[Intl-tobacco] Canada: Criminal Charges Against RJR

[Robert Weissman]

RCMP lays criminal charges against Canadian tobacco company

TORONTO, Feb. 28 /CNW/ - After a four and a half year criminal
investigation into allegations of the Canadian tobacco industry's
complicity in smuggling contraband tobacco products from the United
States
into Canada, the RCMP has laid six counts of Fraud and one count of
Conspiracy to Commit Fraud and to Possess Proceeds of Crime against a
major
Canadian tobacco manufacturing company and a number of its' subsidiaries
and current and former senior executives.

These charges are laid under Section 380 (1) (a) and Section 465 (1) (c)
of
the Criminal Code of Canada. The charges pertain to activities of the
company, its affiliates, its senior officers and others involved in the
smuggling of contraband Canadian blend tobacco products between 1991 and
1996 inclusive.

The companies charged are:

JTI-MACDONALD, CORP., formerly known as RJR-Macdonald, Inc., Toronto, Ontario.

R.J. REYNOLDS TOBACCO CO., (Delaware), USA.

R.J. REYNOLDS TOBACCO INTERNATIONAL, INC., (Delaware), USA.

NORTHERN BRANDS INTERNATIONAL, INC., (Delaware), USA.

These companies were all either affiliated companies or subsidiaries of
R.J. R. Nabisco Holdings, Corp., (Delaware), USA during the time of the
alleged offences. A series of mergers and restructuring resulted in the
creation of a holding company now known as R.J. Reynolds Tobacco
Holdings,
Inc., (Delaware), USA.

Also charged are current and former employees of these companies. They are:

EDWARD LANG of Naples, Florida - former member of the Board Of Directors
of
RJR-Macdonald, Inc. and former Senior Vice President of Manufacturing
for
R.J. Reynolds Tobacco Co.

DALE SISEL of Gillette, Wyoming - former President and Chief Executive
Officer for R.J. Reynolds Tobacco International, Inc.

JAAP UITTENBOGAARD of Jupiter, Florida - former Chief Financial Officer
and
Vice President of Finance for R.J. Reynolds Tobacco International, Inc.
and
former Director of Northern Brands International, Inc.

PIERRE BRUNELLE of Geneva, Switzerland and the Province of Quebec -
former
President and Chief Executive Officer of RJR-Macdonald, Inc. and former
member of the Board of Directors of RJR- Macdonald, Inc.

PAUL NEUMANN of Geneva, Switzerland - former Vice President of Finance
for
RJR-Macdonald, Inc. and current employee of Japan Tobacco International,
Geneva.

ROLAND KOSTANTOS of Geneva, Switzerland - former Chief Financial Officer
for R.J. Reynolds Tobacco International, Inc. and former Vice President
of
Finance, Chief Financial Officer, and Vice President of Finance and
Administration for RJR- Macdonald, Inc. Mr. Kostantos is a current
employee
of Japan Tobacco International, Geneva.

STANLEY SMITH of British Columbia - former Vice President of Sales for
Canada for RJR-Macdonald, Inc.

And PETER MacGREGOR of Atlanta, Georgia - former Manager of Finance and
Administration for Northern Brands International, Inc.

Also identified in this indictment as an unindicted co-conspirator is
LARRY
MILLER of Las Vegas, Nevada and Messena, New York. Mr. Miller is
currently
serving seventeen and one-half years in the United States federal
corrections system for smuggling-related offences and for conspiring to
conduct financial transactions that defrauded the United States and
Canada
of tax revenue.

All accused have been summoned to appear in court at Old City Hall in
Toronto, Courtroom 111 on Wednesday, March 26th, 2003.

The RCMP alleges that, between 1991 and 1996, the accused conspired
together to commit fraud by agreeing to deal in Canadian blend
cigarettes
and fine-cut tobacco in a manner which fraudulently deprived the
governments of Canada, Ontario and Quebec of more than $1.2 billion
dollars
in lost revenue through evaded federal excise duties and taxes and
provincial tobacco taxes.

The RCMP also alleges that the revenue of RJR- Macdonald Inc. derived
from
the sale of Canadian blend tobacco products into the United States
between
1991 and 1996 was a result of this fraudulent activity, and as such,
this
revenue is proceeds of crime.

The RCMP alleges that, between 1991 and 1996, the accused supplied the
Canadian black market with Canadian blend tobacco products manufactured
both in Canada and Puerto Rico, knowing that these products were being
smuggled back into Canada and onto the commercial market. In addition,
the
RCMP alleges that the accused furthered this criminal activity by
knowingly
facilitating the flow of Canadian blend tobacco products to Canada
through
an affiliated company in the United States and third parties in the
Caribbean in order to ensure a constant supply of the contraband to
smuggling channels.

"As Canadian taxpayers, we all pay for corporate fraud," said Inspector
Robert Davis, Officer in Charge of the RCMP Greater Toronto District
Commercial Crime Section. "We pay in revenue losses that contribute
towards
our social welfare programs - programs that support our seniors, educate
our children and take care of our ill and less fortunate." "To give you
some idea of the impact, the more than $l.2 billion dollars in lost
revenue
identified during this investigation is enough money to buy two MRI
machines for each and every public hospital in Ontario and Quebec.
$1.2 billion dollars is also enough money to supply every high school
student in Ontario and Quebec with new text books for one year."

"This investigation is part of the RCMP's on-going efforts to
investigate
allegations of impropriety by corporations operating in Canada," added
Inspector Davis. "Large multi-national corporations will be held
accountable for their criminal activity. Senior executives of those
companies will not be allowed to hide behind a 'corporate veil' to
protect
themselves from criminal prosecution."

This investigation is on-going and the possibility exists that further
charges will be laid.

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For further information: Media Contact: Constable Howard Adams, RCMP
Media
Relations Officer "O" Division (Toronto), (905) 876-9674 (office), (416)
565-8012 (cell)