A political row is brewing over a US government decision to slash the penalty
it is seeking in a long-running racketeering case against the tobacco industry.
The department of justice dropped its bombshell, that it was seeking only $10bn
(£5.5bn) instead of $130bn, into closing arguments late on Tuesday in the
Washington DC trial.
District judge Gladys Kessler, who is hearing the case, yesterday questioned
what lay behind the decision. "Perhaps it suggests that there are some
additional influences being brought to bear on the government's position."
Democrats accused the government of bowing to big business. "Big tobacco
is one of the top donors to Republicans and it is getting what it paid for,"
said New Jersey Democrat Frank Lautenberg.
Shares in Altria, which owns cigarette maker Philip Morris, climbed 1.24% to
$68.62, while RJ Reynolds Tobacco rose 1.2% to $83.99.
The case accuses the tobacco industry of orchestrating a 50-year conspiracy
to hide the health effects and addictive nature of cigarettes. In closing arguments,
justice department lawyers said the industry had misled people with "half
truths, deceptions and lies that continue to this day". The case has been
in court for eight and a half months.
During the trial government lawyers had outlined a proposal that the industry
pay more than $5bn a year for a smoking-cessation programme for 25 years to
fund telephone advice lines, clinics and research.
The demand has been cut to an annual $2bn for five years. The justice department
issued a statement describing the fresh proposal as "an initial requirement"
that could be extended if court-appointed monitors found further evidence of
fraud. "This proposal has been designed to be a forward-looking remedy
to prevent and restrain future wrongful conduct."
John Wunderli, senior assistant general counsel to Altria, said: "They
haven't offered us any explanation. It was just an end of the day, seemingly
casual reformulation of what they are asking for."
Anonymous sources have suggested, though, that the justice department was pressed
to cut the penalty by people higher up in the organisation.
"It feels like a political decision to take into consideration the tobacco
companies' financial interests rather than the health interests of 45 million
addicted smokers," William Corr of the Campaign for Tobacco-Free Kids told
the Washington Post.
The justice department filed the case five years ago under the civil Racketeer-Influenced
and Corrupt Organisations act, Rico. There have been 44,000 pages of testimony
from more than 80 witnesses.
Former attorney general John Ashcroft in 2001 tried to settle the case, begun
by the Clinton administra tion, or shelve it but public pressure forced it back.
There will be short rebuttals from both sides today. A ruling is not expected
Government lawyers proposed additional remedies including banning the terms
"mild" and "light" cigarettes, an acknowledgment that sec
ond-hand smoke causes cancer and a ban on price cutting promotions.
Tobacco companies have argued that the remedies are not permitted under Rico.
In closing, their lawyer, Ted Wells, said: "Your honour should not take
up the government's invitation to engage in social policy engineering."
The industry won a victory in February when an appeals court ruled that the
government could not seek $280bn in allegedly ill-gotten gains.
The defendants include British American Tobacco, Brown & Williamson, Philip
Morris USA, RJ Reynolds and Lorillard Tobacco.