[Intl-tobacco] US Congress seeks to limit foreign govt use of RICO

[robert weissman]

Campaign for Tobacco-Free Kids:
U.S. House Judiciary Committee Passes Bill that
Protects Cigarette Smugglers
July 19, 2006

Contact: Nicole Yazdanseta of Campaign for Tobacco-Free Kids, 202-296-5469


WASHINGTON, July 19 /U.S. Newswire/ -- The U.S. House Judiciary Committee this
afternoon approved special interest legislation that would shield U.S. tobacco
companies from legal accountability if they aid and abet cigarette smuggling, which
often is used to fund criminal and terrorist enterprises around the world. The full
House of Representatives should defeat this legislation when it comes to the floor
for a vote.


The legislation, H.R. 5535, would prohibit foreign governments from suing an
American company in U.S. courts under the civil provisions of the
Racketeer-Influenced and Corrupt Organizations (RICO) law. This prohibition would
apply even if the American company knowingly participated in or abetted smuggling or
money laundering in the country seeking to sue. Several countries are considering
filing such RICO suits to hold U.S. tobacco companies legally accountable for their
alleged involvement in cigarette smuggling.


Countries including Canada, Colombia and several European Community countries have
alleged that U.S. tobacco companies have played a major, documented role in
fostering cigarette smuggling, which has undermined policies to reduce smoking, cost
governments billions in tax revenue and helped fund and launder money for
terrorists, drug traffickers and other criminal enterprises around the world.


While the Judiciary Committee did pass an amendment allowing lawsuits in cases of
conduct that provides funding to a terrorist organization, the legislation would
still block foreign governments from filing other lawsuits related to cigarette
smuggling, even if the smuggling was used to fund other criminal enterprises.


Tobacco companies are already provided more than adequate protection against
lawsuits by foreign governments in our courts. U.S. courts have dismissed previous
lawsuits filed by countries to recover billions of dollars in tax revenue lost
because of cigarette smuggling. The courts found that these lawsuits violated a
legal doctrine known as the "revenue rule," which the courts interpreted as barring
suits by foreign governments seeking to collect unpaid taxes even if the U.S.
companies involved acted illegally. These decisions have spurred countries to look
at the civil RICO law as another way to hold tobacco companies accountable.


"It appears to us that H.R. 5535 is special interest legislation designed to protect
the tobacco industry from the legitimate efforts of foreign governments to protect
themselves from tobacco companies that aid, abet and foster illegal smuggling,
criminals and terrorists. There is no reason why Congress should protect any tobacco
company that engages in cigarette smuggling," the American Heart Association and
Campaign for Tobacco-Free Kids wrote in a letter to House Judiciary Committee
members.


The full letter can be found at:
http://tobaccofreekids.org/pressoffice/RICOLetter071806.pdf