 

 submitted certain documents to us and among those remain the 

 chronology of the relationship of Brown & Williamson to British- 

 American Tobacco. 



And am I correct that BAT is the parent company of Brown & 

 Williamson? 



Mr. Sandefur. British- American Tobacco Industries is our par- 

 ent, yes, sir. We are a wholly-owned subsidiary of that company. 



Mr. Waxman. So BAT completely owns Brown & Williamson? 



Mr. Sandefur. That's correct, yes, sir. 



Mr. Waxman. And Brown & Williamson has input into BAT's re- 

 search? 



Mr. Sandefur. Mr. Chairman, my chairman along with several 

 other sister companies report in to BAT industries. From time to 

 time, there will be discussions by our R&D people, our scientists 

 with our sister company scientists, but it would be misleading you 

 if I told you that we made those decisions. 



Mr. Waxman. I'm not suggesting that. I just want to know if you 

 have input into that research. 



Mr. Sandefur. We do have input, yes. 



Mr. Waxman. And your employees participate in BAT research 

 conferences? 



Mr. Sandefur. Yes, sir, that's correct. 



Mr. Waxman. In fact, in 1961, Brown & Williamson entered into 

 an agreement with BAT to pool their research efforts. 



Mr. Sandefur. Mr. Chairman, I was in college in 1961. I can't 

 speak to that subject, no, sir. 



Mr. Waxman. Well, the documents you submitted to us indicate 

 that. 



Mr. Sandefur. I haven't read those files. 



Mr. Waxman. In 1969, Brown & Williamson and BAT entered 

 into a cost-sharing arrangement under which Brown & Williamson 

 would help fund the research conducted at BAT laboratories. 



Mr. Sandefur. Same answer, yes, sir. I was in college during 

 that time. I don't know. 



Mr. Waxman. Well, if it is a cost-sharing arrangement, do you 

 know whether you are still sharing the cost. 



Mr. Sandefur. Let me put it this way, Mr. Chairman. The par- 

 ent sends me a bill and I pay it. It is like — it's like asking me what 

 dividend I'm going to pay. They tell me and I pay it, yes, sir. 



