[Intl-tobacco] EU files RICO case against Philip Morris and RJR

[Robert Weissman]

Brussels, 6 November 2000

Statement by Commissioner Michaele Schreyer on civil action against two
U.S. Tobacco companies

"Four months ago the European Commission decided on a legal action
against a number of U.S tobacco companies in relation to cigarette
smuggling.

Since then, the President and I have been actively working with our
legal experts.

The time has come to proceed.

The Commission has now filed a civil action in New York against the
Philip Morris and RJ Reynolds corporations for their alleged involvement
in smuggling
cigarettes into the E.U. This civil action alleges breaches by these
corporations of the U.S. Racketeering Influenced and Corrupt
Organization Act (RICO).

The Commission seeks compensation for financial losses the E.U. has
suffered and injunctive relief in order to prevent further smuggling.

The protection of the financial interests of the European Union is a
high priority of the European Commission. The present case is a new step
in our strategy to
fight against fraud and financial irregularities."

P.S. No further comment will be made on the content of the claim by any
offical, agent or counsel of the European Commission outside the Court
proceedings.
However, under the rules of US civil procedure, the United States
District Court for the Eastern District of New York will make copies of
the complaint available
to persons who request it.

--------------------------------

ASH UK response
(www.ash.org.uk/?press)

6th November 2000 ? immediate release<?xml:namespace prefix = o ns =
"urn:schemas-microsoft-com:office:office" />

European Union takes US tobacco companies to court over smuggling

The EU has filed a RICO action (Racketeer Influenced Corrupt
Organisations) against Philip Morris and RJ Reynolds in the US courts -
see European Commission press release.  The civil RICO action will
attempt to recover excise duties, which the EU will allege were lost as
a result of the involvement in smuggling of the two companies.  If
proven, the case could cost the companies billions - civil RICO allows
punitive damages of three times the actual loss and losses over four
years to be assessed.  There are now cases
arising from Canada, Colombia, Ecuador and EU.

Clive Bates, Director of Action on Smoking and Health (ASH) in London
said:

"The evidence suggests tobacco companies have played a controlling and
orchestrating role in the global tobacco smuggling racket, and it is
important that the authorities use whatever legal routes that are
available to stop them in their tracks.  Now they are beginning to see
the tobacco industry as underlying commercial drivers of cigarette
smuggling, we are one step closer to defining responses that will work.

"Why try to tackle thousands of small traders and petty criminals when
there are legal actions available against the tobacco companies, which
are the prime movers and the real Mr. Bigs in tobacco smuggling."

 The action does not yet include British American Tobacco.  However, it
would be a mistake to assume that BAT is off the hook.  The EU action is
using the same New York law firm (Speiser, Krause, Nolan and Granito) as
the US-based racketeering action over Colombian cigarette smuggling.  In
this case, BAT was added several months
after the initial case was launched against Philip Morris. This could
easily happen again. On Monday 30th October the UK Department of Trade
and Industry launched an investigation into BAT's involvement in
smuggling.

 "The DTI should make its report on BAT available to the EU anti-fraud
unit with a view to assisting with the RICO case and assessing whether
BAT should be joined to the action.

"This will give a real boost to the international efforts to tackle
smuggling through the World Health Organisation tobacco treaty and its
smuggling protocol.  If governments understand the role of the tobacco
industry and work together to restrain it, they can tackle the problem
without rolling back their policies on taxing tobacco.

 Some 350 billion sticks are smuggled annually - about one third of all
internationally traded cigarettes.

 Contacts:

Clive Bates (ASH): +44 (0)20 7739 5902 (office) +44 (0)468 791237
(mobile)