Off the Record:
What Media Corporations Don�t Tell You About Their Legislative Agendas is the latest investigative report from the Center for Public Integrity.

(Washington, Nov. 7) A European Union lawsuit against two major U.S. tobacco companies says RJR Nabisco had dealings with suspected narcotics traffickers in Spain and money-laundering suspects in the Caribbean, and claims that smuggling activities by Philip Morris "have enabled drug lords to launder their illicit profits."

According to the complaint, filed Nov. 3 in U.S. District Court Eastern District of New York, both RJR and Philip Morris shipped American cigarettes to smugglers in Panama, who then re-shipped them to Europe for sale within the European Union.

In January, the Center for Public Integrity's International Consortium of Investigative Journalists released the results of its six-month investigation into global cigarette smuggling. The investigation, which focused mostly on British American Tobacco, involved the analysis of more than 11,000 pages of internal corporate documents and later prompted the British government to launch its own formal inquiry.

The EU lawsuit accused the two companies of "involvement in organized crime in pursuit of a massive, ongoing smuggling scheme." Philip Morris produces Marlboro, the world's best selling cigarette brand, and RJR manufactures the popular Camel and Winston brands.

• The British Department of Trade and Industry launched a formal investigation in October into alleged smuggling activities by British American Tobacco, the parent company of Brown & Williamson Tobacco.
    
• The majority of Colombian governors filed a civil RICO suit against Philip Morris in May in New York, charging that the Colombian states were defrauded of billions of dollars in lost tax revenue over a 10-year period. That suit was amended in September to include British American Tobacco.
    
• Ecuador filed a civil RICO suit in June in Miami-Dade Circuit Court against Philip Morris, British American Tobacco and RJR.
    
• Canada filed a $1 billion civil RICO lawsuit against RJR and its related tobacco companies in New York state in December 1999, contending cigarette smuggling across the U.S.-Canadian border. The case was dismissed last June on the basis of an 18th-century English common law rule that prohibits courts from being used to collect another country's revenue. Canadian officials have appealed the decision.

According to a RJR statement, the company has not seen the European lawsuit, but argues that any suggestion that the company "has been involved in smuggling activity -- in Europe or elsewhere -- is unsupportable and untrue." Japan Tobacco's New York office would not comment on the complaint. Philip Morris also stated that it had not seen the lawsuit. Philip Morris Europe's vice president for corporate affairs, David R. Davis, said in a statement that "we will vigorously contest the [European] Commission's unprecedented attempt to utilize American courts to impose liability on us." 

Jonathan Faull, a spokesman for the European Commission in Brussels, told the Center that the lawsuit was rightly filed in the United States. "We believe that this is the proper jurisdiction, as we are alleging there's been a violation of U.S. law by U.S. companies," said Faull.

Japan Tobacco continued with smuggling policies already in place, after purchasing RJR's international tobacco business in 1999, according to the suit.

Erik Schelzig is a senior research associate and Mary Beth Warner is a research associate with the International Consortium of Investigative Journalists at the Center for Public Integrity. Andre Verloy of ICIJ contributed to this report.
  
To write a letter to the editor for publication, send to letters@publicintegrity.org. Please include a daytime telephone number.

Related reports:

• U.K. Considering Formal Investigation into Cigarette Smuggling  (June 15, 2000)
    
• Philip Morris Accused of Smuggling, Money-Laundering Conspiracy in Racketeering Lawsuit. (May 23, 2000)
    
• Global Reach of Tobacco Company's Involvement in Cigarette Smuggling Exposed in Company Papers. (Feb. 2, 2000)
    
• Major Tobacco Multinational Implicated In Cigarette Smuggling, Tax Evasion, Documents Show (Jan. 31, 2000)
    

Related links:

The European Union is not giving up its fight with U.S. tobacco companies, despite the dismissal of a lawsuit that alleged Philip Morris and R.J. Reynolds are involved in smuggling cigarettes into Europe.
(Associated Press, July 18, 2001)

• British American Tobacco has scrapped an independent inquiry into allegations that it exploits smuggling of cigarettes, on the grounds that it is no longer necessary.
  (The Guardian, London, May 3, 2001)

• Customs officers seize their most unusual consignment of smuggled tobacco yet -- "furniture" constructed entirely from cigarettes.
  (Times of London, Nov. 19)

• Britain to investigate tobacco smuggling.
  (The Guardian, London, Oct. 31)

• Commentary, Action on Smoking and Health.
  (The Guardian, London, Nov. 1)
    

• Big Tobacco no doubt it benefits enormously from the illicit trade.
  (Editorial, New York Times, Nov. 13) (free registration required)
    
• Tobacco firms sued over EU smuggling.
  (The Guardian, London, Nov. 7)
    
• Tobacco titans face EU lawsuit; European group accuses companies in smuggling case.
  (USA Today, Nov. 7)
    
• European Union sues Philip Morris, R.J. Reynolds.
  (Washington Post, Nov. 7)
    
• Europeans Suing Big Tobacco in U.S.
  (New York Times, Nov. 7) (free registration required)
    
• Brussels sues US tobacco groups over smuggling.
  (The Times, London, Nov. 7)