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US: Government Seeks $289 Billion from Tobacco

by Jonathan D. SalantAssociated Press
March 18th, 2003

WASHINGTON -- The nation's tobacco companies should forfeit $289 billion in profits for a scheme to deceive and defraud smokers and the general public, the Justice Department says in court filings.

In more than 1,400 pages filed in U.S. District Court as part of the government's suit against the tobacco industry, the Justice Department estimated 440,000 Americans die each year from smoking cigarettes or being exposed to secondhand smoke, or one of every five deaths in the United States.

The government accused companies of lying about a link between cigarettes and cancer, denying that smoking was addictive and continuing to target teenagers.

"Defendants have intentionally marketed cigarettes to youth under the legal smoking age while falsely denying that they have done so," the filing said.

Bill Ohlemeyer, vice president and associate general counsel for Philip Morris USA, called the claims absurd and noted the government regulates how cigarettes are sold.

"Congress has drafted the health warnings that have been on every pack of cigarettes since 1966," he said. "A lot of what they claim as being fraud are things that are either false or things that the government was aware of because the tobacco companies were either working with the government or were being told by the government about some of these issues."

The trial is scheduled to begin in September 2004, but Ohlemeyer said the company will ask the judge this fall to dismiss the case.

Lawmakers from tobacco-growing states criticized the filings. "Continuing this crusade will harm tobacco sharecroppers more than it will harm tobacco shareholders," said Sara Yawn, a spokeswoman for Rep. Bob Etheridge, D-N.C.

The Clinton administration filed the lawsuit in 1999. The following year, U.S. District Court Judge Gladys Kessler ruled that the government could not recover billions of dollars spent by Medicare to treat sick smokers. She allowed the government to seek damages for profits tobacco companies allegedly obtained through fraud.

The suit is separate from the action that states brought against the industry for health care costs related to smoking, settled in 1998 for $246 billion. That settlement included restrictions on advertising aimed at young smokers with cartoon characters such as R.J. Reynolds' Joe Camel.

During the Clinton administration, congressional Republicans tried to block the government from paying for the lawsuit. And after President Bush took office, the new administration initially did not request money to pursue the case, and later discussed settling the suit.

Anti-smoking groups that have been skeptical of the Bush administration's desire to pursue the case praised the Justice Department's filings.

"It indicates that the tobacco companies' illegal actions have continued to this very day, notwithstanding the industry trying to convince the American people, Congress and the administration that they have reformed," said William Corr, executive vice president of the Campaign for Tobacco-Free Kids.

Tobacco industry analyst Martin Feldman of Merrill Lynch said the Bush administration has simply added a dollar figure to the Clinton administration lawsuit.

"The publication of an actual dollar amount in no way strengthens the (government's) claims, nor does it weaken the defense argument," Feldman said. "The administration has taken the view that instead of simply withdrawing this claim, it will let the courts decide."

The tobacco industry gave the Republicans $3.5 million in campaign contributions from 1999 to 2002, almost three times the $1.2 million given to Democrats during the same period, according to Political Money Line, an Internet research site that tracks donations and lobbying expenses.

On the Net: Justice Department: www.usdoj.gov
Campaign for Tobacco-Free Kids: www.tobaccofreekids.org
Philip Morris: www.philipmorrisusa.com





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