June 28, 2005

US seeks $14 billion in tobacco case

By Peter Kaplan

WASHINGTON (Reuters) - The government asked a federal judgeto require cigarette makers to fund a $10 billion quit-smokingprogram and $4 billion for an anti-smoking education campaignto remedy decades of alleged fraud by the industry.

Lawyers for the Justice Department told U.S. District JudgeGladys Kessler in a motion with the court late on Monday thatthe smoking cessation program and other remedies should beimposed if the judge rules in favor of the government in itslandmark racketeering case.

The remedies were in line with sanctions government lawyersoutlined in closing arguments before Kessler earlier thismonth. However, the plan has drawn criticism because it is onlya fraction of the $130 billion, 25-year program recommended bya government witness.

The $10 billion would pay for a nationwide program thatwould run for five years if Kessler concludes that the tobaccocompanies violated racketeering laws.

The $4 billion education program would be spread over 10years and run through the American Legacy Foundation, ananti-smoking campaign created as part of the cigarette makers1998 settlement with state attorneys general.

Among the other remedies listed by the government were:

--A system that would impose heavy fines on the companiesif rates of youth smoking fail to drop in line with pre-settargets.

--A ban on the use of "health descriptors" in cigaretteads, such as "light" or "mild."

--Appointment of an "investigations officer" with theauthority to monitor and investigate the tobacco companies andto recommend removal of company executives if warranted.

The department said the court should be allowed to extendthe cessation program if it deems it warranted.

Industry critics repeated long-standing charges that thepenalties are too weak and that the Bush administration wascatering to the tobacco industry.

"It is a serious breach of the Justice Department'sresponsibility to the American people and an abuse of power onbehalf of the tobacco companies," Sen. Edward Kennedy, aMassachusetts Democrat, said in a statement.

Targeted in the 1999 lawsuit are: Altria and itsPhilip Morris unit; Loews Corp.'s Lorillard Tobaccounit, which has a tracking stock, Carolina Group ; VectorGroup Ltd.'s Liggett Group; Reynolds American's R.J. Reynolds Tobacco unit; and British American Tobacco Plc unit, British American Tobacco Investments Ltd.

The companies deny they illegally conspired to promotesmoking and say the government has no grounds to pursue them orimpose additional restrictions after they drasticallyoverhauled marketing practices as part of a 1998 settlement.

Kessler has repeatedly urged the government and cigarettemakers to settle the landmark racketeering case. The two sidesheld meetings earlier this year at Kessler's request in anunsuccessful effort to reach a settlement.