US: The US tobacco firm R.J. Reynolds (RJR) is knowingly selling its cigarettes for money that comes from organised crime, according to a lawsuit filed in New York by the European Commission, backed by 10 European Union states.
The lawsuit seeks an injunction from the US District Court for the eastern district of New York restraining the company's behaviour. Ms Michaele Schreyer, European Commissioner for the Budget, said: "The Commission is determined to win its fight against money-laundering, tobacco-smuggling and connected serious cross-border crimes."
The 148-page suit details more than eight schemes by which RJR, the second-biggest US tobacco company and maker of Camel, Winston and Salem cigarettes, has been prepared to sell its products to criminal racketeers, mainly dealing in drugs and weapons.
Italian organised crime, it says, bought cigarettes from RJR through Alfred Bossert, a money-launderer based in Lugano, Switzerland. Cigarettes were also sold to Iraq, in contravention of US law, through the son of President Saddam Hussein. Criminal elements in the Balkans, particularly in Montenegro, were also buying RJR' cigarettes.
Cigarettes were brought into the EU through such ports as Valencia and Antwerp and then dispersed through the EU. There were typically a series of intermediaries between the end-purchaser and the supplier. The intermediaries operated through Panama, Switzerland, Cyprus, Turkey and the Balkans, sources close to the case said.
The lawsuit does not put a price on the compensation sought from the American company, but sources close to the case said that the European Commission and the member-states had suffered damage worth hundreds of millions of euros.
The case has been constructed so as not to touch on allegations of smuggling, which were the subject of an earlier unsuccessful lawsuit filed last year by the Commission against RJR, Japan Tobacco and Philip Morris, claiming that the EU was losing billions of euros in customs and tax revenue.
An EU source said a decision had been taken to pursue the companies separately on the issue of money-laundering and not bundle together a suit against all three.
The new case argues that the Commission and the EU member-states have suffered economic damage because of the crimes committed on their territories and that they have a claim on the proceeds of those crimes. It says the cost of fighting money-laundering and crime has to be taken into account.
The lawsuit alleges that RJR knew the money paid for its cigarettes came from criminal proceeds or was wilfully blind to that fact.
The Irish Government, with Britain, Denmark, Sweden and Austria, was in the minority that did not subscribe to the lawsuit, which seeks an injunction from the New York state court restraining R.J. Reynolds's behaviour.
A spokesman for the Government said while Ireland supported the Commission's action it did not subsribe to the lawsuit as it would not suffer any economic loss.