Politics

What Happened: In 2001, Laos’s then-prime minister, Bounnhang Vorachit, signed off on a contract that would award millions of dollars in profits to a U.K.-based tobacco giant and business tycoon Sithat Xaysoulivong – a close ally, and eventual in-law, of Bounnhang. Exclusive reporting by The Examination, co-published with The Diplomat, reveals the details of the contract, which swore all parties to secrecy. The pact privatized Laos’ state tobacco monopoly by creating a joint venture between the government and British firm Imperial. A company held by Sithat also received a minority stake; The Examination’s analysis of financial records found that Sithat’s company received more than $28 million under the deal since 2023. Importantly, the contract also prevented Laos from raising taxes on cigarettes, meaning the country has some of the world’s cheapest cigarettes. Those low prices are part of the reason why Laos’ male cigarette smoking rate is among the highest in the world – with all the negative health outcomes that implies.

Our Focus: The 2001 deal “has all the hallmarks of a corrupt scheme,” said Kush Amin, a legal specialist at the anti-corruption group Transparency International, who reviewed the documents obtained by The Examination. Sithat, who made millions from the deal, is both politically well-connected and had no prior experience in the tobacco industry before being offered the chance to buy into the joint venture. (In a statement, Imperial said it is is “committed to operating with integrity and in adherence with all applicable compliance standards.”) But beyond enriching a politically-connected businessman, the deal has had immense consequences for public health. The secretary of Laos’ parliament even wrote a letter to the current prime minister arguing that the deal “resulted in significant losses to national revenue and negatively impacted the health of the Lao people.”

What Comes Next: The 2001 deal takes on special relevance now, because key provisions – including the tax freeze – are due to expire next year. The current prime minister, Sonexay Siphandone, indicated in November that his government would terminate the contract – but also left the door open for negotiations over a new agreement. Whether the deal is renewed, and under what terms, will be a key question for public health outcomes in Laos. “The Lao people have already suffered from this contract for 25 years,” said Bungon Ritthiphakdee, executive director of the Thailand-based Global Center for Good Governance in Tobacco Control. “The question is whether a new generation will have to continue suffering.”

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INTERVIEW

Jeffrey Wasserstrom, a professor of history at the University of California, Irvine and the author of “The Milk Tea Alliance: Inside Asia’s Struggle Against Autocracy and Beijing,” on the legacy of the loose coalition: “Its brief flourishing was due to a unique convergence of factors, but I see it as having a broader relevance. Some of the networks established during it remain, and it maintains some presence in online spaces and real-life ones, too, in part via activities such as talks and film showings.”

Northeast Asia

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South Asia

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Southeast Asia

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Central Asia

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Security

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