RJR Goes Uptown

Angry protests from civil rights and health activists have forced the R.J. Reynolds Tobacco Company to cancel a new brand of cigarette targeted primarily at blacks. The company had planned to test market its "Uptown" cigarettes among blacks in Philadelphia in January. News of the brand and the planned promotional campaign, how-ever, triggered protests which culminated with the Secretary of Health and Human Services, Dr. Louis Sullivan, assailing R.J. Reynolds.

Sullivan strongly criticized the targeting of blacks with cigarette promotions, and decried the tobacco industry's pursuit of "profits at the expense of the health and well-being of our poor and minority citizens." "Let this be just the beginning of an all-out effort, for there are other companies who are doing the same thing," Sullivan said. "We must resist the unworthy of forts of the tobacco merchants. ... This trade-off between profits and good health must stop. And it will stop if, around the country, our citizens rise up and say, 'Enough, no more.'"

Following the Secretary's comments, Johnson Publishing Co. of Chicago, publishers of the nation's largest black magazines, including Ebony, Jet and RM announced that it would not accept advertising for "Uptown" cigarettes.

Shortly thereafter, R.J. Reynolds pulled the plug, but not without a show of petulance. "We regret that a small coalition of anti-smoking zealots apparently believes that black smokers are somehow different from others who choose to smoke," a company official stated in announcing Uptown's cancellation. "This represents a loss of choice for black smokers and a further erosion of the free enterprise system."

Three weeks later, the Washington Post revealed that the company plans to introduce a cigarette targeting what an R.J. Reynolds-commissioned marketing study labeled the "virile female." Called "Dakota," the brand is to be aimed at young, poorly educated, white females.

Reynolds, perhaps smarting from its experience with "Uptown," denied that "Dakota" is to be aimed solely at women, though it acknowledged plans to market the "Dakota" brand.

GE Guilty Again

After a long and acrimonious trial which received strikingly little national press attention, the General Electric Company (GE) was convicted in February of defrauding the US. Army of nearly $8 million: A federal jury in Philadelphia found the company guilty of multiple counts of mail fraud and making false claims about the conduct of a GE subsidiary in its handling of a$70 million Army computer contract in 1983.

The subsidiary, Management and Technical Services Co., or Matsco, of King of Prussia, Pa., entered into an agreement with the Army whereby Matsco could increase its profit margin if it negotiated sizeable discounts from its suppliers. Instead of going after such discounts legitimately, however, Matsco provided the Army with inflated estimates of its suppliers' actual costs, and then claimed the normal costs were discounts.

GE claimed at the trial that it had tried to make amends after realizing what had happened, and bitterly criticized the government for criminalizing the affair.

Prosecutors, however, scoffed at that position, arguing that a "look-the-other-way" corporate mentality allowed the $8 million fraud to occur. One member of the prosecutorial team commented, "This verdict sends a message that, when a big company engages in this conduct, merely opening its wallet and paying money back is not enough."

Sentencing in the case is set for April. GE promises to appeal the guilty verdict.

Toxic Ash Trade

A Connecticut-based company's plan to export incinerator ash to a group of Latin American and Caribbean nations was scuttled in February after environmentalists helped generate opposition among the would-be recipient governments. Under the arrangement, International Energy Resources, Inc. (IER) would have collected ash from garbage incinerators and so-called waste-to-energy plants in the northeastern United States � for a hefty disposal fee � and exported it to Guatemala, Jamaica, Colombia and the Dominican Republic for use as fill in highway construction projects. IER anticipated exporting a minimum of 3,000 tons of ash per day for at least 10 years. IER had promoted the deal as an effective way to ease the problem of diminishing U.S. landfill capacity; by "solving" the problem of ash disposal, the company claimed it would facilitate the operation of waste-to-energy plants and garbage incinerators.

Environmentalists and public health experts concerned about the toxicity of incinerator ash disagreed. Greenpeace, for example, reports that incinerator ash contains toxic heavy metals and organic chemicals, including dioxins. Should residents be exposed to these substances through contaminated groundwater supplies, they could suffer from immune system disorders, cancer, liver disease, miscarriages, birth defects and neurological damage, according to Greenpeace. As a result of these risks, U.S. regulations require incinerator ash to be disposed of in specially prepared landfills or cement cells.

Protests within Guatemala and Jamaica were in part responsible for those governments' decisions to refuse IER's ash. In Jamaica, for example, the Daily Gleaner called on the Jamaican government "to make a firm statement on the matter to reassure this nation that such toxic wastes will never be allowed to taint our shores."

IER ultimately cancelled the export plan in response to pressure from the company's shareholders. Shareholders objected to the plan for environmental reasons and also because they wanted the company to avoid further negative publicity.

The collapse of the plan left IER officials fuming. A spokesman attributed the company's troubles to "a bunch of morons who did not understand" what IER intended to do.

� Garth Bray