AUGUST 6, 2004
More pain for the tobacco barons
The US tobacco industry is now in the sixth year of its 25-year deal with the majority of the state governments in the USA to pay $206bn as a settlement for legal actions over the cost of medical treatment of smokers. Now it seems the US Federal Government is mounting a new attack on tobacco. In May a federal judge in the United States District Court in Washington DC ruled that the US government is allowed to seek $280bn in tobacco industry profits. The government has to prove that the cigarette makers knowingly committed fraud by deceiving the public for decades about the dangers of smoking and the addictive qualities of nicotine. The case goes to trial in Washington on September 13. The decision led to major drops in the value of tobacco shares.
The Justice Department's case against the tobacco industry, which started in the Clinton administration, is a civil case under the Racketeer Influenced and Corrupt Organizations Act, known as RICO. The 1970 law was designed to clamp down on organized crime. The trial is expected to last between three and five months and will involve Altria, RJ Reynolds, Brown & Williamson, British American Tobacco, Lorillard Tobacco Co and the Liggett Group Inc.
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