Pubdate: Thu, 10 Aug 2000
Source: Guardian Weekly, The (UK)
Copyright: Guardian Publications 2000
Contact:  75 Farringdon Road London U.K EC1M 3HQ
Fax: 44-171-242-0985
Website: http://www.guardianunlimited.co.uk/GWeekly/front/
Page: 12
Author: Terry Macalister

ECUADOR ACCUSES BRITISH TOBACCO GROUP OF SMUGGLING

British American Tobacco faces legal action in a Florida court over alleged
tobacco smuggling in South America.

The world's second-largest cigarette manufacturer, based in London, has
been targeted by the government of Ecuador for "illegally avoiding the
taxation of tobacco products". BAT, along with a number of rival tobacco
companies, is accused of engaging in a scheme "to frustrate Ecuadorian
authorities by making false and deceptive representations".

Last month the European Commission announced it would act against unnamed
cigarette manufacturers to recover tax losses from smuggling. Anti-smoking
groups in Africa are also calling for criminal action against cigarette
manufacturers. But the case filed in Miami represents the first time that
lawyers have started to actively pursue BAT, which last week reported
six-monthly profits of nearly $1.05bn from brands such as Dunhill and
Rothmans.

Operating profits in Latin America rose 42%, but BAT admitted a growing sum
- $225m a year - is being spent on legal work to fend off cases involving
smoking-related illnesses. The tobacco group, which has the former Tory
chancellor Kenneth Clarke as deputy chairman, said it had not yet been
served with papers by the Ecuadorian government.

But Neil Withington, BAT's head of legal services, confirmed action had
started. "We are aware Ecuador has filed a case in the state court of
Florida which names BAT and Brown & Williamson and the US tobacco industry
generally," he explained.

Mr Withington dismissed suggestions the company might face a growing number
of smuggling cases. He believed the threats from Africa were part of a
propaganda exercise being coordinated by the UK-based anti-smoking campaign
group Ash. "I would be surprised if there was a huge escalation [of legal
action] in this area," Mr Withington said.

Clive Bates, director of Ash, said the noose was tightening on BAT and
other top manufacturers. "Some people think it's absurd that these
companies could have been guilty of smuggling. But the US racketeering laws
being threatened in the Florida case and EC threats to take legal action
suggest that is exactly what they have been doing."

He said the latest revelations would put further pressure on British
ministers to order an inquiry into BAT. An all-party Commons health
committee has already called for an investigation after the Guardian
revealed how BAT exploited smuggling in South America and Asia.

BAT insisted it was confident it could successfully appeal against last
month's multi-billion-dollar award by a Miami jury for product liability in
a class action case, named after the litigant Howard Engle.

The action ruled that US tobacco companies were liable for lung cancer and
other ailments among an estimated 500,000 unidentified smokers in Florida.