Guatemala Suit (fwd)

[Robert Weissman <rob@essential.org>]

               May 13, 1998

                                Guatemala sues U.S. tobacco
                                companies

                                Government wants $800 million, alleges
conspiracy
                                to hide health risks

                                BLOOMBERG NEWS

                                WASHINGTON

                                Guatemala filed suit against the largest
tobacco companies,
                                accusing them of violating U.S.
racketeering laws to conceal the
                                health risks of cigarettes. 

                                The suit by Guatemala, the first by a
foreign government, was filed
                                against B.A.T Industries Plc and its Brown
& Williamson cigarette
                                unit, Brooke Group Ltd.'s Liggett unit and
Philip Morris Cos. 

                                ''What we have here is a drug product that
has caused a
                                worldwide cancer epidemic,'' said George
Fleming, an attorney for
                                Guatemala in Houston. 

                                Guatemala's attorney general, Acisclo
Valladares Molina, told
                                reporters at a news conference in
Washington that his government
                                wanted reimbursement for the cost of
treating sick smokers, which
                                he said amounted to $800 million. The suit
filed, however, asks for
                                triple damages, according to a news
release. 

                                The Guatemalan lawsuit underscores the
uncertainty that U.S. 
                                tobacco companies face, even as the U.S. 
Congress considers
                                tobacco legislation that would usher in a
new era of government
                                regulation of one of America's oldest
agricultural products. 
                                Lawyers in Israel, Ireland and other
countries are also considering
                                lawsuits against the industry. 

                                Fleming said that the suit alleges
violations of the Racketeering
                                Influenced and Corrupt Organizations Act,
which allows for treble
                                damages, because the industry conspired to
hide the truth about
                                the links between smoking and illness. 

                                Philip Morris and B.A.T denied the
charges.  Philip Morris officials
                                said that they were politically inspired. 
They said that Valladares
                                Molina is running for president and is
trying to increase his
                                popularity. 

                                ''It is absurd for the Guatemalan attorney
general to claim that
                                anything the American tobacco companies
have done has misled
                                the government about the health risks
associated with smoking,''
                                Timothy Lindon, a senior assistant general
counsel for Philip
                                Morris, said in a written statement. 

                                Michael Prideaux, a spokesman for B.A.T in
London, said,
                                ''We're confident that the claim is
without merit and can be
                                defended.''

                                RJR Nabisco Holdings Corp.'s tobacco
subsidiaries were not
                                named in the lawsuit. Nat Walker, a
spokesman for R.J. Reynolds
                                Tobacco Co., said yesterday that Reynolds
does not sell its
                                brands in Guatemala. 

                                Philip Morris shares fell 7/16 to close at
37 13/16, and B.A.T
                                shares rose 1/8 to 19 7/8. Brooke Group
shares rose 3/16 to 10
                                11/16. 

                                The lawsuit also names as defendants the
Council for Tobacco
                                Research and the Tobacco Institute. 

                                ''As recently as 1991, these defendants
sponsored a seminar in
                                Guatemala City entitled 'The Truth About
Tobacco,' '' Fleming
                                said. ''Far from the truth, this seminar
presented industry-paid
                                experts who claimed there is insufficient
evidence that tobacco
                                causes lung cancer and that the use of
tobacco products has not
                                been shown to cause substantial health
damage.''

                                Tabacalera Nacional and Tabacalera
Centroamerican SA are
                                controlled by B.A.T and Philip Morris
respectively and together
                                hold 70 percent of the Guatemalan
cigarette market, Fleming said. 

                                Published: May 13, 1998