EU takes US tobacco companies to court over tobacco smuggling

Monday 06 November 2000

6th November 2000 ­immediate release

The EU has filed a RICO action (Racketeer Influenced Corrupt Organisations) against Philip Morris and RJ Reynolds in the US courts.  The civil RICO action will attempt to recover excise duties, which the EU will allege were lost as a result of the involvement in smuggling of the two companies. If proven, the case could cost the companies billions – civil RICO allows punitive damages of three times the actual loss and losses over four years to be assessed.  There are now cases arising from Canada, Colombia, Ecuador and EU.

Clive Bates, Director of Action on Smoking and Health (ASH) in London said:

“The evidence suggests tobacco companies have played a controlling and orchestrating role in the global tobacco smuggling racket, and it is important that the authorities use whatever legal routes that are available to stop them in their tracks. Now they are beginning to see the tobacco industry as underlying commercial drivers of cigarette smuggling, we are one step closer to defining responses that will work.

“Why try to tackle thousands of small traders and petty criminals when there are legal actions available against the tobacco companies, which are the prime movers and the real Mr. Bigs in tobacco smuggling.”

The action does not yet include British American Tobacco.  However, it would be a mistake to assume that BAT is off the hook.

“The DTI should make its report on BAT available to the EU anti-fraud unit with a view to assisting with the RICO case and assessing whether BAT should be joined to the action.

“This will give a real boost to the international efforts to tackle smuggling through the World Health Organisation tobacco treaty and its smuggling protocol.  If governments understand the role of the tobacco industry and work together to restrain it, they can tackle the problem without rolling back their policies on taxing tobacco.

Some 350 billion sticks are smuggled annually – about one third of all internationally traded cigarettes.  For more information see: ASH resources on SmugglingASH international resources

WHO Framework Convention on Tobacco Control – smuggling protocol. Governments are negotiating a treaty on tobacco control. In Geneva 16-21 October 2000 over 90 countries expressed their support for tough inter-governmental action against smuggling to be built into the convention.

For further information, see a recent BMJ paper How cigarette smuggling can be reduced (requires subscription).