[Intl-tobacco] Italy to Sue Philip Morris, R.J. Reynolds, Minister Tells Paper (fwd)

[Robert Weissman]

Italy to Sue Philip Morris, R.J. Reynolds, Minister Tells Paper
by Jim Osborne
Source: Bloomberg News, Sunday, 1/14/01

Milan, Jan. 14 (Bloomberg) -- Italy will follow the European Union by
filing a racketeering lawsuit against Philip Morris Cos. and R.J. Reynolds
Tobacco Holdings Inc. accusing them of smuggling cigarettes into Europe,
La Stampa reported, citing Finance Minister Ottaviano Del Turco.

``We're going to follow the path opened by the European Commission,'' the
minister told the newspaper in an interview yesterday. ``I expect other
countries to take similar action.'' He expects Italy to file by the end of
the month.

The European Commission lawsuit, filed in a Brooklyn, New York, federal
court last November, alleges that the two largest U.S. tobacco companies
conspired with drug dealers and engaged in ``organized crime in pursuit of
a massive, ongoing smuggling scheme'' that began in the late 1970s.

Spain and Germany may follow Italy in taking legal action in the U.S. to
back a suit filed last November by the European Union, La Stampa reported
today.

Philip Morris denies the allegations. ``We do not condone, assist or
promote contraband,'' David R. Davies, vice president for corporate
affairs for Philip Morris Europe, told the newspaper. He said Philip
Morris, the No. 1 cigarette company, would work with the EU and European
governments to help fight smuggling. Del Turco said that help was
virtually ``nonexistent,'' La Stampa reported yesterday.

Both U.S. companies last month asked a European court to rule that the
European Commission, the EU's executive body, didn't have the authority to
file its U.S.  lawsuit.

Tobacco smuggling costs EU countries 2 billion euros ($1.9 billion) in
lost tax revenue annually, the commission has said. The EU is also
fighting tobacco smuggling with stiffer border controls and increased
customs cooperation among member governments. Almost 30 percent of
Europeans are regular smokers.

(La Stampa, 1/13, pp 1-3; 1/14 pp.8-9)