W. E. (Gene) Ainsworth, Jr.
Background
- Born in Jackson Mississippi in August 1942.
- Attended local public schools – 1947-1960.
- Millsaps College BS 1964, Mississippi College, JD 1966.
- Small town Mississippi lawyer 1966-1967.
- Chief of Staff U. S. Representative G. V. Montgomery (MS) 1968-1972; Executive Branch (The White House) 1973-1975.
- Legal Counsel, Timmons & Co. 1976-1977.
Coming to RJR
Ainsworth Joined RJR Tobacco April 1978. He remained until May 2007. He was recruited to start a Government Relations, Government Regulator Department. My first title was Director of Government Relations. He was promoted to Vice President in 1982 and to Senior Vice President in 1986.
Memorable Events
He found it hard to hard to pick just three memorable events, but these stand out above all of the rest— the KKR buyout, the onset of mass products liability lawsuits ending with the infamous Master Settlement Agreement, and the Brown & Williamson merger. He retired in 2007 having served almost 30 years (which given all the drama of the KKR buyout, multiple management changes, an avalanche of lawsuits and government regulatory action, “I equate my time at RJR to be about 70 dog years.
Master Settlement Agreement
The tobacco settlement was one-sided, and Republicans criticized the tobacco companies, who should’ve been pro-Republican as well as pro-business, for funding their “enemies.” All the wealth that went to the lawyers gave them a war chest to go after more companies such as Johnson and Johnson with talcum powder, Monsanto with Roundup, and soft drinks with excess sugar. They set up decades of plaintiff lawsuits. The lawyers are very sharp. They shop for courts that will favor them, such as East St. Louis Illinois.
Tobacco companies gave up money, marketing power, outdoor advertising, and magazine advertising; they got little from it. This was a good deal for Phillip Morris and a bad deal for everyone else. Steven Goldstone resisted but could not do more than maintain a holding action.
Regarding the tobacco, buy out, Gene urged that they retain the quota system which would at least give the cigarette companies something for their money – a right to buy tobacco in the U.S. market and a voting constituency with the small tobacco farmers who would still be in business. The Governor of Georgia threatened punitive state excise tax on cigarette sales. Finally, the three major tobacco companies picked up a portion of the cost for RJR.
In setting up the MSA, Gene said that the “Ivy League” attorneys left a hole you could drive a truck through, allowing many small new cigarette companies to be created that was not bound by the settlement agreement. It took 8 years to close that loophole. Companies like Renegade Tobacco in Mocksville NC sprang up. At least 41 of them. They had to be closed down, state by state. One example was a family in South Boston, Virginia who had been tobacco farmers. They set up a highly successful cigarette business and even had their own jet plane.
Gene discussed how much money the lawyers got. There was a lawyers’ pool. One Mississippi lawyer got way more than $1.6 billion – his portion was listed as $500 million. Sadly, he went to jail over a tiny suit later on when he was already so rich
The North Carolina MSA Money and Where it Went
- 50% to Gold Leaf Fund. This was a slush fund for whatever economic advantages could be had, mostly for Eastern North Carolina enterprises.
- 25% to tobacco growers to build Barns and other improvements in farming
- 25% to a public relations firm that put out information on the evils of smoking in the education of children. But a quid pro quo was that this firm would handle the public relations for specific candidates, who were in election contests, for little or no fee.
When the Republicans took charge of the state legislature in North Carolina they left Gold Leaf alone, seeing it as a slush fund they now could command.
Outlook for Tobacco
RJR lost its culture and became just another corporation run by people who knew nothing about tobacco. The tobacco companies are on a fast downward slope. The new technologies are being taken over by Silicon Valley. RJR vaping market share went from 65% to 22% with the introduction of Juul. It is hyped with nicotine and under assault by the FDA but is still on the market.
After RJR
Since retirement from RJR, he has maintained an active consulting practice with several major U.S. companies, severed on the Board of Trustees of Millsaps College, managed family interests in timberlands in Mississippi, and at long last, have had time to spend with my two grown daughters and their families here in North Carolina
Although we had mutual friends, I met Gene Ainsworth years after we both had left RJR. He was invaluable in walking me through the legal side of the tobacco business and explaining the finer points of the trillion-dollar Master Settlement Agreement. GAH