Tom Steyer, the billionaire former hedge-fund manager starring in a TV ad for a California ballot measure to raise state tobacco taxes, once invested millions of dollars in tobacco companies, federal records show.
Farallon Capital Management, the San Francisco-based hedge fund Steyer ran until late 2012, when he left to focus on boosting alternative energy, counted among its investments shares in UST, Inc, according to records mandated by the Securities and Exchange Commission. The former holding company’s subsidiaries included U.S. Smokeless Tobacco Company, makers of Copenhagen and Skoal. UST was acquired by Altria, makers of Marlboro cigarettes, in a deal worth more than $10 billion.
Proposition 56, the Nov. 8 measure to hike by $2-a-pack the tax on cigarettes is drawing heavy opposition from Big Tobacco. Philip Morris, R.J. Reynolds and smaller contributors have combined to raise more than $66 million to defeat the tax.
Steyer, co-chairman of the tobacco tax increase campaign, is among the largest contributors to Proposition 56, donating $5.5 million.
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A spokesman for Steyer said the billionaire strongly opposed Farallon’s investment in tobacco and insisted on a full vote of the firm’s partners.
“Unfortunately,” Gil Duran said, “he found himself in the minority, and the firm proceeded with the investment. Then, as now, Tom strongly opposed tobacco, and that’s why he is chairing the campaign to save lives by keeping cigarettes out of the hands of children.”
Duran added that Farallon’s total investment in tobacco amounted to a “fraction of a fraction of one percentage point” of the firm’s overall size, as indicated in SEC filings.
In his statewide TV ad promoting Proposition 56, Steyer stares into the camera and confronts the tobacco companies for pushing a deadly product and lying about it for decades. “Now, they are lying about Prop. 56,” he says in the ad.
“This is a very personal issue for me,” Steyer, whose mother was a longtime smoker and died of lung cancer, added in a statement released with the ad Friday.
“I refuse to stand by as Big Tobacco continues its campaign of smoke and lies in an effort to mislead and confuse California voters. Voters need to know that Prop 56 will save lives and save taxpayers billions of dollars by getting smokers to finally pay their fair share of healthcare costs that all taxpayers have to pay now; and if you don’t use tobacco, you don’t pay.”
The requisite SEC records show Farallon invested in a fund that held a stake in National Tobacco Company, which produced loose-leaf chewing tobacco under the Beech-Nut brand.
The fund also led a group of investors, including PT Djarum, the third-largest cigarette maker in Indonesia, to take a controlling stake in the country’s largest and most influential bank. Seven years later, Farallon offloaded its stake in PT Bank Central Asia in 2009.
A potential 2018 gubernatorial candidate, Steyer has frequently appeared in TV ads via his NextGen Climate organization.
He has bolstered his national profile in recent years by contributing tens of millions on Democratic candidates and causes – with an acute focus this election cycle on stopping Donald Trump from becoming president.
At the California Capitol, his intensifying pressure on Big Oil has commanded attention. Steyer worked with Senate President Pro Tem Kevin de León on climate policies and has repeatedly threatened to place an oil-extraction tax on a future statewide ballot.
But as he’s taken on powerful interests, Steyer has been forced to reconcile his evolving activist, mega-donor and citizen legislator identities with the investments he once guided at Farallon, including in companies that operated coal-fired plants. Steyer has said he personally divested from fossil fuels in mid-2014, calling it his version of a “Paul on the road to Damascus conversion.”
“I came to the intellectual and emotional decision that (climate change) was going to be the overriding issue for our society,” he told The Bee last year. “I honestly felt as if I wanted to have a different relationship to society than just running a business and being profitable.”