[Intl-tobacco] Italy to Join EU's Suit Against RJR, Philip Morris

[Robert Weissman]

Italy to Join EU's Suit Against RJR, Philip Morris (Update1)
by Steve Scherer
Source: Bloomberg News, Wednesday, 1/17/01

Rome, Jan. 17 (Bloomberg) -- Italy will join the European Commission in a
U.S.  lawsuit that accuses Philip Morris Cos. and R.J. Reynolds Tobacco
Holdings Inc.  of smuggling cigarettes into the European Union, Finance
Minister Ottaviano Del Turco said.

The commission's suit charges that the two largest U.S. tobacco companies
conspired with drug dealers in an ongoing smuggling scheme that began in
the late 1970s. Del Turco said Italy will contribute evidence from its
battle against smugglers.

Last summer smugglers using armored jeeps caused a series of fatal traffic
accidents while fleeing police. Italy's crackdown against contraband
tobacco resulted in the collection of an extra 2 trillion lire ($1
billion) in taxes in 2000, Del Turco said.

``We're tired of counting our dead while others count their money,'' Del
Turco said.

Other European countries will probably join the suit by the end of the
month, the finance minister said. He mentioned Portugal and Spain as
countries that also are fighting contraband cigarettes.

The U.S. lawsuit, filed under racketeering statutes in federal court in
Brooklyn, New York, does not specify damages. The judge must decide by the
end of April whether to accept the case, which was filed in November, Del
Turco said.

Italy is the ``eastern front'' of the battle against smuggling in the EU,
Del Turco said. ``We're doing this not only to protect our own borders but
also those of Europe.''

A spokeswoman at Philip Morris Europe SA said the company had no comment.
The company released a comment Saturday after Italian papers had reported
Italy would file its own lawsuit.

``Philip Morris is against contraband and wants to cooperate with
governments to combat this practice,'' David Davies, vice president of
corporate affairs for Philip Morris Europe, said in the statement. RJR
officials in the U.S.  didn't return calls seeking comment.

RJR shares fell as much as 2 percent to $50.69 in midday trading on the
New York Stock Exchange. Philip Morris shares fell as much as 1.5 percent
to $41.94.