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.