EU sues tobacco giant
The European Union is suing US tobacco giant RJ Reynolds seeking compensation for alleged money laundering.
More companies were expected to be named later.
Officials would not put an amount on the practice, but said it dates back a decade and involves hundreds of millions of euro.
They said their proof came from “shipping papers, witness statements and customs documents.”
The European Commission said it sought ”relief to stop the laundering of proceeds of illegal activities and to seek compensation for losses sustained.”
The case – contained in a 156-page filing with a New York court - stems from a tax evasion case the EU has initiated against RJ Reynolds, Philip Morris and Japan Tobacco.
in February, a New York District Court dismissed the tax evasion claim - allegedly involving billions in lost revenues due to cigarette smuggling – saying it has no jurisdiction in foreign tax issues.
The Europeans are appealing that ruling which also left open, however, the possibility to pursue a money laundering case in a civil lawsuit.
Officials said money laundering involved cigarettes paid for with money from illegal drugs and arms trade and participants in organised crime. The cigarettes ended up in Europe and beyond, including Iraq, through intermediaries in Panama, Switzerland, Cyprus, Turkey, Montenegro and other countries.
Uday Hussein, eldest son of Iraqi President Saddam Hussein, has for years been importing cigarettes into Iraq earning millions in “taxes” from legal and illegal cigarette imports, the Wall Street Journal reported today.
It quoted a tobacco company lawyer as saying illegal sales of cigarettes can occur in many ways without tobacco companies being aware of that.
Supporting the EU head office in its money laundering case are the governments of ten EU nations: Italy, Germany, France, Spain, Portugal, Greece, Belgium, the Netherlands, Finland and Luxembourg.
In its tax case against RJ Reynolds, Philip Morris and Japan Tobacco – now going to appeal – the EU alleges American tobacco companies intentionally oversupplied countries in eastern Europe and elsewhere so the surplus would inevitably be smuggled into the EU.
