Big Tobacco in the Dock as America Prepares for Biggest Ever Lawsuit ; BUSINESS ANALYSIS $280Bn Action over Claims That Industry Deliberately Withheld Damning Health Studies

By Stevenson, Rachel | The Independent (London, England), August 13, 2004 | Go to article overview
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Big Tobacco in the Dock as America Prepares for Biggest Ever Lawsuit ; BUSINESS ANALYSIS $280Bn Action over Claims That Industry Deliberately Withheld Damning Health Studies


Stevenson, Rachel, The Independent (London, England)


THE TOBACCO industry will face its biggest legal challenge yet next month, when it will finally appear in the dock to fight a $280bn claim from the US Government for deceiving the public over the health risks of smoking for more than 50 years.

It is the largest suit ever launched by the Department of Justice and promises to reveal whether scientific research on nicotine was withheld, destroyed and ignored by a number of companies in a conspiracy designed to keep "profits above the public health", dating back to 1954.

The secrets of the tobacco industry have already been the subject of an Oscar-nominated Hollywood blockbuster. When Jeffrey Wigand, who was head of research and development at Brown & Williamson, British American Tobacco's former US subsidiary, described cigarettes as the "delivery device for nicotine" to the US media, the tobacco industry was almost choked by the biggest public health lawsuit to date. His revelations that tobacco companies knew nicotine was addictive and that carcinogenic material was knowingly added to cigarettes were made public by the American investigative journalist Lowell Bergman, whose work inspired the film The Insider, starring Al Pacino and Russell Crowe. Mr Wigand's testimony helped bring about a $206bn settlement between the tobacco industry and 46 US states for the costs of treating sick smokers.

On 13 September, the sequel to that settlement will open to the public, with a federal trial set to take place in Washington DC that has taken five years to bring to court. A number of major cigarette companies, including BAT, are on trial on "fraud and deceit" charges that were originally designed to fight the mafia. Along with BAT stands Philip Morris, R J Reynolds, Lorillard and Liggett, which represent the best-known brands in cigarettes such as Marlboro, Lucky Strike, Pall Mall and Camel.

These giant corporations stand accused of conspiring to wilfully mislead the public over the health dangers of smoking in a pact that began in January 1954. The US Department of Justice claims that a group of chief executives met at the Plaza Hotel in New York to agree a "long-term public relations campaign based on fraud and deception". It is claiming $280bn from the past profits of these companies on racketeering charges, making it the largest case of its kind in history.

President Bill Clinton began the action in 1999 and originally sought to recoup the healthcare costs for treating smoking-related diseases. Deaths from smoking in the US amount to 400,000 a year, and $20bn a year of taxpayers' money goes on treating smokers. Janet Reno, the then Attorney General, said at the time that over the past five decades, tobacco companies had "conducted themselves without regard to the truth, without regard to the law, and without regard to the health and life of the American people". She claimed the tobacco industry had waged an "intentional, co- ordinated campaign of fraud and deceit, designed to preserve their enormous profits whatever the cost - in human lives, human suffering and in medical resources".

News of the lawsuit in 1999 sent shares in BAT plummeting. Some pounds 5.8bn was wiped off its market capitalisation and the then chairman, Martin Broughton, was forced to appeal directly to Wall Street to support the business and stop the downward orbit of its share price.

Since then, the road to trial has been beset with difficulties. The tobacco industry scored a large victory in 2000 when the Government's claim to recover healthcare costs was thrown out.

The case now hinges on racketeering charges.

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