- Smoking remains the largest preventable cause of death.
- Members of Congress have nevertheless invested in tobacco companies.
- Some lawmakers who have invested in such companies often speak out against tobacco.
Weeks before the coronavirus pandemic became a public-health crisis in America, Congress was fixated on another respiratory calamity.
A mysterious lung illness was killing dozens of people and sickening thousands more. It seemed to be linked to counterfeit vapes — particularly those containing THC, the high-inducing compound in marijuana.
That drove Congress to action. The Democratic-led House passed a bill to ban all flavored tobacco, including menthol cigarettes and all kinds of e-cigarettes meant to offer smokers tasty alternatives.
The author of that bill was Democratic Rep. Frank Pallone of New Jersey, who held particular influence over public-health policy as the chairman of the Energy and Commerce Committee.
But while Pallone was shepherding the bill through Congress and accusing Big Tobacco of preying on children, his wife, Sarah Pallone, held up to $15,000 worth of shares in the tobacco giant Philip Morris International. The anti-tobacco legislation would have banned Philip Morris products such as Marlboro menthol cigarettes but benefited the company's new Iqos brand of heated flavorless tobacco, which had recently received approval from the Food and Drug Administration.
Mary Werden, Pallone's spokeswoman, did not answer questions about whether the investment presented a conflict of interest but said only that Sarah Pallone no longer owned stock in Philip Morris after selling off her shares in August. The stock appeared to be held as part of a trust and paid up to $1,000 in dividends in 2020. Annual filings show that Sarah Pallone also sold up to $15,000 worth of shares in Altria, the parent company of Philip Morris USA, in 2019.
It's not clear when she first purchased shares in the companies, but both Altria and Philip Morris stock appear in the congressman's annual financial-disclosure forms from 2012 to 2019.
Pallone's situation illustrates how federal lawmakers' personal finances can clash with their political persona and public policy positions.
Federal disclosures that Insider reviewed indicated that at least 16 members of Congress or their families had invested in tobacco companies from the start of 2020 through 2021. The tally is part of the exhaustive Conflicted Congress project, in which Insider reviewed nearly 9,000 financial-disclosure reports for every sitting lawmaker and their top-ranking staffers.
Pallone isn't the only anti-tobacco champion in Congress with personal financial ties to tobacco giants, who together spend millions of dollars annually lobbying the federal government and whose shares have largely risen this year.
Rep. Josh Gottheimer, a Democrat of New Jersey who has declared a "war on youth vaping" and cosponsored Pallone's bill, sold up to $50,000 worth of shares in Philip Morris International and as much as $50,000 worth of Altria shares in February. CQ Roll Call first reported the sales.
Gottheimer's spokeswoman, Alexandra Caffrey, said that a third party managed his portfolio and that he received only statements of transactions. She did not name the third party or say whether he'd given any direction to the money manager about which stocks to avoid.
"All decisions related to buying and selling of securities are done so without Josh's approval," Caffrey said.
The American Vaping Association, an advocacy group, panned the lawmakers' investments. Smaller e-cigarette companies have complained that severe restrictions on their products benefit corporate tobacco giants trying to push them out of the market. Philip Morris, Altria, and British American Tobacco have all expanded into smokeless tobacco.
"Investments in tobacco companies should not per se be viewed with hostility," said Gregory Conley, the group's president. "What is worthy of derision is members of Congress profiting off of incumbent tobacco manufacturers while cheering on measures to ban smoke-free nicotine products that directly compete with these corporate behemoths, as both Rep. Pallone and Rep. Gottheimer have done."
Tuberville and Upton among tobacco investors
Members of Congress must disclose all their stock trades in a public database within no more than 45 days of the transaction. But they're still allowed to sit on congressional committees, write legislation, and vote on bills that might affect them financially.
Sen. Tommy Tuberville, a freshman Republican of Alabama who sits on the Health, Education, Labor, and Pensions Committee, which has authority over healthcare regulations and health agencies, holds up to $100,000 worth of Philip Morris International stock when counting both an account for himself and a joint account, his latest annual disclosures show.
His spokeswoman, Ryann DuRant, previously told Insider that her boss did not personally make his own stock trades and had "long had financial advisors who actively manage his portfolio without his day-to-day involvement." But DuRant has not said whether Tuberville gives any direction to his advisors about which stocks to avoid, and when Insider followed up with her she said she didn't have anything new to add to her previous statement.
Another senator with financial family ties to tobacco giants is Roy Blunt, a Republican of Missouri who's set to retire when his term expires in 2022. Blunt's wife, Abigail Perlman Blunt, is a lobbyist for the food giant Kraft Heinz, but when they got married in 2003 she was a lobbyist for Altria. (Altria used to own Kraft Foods but severed ties in 2007.)
Blunt's latest annual financial disclosures show that Perlman Blunt holds up to $250,000 worth of Philip Morris International stock that in 2020 paid between $5,001 and $15,000 in dividends. (Members of Congress are required to report such holdings only in broad ranges.) Blunt has been one of the most effective proponents of expanding federal funding for medical research; his office did not respond to questions about whether that work was out of step with his wife's tobacco investments. Lobbying disclosures show that Perlman Blunt does not lobby the Senate.
A 2020 annual disclosure showed that Amey Miller, the wife of Rep. Fred Upton, a Republican of Michigan, held shares in Philip Morris, but it didn't specify which division. Upton, who is on the Energy and Commerce Committee and previously chaired the powerful panel from 2011 to 2017, has voted to ban smoking on airplanes. His communications director, Billy Fuerst, described him as the "decisive swing vote to ban smoking in the workplace."
Fuerst said that Upton hadn't personally invested in Philip Morris but that the shares were transferred to Miller when her mother died years ago.
"He also supported the STOCK Act and lists all of his transactions pursuant to federal law," Fuerst said.
Despite huge strides in reducing tobacco use in the US over the past five decades, smoking remains the leading cause of preventable death, responsible for more than 480,000 deaths a year in the US, according to the Centers for Disease Control and Prevention. The World Health Organization has said people who smoke are also more likely than nonsmokers to develop a serious case of COVID-19.
In 2020, tobacco companies together spent more than $28 million to lobby the federal government, including Congress, according to an analysis by OpenSecrets, a nonpartisan organization that tracks money in politics. But overall, Congress has moved toward stronger tobacco restrictions. In late 2019, President Donald Trump signed a law that raised the legal smoking age to 21 from 18.
Supporters of e-cigarettes also invest in tobacco giants
Some members of Congress who've invested in large tobacco companies have cosponsored legislation to prevent the FDA from banning most e-cigarettes, such as Republican Reps. Virginia Foxx and Rep. David Rouzer, both of North Carolina, and Rep. John Rutherford, a Republican of Florida.
Rutherford holds shares of Philip Morris International, Altria, and British American Tobacco. Each investment is worth between $1,000 and $15,000, his latest annual disclosure showed.
Last year, Rouzer praised the Department of Agriculture for allowing tobacco growers to receive COVID-19 relief funds under Trump. During the 2020 election cycle, Rouzer was among the largest House recipients of tobacco-linked campaign cash, receiving $30,600 from PACs and individuals who work in the industry.
The tobacco industry spent more than $8 million to support various candidates for Congress and the White House, 69% of whom were Republicans, according to OpenSecrets. Large tobacco companies such as Altria also have political action committees — OpenSecrets data shows that in the 2020 election cycle Altria's PAC gave $485,500 to Republican committees and $241,000 to Democratic ones.
Rep. Rob Wittman, a Republican of Virginia, has also been supportive of the vaping industry while investing up to $15,000 in Philip Morris International. Through his spokeswoman, Sarah Newsome, Wittman said a financial advisor managed his stocks using a third-party investment manager "who implement trades at their own discretion without consulting with or getting input from their clients."
"Mr. Wittman believes members of Congress should not improperly benefit from their role," Newsome said. "He supports measures to avoid conflicts of interest. He has placed his investments in the care of a brokerage to avoid any perceived ethical issues. He remains committed to accountability and transparency in government."
Wittman, like all members of the House and the Senate, has the option to place his financial assets in a "qualified blind trust," which Congress describes as the "most comprehensive approach" to "eliminate conflicts of interests and the appearance of them." But such blind trusts can be costly and time-consuming to formalize, and Wittman — along with most other members of Congress — has not established one.
Only 10 lawmakers have taken the option to use a qualified blind trust, Insider found.
The financial arrangement allows members to invest their money without any knowledge of or power to make decisions about stock trades. Rep. Dean Phillips, a Democrat of Minnesota, held up to $15,000 worth of Philip Morris International shares but placed all his investments into a blind trust after an ethics complaint accused him of making timely investments before the pandemic.
The other tobacco investors in Congress include Republican Reps. Pat Fallon, Pete Sessions, and August Pfluger, all of Texas, and Republican Reps. Diana Harshbarger of Tennessee and Carol Devine Miller of West Virginia. None responded to a request for comment.