(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."
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.According to the suit, RJR defendants had dealings with "individuals in Spain who they knew or should have known were identified by Spanish legal authorities as being involved in narcotics trafficking." The suit mentions one RJR customer in Spain who purchased large quantities of RJR cigarettes and smuggled them throughout the country, while at the same time being suspected by Spanish authorities of narcotics trafficking.
"Representatives of the Philip Morris Defendants are on actual notice that the source of funds used to purchase their cigarettes is drug trafficking, yet they continue to receive these funds and to sell cigarettes to these persons," the lawsuit said.
The lawsuit includes the allegation that RJR produced a certain type of Winston cigarette presentation, called a "patanegra," to sell in Spain to their "best smuggling customers so as to insure that they could maintain their competitive advantage over other smugglers and the RJR Defendants could increase their market share."
The 188-page complaint alleges that Philip Morris, RJR Nabisco, Japan Tobacco (to whom RJR sold its international cigarette operations in 1999), and related subsidiaries, are guilty of violations of the Racketeer Influence and Corrupt Organizations (RICO) Act of 1970. The accusations include money laundering, wire fraud and mail fraud.
The lawsuit contends that the companies have facilitated cigarette smuggling into Europe in violation of U.S. law and customs agreements between the U.S. and the European Union, an organization of 15 Western European nations.
The complaint alleges that "billions of dollars" have been lost through the evasion of customs duties and other fees and taxes, and seeks money damages, which could be trebled under the RICO Act.
The European complaint is the latest in a string of actions against tobacco companies related to cigarette smuggling:
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."
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.
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.
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