[Intl-tobacco] PM-EU smuggling settlement

[robert.weissman@essentialinformation.org]

> Sources: EU to sign $1 billion deal with U.S. tobacco giant in cigarette
> smuggling case
> By PAUL GEITNER
> AP Business Writer
> 384 words
> 8 July 2004
> 16:11
> Associated Press Newswires
> English
> (c) 2004. The Associated Press. All Rights Reserved.
> BRUSSELS, Belgium (AP) - Philip Morris International and the European
> Union have sealed a deal for the maker of Marlboro cigarettes to pay $1
> billion to fight smuggling and counterfeits that are costing both sides
> hundreds of millions annually in lost taxes and sales, sources familiar
> with the matter said Thursday.
> Negotiations to end years of legal wrangling, first revealed in April,
> will conclude Friday with the signing of a cooperation agreement, one
> source familiar with the talks said on condition of anonymity.
> EU Budget Commissioner Michaele Schreyer, who spearheaded the fight,
> scheduled a news conference for Friday on "combatting fraud." Her
> spokesman refused to elaborate.
> A company spokeswoman also refused to comment.
> But the sources said the deal was the same as one outlined in April.
> Philip Morris International, a unit of U.S. tobacco and food giant Altria
> Group Inc., would make payments over 12 years totaling about $1 billion --
> the biggest sum the EU has ever extracted from a single company, the
> sources said.
> In return, they said it would resolve all disputes between the company and
> the EU, which has filed two lawsuits in recent years against Philip Morris
> and was considering filing a third.
> The latest suit, filed in New York in 2001, accused U.S. tobacco giants of
> complicity in cigarette smuggling by intentionally oversupplying
> neighboring countries. Such smuggling is estimated to cost European
> governments hundreds of millions of dollars in lost tax and customs
> revenue each year, according to the EU's head office.
> The lawsuit was dismissed on jurisdictional grounds but a U.S. appeals
> court gave the EU a green light in January to file a new one based on
> money laundering laws.
> The company has denied involvement, but says the flow of fake Marlboros
> into the high-margin European market costs it $100 million each year.
> The draft agreement had to be reviewed by EU governments that joined the
> European Commission's legal action before it could be signed.
> Both sides stressed then the prospective payments were not penalties but a
> commitment to work together.
> Altria shares rose 10 cents to close at $49.40 Thursday on the New York
> Stock Exchange.