U.S. Tobacco Firms Sued by EU – Accused of Smuggling Cigarettes

Philip Morris and R.J. Reynolds were named in a complaint by the European Union’s governing commission for complicity in the smuggling of thousands of container loads of cigarettes without paying the applicable duties on them.

EU Budget Commissioner Michaele Schreyer told the BBC that the suit was brought in the U.S. under provisions of the RICO act, originally aimed at organized crime. “The Commission seeks compensation for financial losses the EU has suffered and injunctive relief in order to prevent further smuggling,” she was quoted as saying.

The claims, which the EU has been threatening for some time, are for several billion dollars in damages, and have been brought as a civil action in New York in order to obtain financial compensation for the lost tariff duties alleged. If successful, the actual amount lost could be trebled under RICO provisions.

The claim rests on the Commission’s assertion that the two companies have been complicit in deliveries of containers of cigarettes to third countries, which are then smuggled into the EU. The companies have denied any wrongdoing.