[Intl-tobacco] EU Considers Money Laundering Lawsuit Against Tobacco Cos

[Robert Weissman]

EU Considers Money Laundering Lawsuit Against Tobacco Cos - Dow Jones
Business News
January 15, 2004

Steve de Bonvoisin, steve.debonvoisin@dowjones.com

BRUSSELS - The European Union Commission Thursday said it was considering
whether to launch legal action against individual tobacco companies
after a
U.S. court dismissed a cigarette smuggling case. The Commission said it
could refile the suit under money laundering laws. "Fighting fraud and the
illegal trade in cigarettes remains a top priority," said E.U. Budget
Commissioner Michaele Schreyer. "The Commission is not giving up on its
battle against tobacco smuggling and money laundering."

In August 2001, E.U. regulators sued cigarette manufacturers Philip Morris
Cos., a unit of Altria Group Inc., R.J. Reynolds Tobacco Holdings Inc.
and Japan
Tobacco Inc. The E.U. accused the cigarette makers of intentionally oversupplying
countries in eastern Europe,
so that the surplus would be smuggled into the 15-nation E.U., resulting in
billions of dollars in lost taxes.

The U.S. District Court in New York threw out the case in February 2002 on
procedural grounds, ruling that the U.S. cannot collect taxes on behalf of
other countries. But the E.U. Commission appealed on the basis of the U.S.
Racketeer Influenced and Corrupt Organizations Act, or RICO. Under the act,
plaintiffs may be awarded up to three times as much as the damage incurred.
The E.U. has declined to give the exact amount.

New York's Second Circuit Appeals Court Wednesday upheld the earlier
dismissal but ruled that the E.U. could file a new lawsuit based on money
laundering laws. E.U. regulators already filed a separate case against R.J.
Reynolds in October 2002. An E.U. Commission spokeswoman said Thursday that
the organization was considering whether to launch similar lawsuits against
other companies, but added there was "nothing immediately coming up."

R.J. Reynolds and Philip Morris weren't immediately available for comment.
The E.U. Commission brought the case on behalf of 10 E.U. countries - Italy,
Germany, France, Spain, Portugal, Greece, Belgium, the Netherlands, Finland
and Luxembourg. Its legal offensive is supported by the World Health
Organization, the U.S. Campaign for Tobacco-Free Kids and the U.S. Federal
Law Enforcement Officers Association.


EU to fight on against tobacco giant despite US legal defeat
Agence France Presse
15 January 2004

The European Commission vowed Thursday to continue a battle over money-laundering
against "big tobacco" despite suffering a legal setback in a US court.
The European
Union's executive arm said an appeals court in New York had on Wednesday
thrown out
its bid to have RJ Reynolds, Philip Morris and Japan Tobacco prosecuted
for tobacco
smuggling. The court upheld a ruling in February 2002 by the district
court in New
York that a US court cannot enforce a foreign tax claim.

But according to the Commission, the appeals court said the EU could
continue to
pursue a case against RJ Reynolds for money-laundering.  "Fighting fraud
and the
illegal trade in cigarettes remains a top priority," EU Budget Commissioner
Michaele Schreyer said in a statement. "The Commission is not giving up
on its
battle against tobacco smuggling and money-laundering," she said.

The EU accuses tobacco giants of being involved in smuggling cigarettes
into the
15-nation bloc, costing member states several hundred million euros
(dollars) a
year in lost customs revenues.
It also alleges that organised crime launders its ill-gotten gains
through the
purchase of contraband cigarettes. A Commission spokeswoman said no
timeframe had
been set to pursue its money-laundering claim against RJ Reynolds, which
was first
lodged in October 2002 by the EU executive and 10 member states.

RJR, the second-biggest tobacco company in the United States after
Marlboro maker
Philip Morris (which has changed its name to Altria), manufactures
several popular
cigarette brands including Camel, Winston and Salem. It has called the
EU claim
"absurd".