|
|
|
|
|
|
|
|
||||||
|
|
|||||
|
|
|||||
|
|
|||||
Racketeering legal action (RICO) against tobacco companies for smuggling
Tobacco companies are facing legal action over their involvement in cigarette smuggling in civil actions under the Racketeer Influenced and Corrupt Organizations (RICO) legislation in the United States (See text of the RICO Act). This law was introduced in 1970 to deal with organised crime and the Mafia, and been used to tackle corporate crime and conspiracies (more information on RICO).
In these actions, the companies are accused of operating a 'smuggling enterprise' in which they control the market for contraband as if it is a regular distribution channel. They do not do the smuggling themselves, but act in such a way as to ensure that it happens and that they control it through middlemen.
There are five cases underway. These are described in the five sections below: 3. Canada (stopped by US supreme Court) 4. Ecuador (current status unknown) 5. Honduras and Belize (current status unknown)
In a nutshell….
“The European Community and ten Member States joined together to commence this civil action to combat, deter, and remedy an ongoing global scheme to smuggle cigarettes, launder the proceeds of narcotics trafficking, obstruct government oversight of the tobacco industry, fix prices, bribe foreign public officials, and conduct illegal trade with terrorist groups and state sponsors of terrorism. Similarly, the [Colombian] Departments have commenced this action to address and remedy cigarette smuggling that fuels narcotics trafficking and money laundering on a massive scale -- a scheme that supports and finances foreign terrorist activity.” (From EU appeal 10 July 2002)
The best overview of the smuggling operations leading to these cases is the International Consortium of Investigative Journalists special reports: o Tobacco Companies Linked To Criminal Organizations In Lucrative Cigarette Smuggling (March 2001)
Timeline – the progress of cases so far…A summary of events in the Canada, European Union and Colombia cases is available as a chronology starting with the first filings in 1999.
1. European Commission and several European Union member statesState of play. This case is against Philip Morris, RJ Reynolds and Japan Tobacco International and is brought by the European Commission and ten EU member states, including France, Germany, Italy, Spain and others - but not the UK. The case has foundered on the ‘revenue rule’ – a longstanding law in the US that foreigners cannot use the US courts to collect foreign taxes. However appeals are in play and the case is going forward redefined as a money laundering action.
Philip Morris indicated in April 2004 that it is willing to settle the lawsuit b offering to pay $1bn to the EU over 12 years. The offer is under consideration by the European Commission and by the 10 EU member states which brought the legal action. · FT coverage of settlement offer
Some of the documents listed below are available only via registering at the New York court web site.
EU Starts racketeering action against US companies ASH press release 6 November 2000
This is the first few paragraphs of the original EU filing, giving an overview of the case.
The full original EU filing [PDF - 201 pages, 8Mb] revised August 2001 This is the initial filing, revised to overcome a technicality in August 2001. This alleges fraud, conspiracy, money laundering etc. (Registration required)
EU case revived – access the court documents and European Commission press release 6 August 2001: EU files again under the name of each of the 10 member states backing the case. This is especially threatening to the companies as the court rejected all except one ‘motion to dismiss’. The new filing overcomes the technical point on which the tobacco companies were successful. (Registration required)
EU alleges link between money laundering and terrorism February 2002 - this brief indicates the EU intent to use the Patriot Act and arguments in relation to terrorism and money laundering to bring its case using a different legal theory. The brief highlights links between US companies and the Iraqi regime.
EU Press release 20 March 2002 European Commission and member states declare intention to appeal or refile using money laundering argument
Report of EU appeal - July 2002 19 July 2002 - EU Appeals Tobacco Smuggle Ruling - Washington Post/AP
EU press release – 19 July 2002 19 July 2002 - Commission files appeal against dismissal of its cigarette smuggling action against three tobacco companies and is supported by WHO, US law enforcement officers and US anti-smoking campaign – Europa.
Three amicus (supporting) briefs submitted with EU appeal July 2002… 2. Campaign for Tobacco Free Kids 3. National Federation of Law Enforcement Officers
October 2002 - EU files money laundering case against RJ Reynolds – · Statement of case (146 pages - PDF - 340K) · European Commission press release
2. Colombian Governors
Background:
BAT faces punitive racketeering charges over Colombian cigarette smuggling ASH press release with links 21 September 2000 at the point where BAT was added to the action which had already started against Philip Morris.
BAT's response to the Colombian action As usual denying everything - 21 September 2000.
Colombian State Governors: Racketeering (RICO) filing This is the full filing against Philip Morris and BAT Eastern District of New York – filing 20 September 2000.
Philip Morris Accused of Smuggling, Money-Laundering Conspiracy In Racketeering Lawsuit News from the International Consortium of Investigative Journalists describing the racketeering action - 23 May 2000.
Philip
Morris Accused in Smuggling Scheme
Eastern District of New York (Brooklyn) documentation for EU and Colombian RICO cases Index to all the documentation (369 documents) lodged at the Court related to the EU case and the related Colombian case.
This case is not proceeding until the issues surrounding the EU case are resolved – the two cases share the same legal team and many of the same arguments. The EU has filed an appeal that includes facts relevant to the Colombian case and BAT.
3. Canadian case
Background o Background on smuggling in Canada - Canadian Non-smokers' rights Association o ASH introduction to smuggling in Canada
Press release of Canadian Government launching action 21 December 1999. This is the first RICO action brought against tobacco companies by a government. Brought against RJR-Macdonald Inc., RJ Reynolds Tobacco Holdings Inc., several related companies, and the Canadian Tobacco Manufacturers Council.
· Statement outlining background and case (note 4MB file) · Detailed filing of RICO claim Jan 2000 (note 4MB file)
Tobacco companies block the case using the 'revenue rule' 5 July 2000. Canadian Non-Smokers' Rights Association press statement
28 July 2000. Canadian government press release announcing intention to appeal against the court's ruling stopping its case.
European Union 'amicus' brief arguing against applicability of revenue rule in the Canadian case 20 December 2000. This is a comprehensive European Union submission to the appellate court due to hear the Canadian appeal arguing that the revenue rule is not applicable. The outcome is important to the EU and Colombian case, so the EU lawyers have intervened in the Canadian case as ‘friends of the court’.
Smuggling page of the Canadian Non-Smokers' Rights Association The excellent and substantial pages of the NSRA give a detailed account of how the tobacco industry orchestrated smuggling in Canada and rolled back tax policy.
4 November 2002. US Supreme Court halts Canadian case. Top Court Won't Review Cigarette Case - Reuters Supreme Court turns down Canada's cigarette smuggling lawsuit - AP
4. Ecuador
Ecuador files suit against several tobacco companies - Associated Press
Full filing by the Republic of Ecuador
5. Honduras and Belize
Honduras and Belize claim that tobacco firms evaded taxes - Reuters 8 May 2001. A smuggling related RICO claim is to be brought in the Miami Dade courts by Honduras and Belize. |
|
|