US government sues tobacco firms for billions

THE UNITED STATES administration is suing leading tobacco companies for damages to offset the cost to the federal government of treating smoking-related illnesses such as lung cancer and emphysema. The lawsuit, announced yesterday by the Attorney General, Janet Reno, reflects the dissatisfaction of President Bill Clinton with an out-of-court settlement reached earlier this year between the tobacco companies and an alliance of 46 states.

Mr Clinton had condemned that settlement (at $206bn the biggest US civil settlement on record) for letting the tobacco companies off too lightly. He was also displeased that the settlement limited the liability of tobacco companies by ruling out future individual lawsuits. He also objected to the terms set by the tobacco companies for funding anti-smoking advertising campaigns.

The new lawsuit could cost the tobacco companies billions of dollars, and they reacted angrily to what amounts to the reopening of a case they hoped had been settled, seeing political motives in the decision. A spokesman for Brown and Williamson described the suit as "a cynical attempt to use the courts for political purposes" and accused the administration of trying to divert attention from its own difficulties, including the inquiry into the 1993 FBI assault at Waco.

Spokesmen for Philip Morris and RJ Reynolds, two other companies named in the lawsuit, categorically ruled out any pre-trial settlement in the case and pledged to fight through the courts. "We believe this case should be dismissed," said the spokesman for Philip Morris. A total of five companies and two lobbying groups are named in the lawsuit.

Anti-smoking groups, however, were delighted. The president of the Campaign for Tobacco-Free Kids, Bill Novelli, described the lawsuit as "the most serious legal threat the tobacco industry had ever faced". Financial markets appeared to agree and the companies' share prices fell at the news.

The lawsuit, which was filed yesterday under federal racketeering laws more commonly used against the Mafia and organised crime, claims that the cigarette companies conspired over more than four decades to defraud and mislead the American public about the dangers of smoking. "Smoking is the nation's largest preventable cause of death and diease, and American taxpayers should not have to bear the responsibility for the staggering costs," Ms Reno said.

The nub of the case is that company executives met in 1954 at the Plaza Hotel in New York and agreed to conceal information about the harmful effects of smoking to preserve their profits. It also accuses the companies of deliberately wooing juveniles through their advertising.

The case is the latest, and by far the largest, in a succession of lawsuits brought against the tobacco industry in the past five years. So far, however, only one - in Florida - has resulted in a jury verdict, and the multi- billion dollar judgment is now subject to appeal.

Whether the new case will be any more successful in extracting money from the tobacco companies will depend on the dispatch of the courts, and the determination of the companies to fight. The likelihood is that pre-trial skirmishing will last well into the presidential election period, allowing the Democrats, and Vice-President Al Gore in particular, to capitalise on the administration's record in fighting "big tobacco".