No tears for the tobacco barons

It is hard to feel sorry for BAT Industries, or any of the other tobacco companies having to watch their share prices go up in smoke. A more smug, disingenuous and downright deceitful industry it would be hard to imagine. If peddling death were not bad enough, they have made a fortune doing it over the years. So far, the industry's complacent boast that it has never paid a cent in damages has held good, but the stock market is surely right to believe the tide is now turning. The industry's insistence that it will be able to withstand the deluge of litigation that awaits is being undermined by a string of adverse rulings in the US courts.

The recent Florida ruling in which BAT subsidiary Brown & Williamson was ordered to pay a cancer sufferer $750,000 in damages is not the first time the industry has been told to compensate a smoker, but all previous rulings have been overturned on appeal. This one may be too, but there's another coming up in Indiana and a string of others behind that. One day the dyke will crack and then the torrent of writs will sweep all before it.

What is important about Bill Clinton's expected intervention in the debate today is that for the first time ever smoking has become a central element of a Presidential campaign. The shift to the top of the political agenda puts this industry in a much more dangerous position than has existed to date. Casting Philip Morris and RJR adrift will lose a few votes in Virginia, but who cares when the whole of health-conscious California thinks you're right?

The industry might be justified in feeling betrayed by governments that have supported it for 30 years after the dangers of smoking were first confirmed. They have cynically balanced tax revenue against higher healthcare costs and been seduced by the tobacco lobby. But betrayed or not, the industry's claim that the proposed restrictions represent an infringement of their freedom of speech is so much tosh. Virtually all products which are known to pose a threat to public health get banned. The wonder is that governments have allowed this one to persist virtually unhindered for so long after the health risks became known.

If Mr Clinton's change of heart reflects a genuine shift in society's tolerance of smoking, and if juries start ruling consistently against the companies, the liabilities are potentially so large that not even the vast untapped Asian markets will save them. If you think tobacco companies' share prices have been oversold, look at the options market where the right to sell BAT shares in November at 35p below the current price was one of yesterday's best performers.