UK High Commissioner to Bangladesh Alison Blake has been accused of helping British American Tobacco, or BAT, to avoid £170 million ($224.44 million) in unpaid VAT to the Bangladesh government, The Guardian reports.
Health and transparency organizations in the UK and Bangladesh have expressed outrage at the lobbying effort and say it breaches World Health Organization rules. "In a letter to Blake seeking her intervention into the long-running dispute, BAT claimed the unpaid VAT claim was 'baseless', threatened to take the matter to an international court and boasted of its "proud history of more than 105 years of investment and revenue contribution in Bangladesh", The Guardian said.
On Aug 6, Blake wrote to the Bangladeshi government in support of BAT. "I am writing regarding the long pending VAT case of British American Tobacco Bangladesh which we have discussed a number of times before and on those occasions I felt assured that your honorable office was determined to resolve the matter," she said. Blake's letter said the high commission knew of the government's legal opinions that a manufacturer would not be liable to pay retrospective VAT.
The high commissioner also wrote of repeated talks between Finance Minister AMA Muhith, Law Minister Anisul Huq and Attorney General Mahbubey Alam about a meeting to discuss an out-of-court settlement of the issue and bemoaned that it had not taken place. Blake also noted in her letter that BAT paid more to the Bangladesh government than any other company, The Guardian said.
The National Board of Revenue, or NBR, counted Tk 19.24 billion in dues and filed the case with the High Court at the end of last year, Chairman Nojibur Rahman told media. The verdict went against BAT. The NBR chief said he was aware of Blake's efforts to settle the issue out of court. There was no scope for discussion with the case which was now at the Appellate Division, he said.
The UK government has previously faced scrutiny for scandals involving BAT in Pakistan in 2015 and Panama in 2013. The British Foreign Office was forced to issue guidelines stating that officials must not "engage with foreign governments on behalf of the tobacco industry, except in cases where local policies could be considered protectionist or discriminatory" following the Panama incident, The Guardian says. The guidelines also bar officials from seeking to "encourage investment in the tobacco industry, or provide any assistance in helping tobacco companies influence non-discriminatory local business policies to their advantage".
The UK is also under WHO regulations preventing it from acting in the interests of tobacco companies."We appreciate the development initiatives of British government in Bangladesh but the attempts to settle the BATB tax issue out of court by the British high commissioner, Ms Alison Blake, is entirely undesirable," a spokesman for Bangladeshi transparency non-profit Progga told The Guardian.
"Tobacco kills around 100,000 people annually and cripples around 382,000 in Bangladesh, and BATB owns the largest share [of the market] here." "We have done nothing wrong here," a BAT spokesperson told The Guardian. "It's incorrect to say that WHO guidelines prohibit all engagement between governments and the tobacco industry; in fact, they caution governments to ensure that all operations and activities of the tobacco industry are transparent." The UK foreign office spokesperson also defended Blake.
"It is entirely appropriate that the UK government supports British businesses overseas. Our actions were in line with guidelines and the letter in question highlighted the original legal opinion that there was no legal basis for retrospective VAT," the spokesperson told.
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