The Alliance of Boulder County
on Tobacco and Health

Anti-terrorism Bill Amendment Try

November 22, 2001

U.S. big tobacco tried to have anti-terrorism bill amended - The (Montreal) Gazette

The Gazette

U.S. tobacco companies attempted to amend the new U.S. anti-terrorism law to stop Canada and other countries from suing them in U.S. courts for billions of dollars in taxes lost to cigarette smuggling.

According to the Congressional Record, big tobacco lobbied Congress to approve an amendment that would have brought to a grinding halt the Canadian lawsuit and two from Colombia and the European Union.

Although the amendment was approved by the House of Representatives, the Senate blocked it, claiming it would weaken the fight against terrorism.

"It's something, it's really something that they would use a national crisis to suit their own needs," one lawyer involved in the lawsuits said of the tobacco companies. "It's appalling." The lawyer did not want his name used.

A court brief filed this month by the European Union in a U.S. court claims that the tobacco companies sought "to exploit a national tragedy and amend the law to gain immunity from liability for any smuggling and money-laundering activities."

Canada sued RJ Reynolds and its affiliate companies in 1999 seeking more than $1 billion U.S. plus penalties for violations of the U.S. racketeering law known as the RICO Act. Colombia and the EU have since filed similar lawsuits claiming Philip Morris and British American Tobacco aided and abetted tobacco smugglers defrauding those governments of billions of dollars in taxes and duties.

The anti-terrorism law bars a foreign government from suing in the United States for taxes or duties lost because of smuggling or other crimes. The U.S.A. Patriot Act was fast-tracked through Congress to provide, in the words of the act, "appropriate tools required to intercept and obstruct terrorism."

Lobbyists frequently attempt to persuade lawmakers to amend laws that will aid vested interests. Often, clauses will be inserted that have little to do with the over-all purpose of the law.

Big tobacco almost succeeded.

When the House of Representatives met to debate the law on Oct. 17, it approved the tobacco amendment.

But the amendment didn't last long. Representatives of the Senate and the House met on Oct. 23 and agreed to delete the tobacco amendment.

As stated in the Congressional Record, they "dropped provision carving out tobacco companies from RICO liability for foreign excise taxes."

Representative Robert Wexler, a Florida Democrat, said that by taking out the tobacco amendment, the law assured that "if our allies are victimized by fraud, smuggling or money laundering emanating from U.S. soil, they should have the benefit of U. S. laws and U.S. courts to combat those offences."

"It's really something that they would use a national crisis to suit their own needs."

Senator John Kerry, a Massachusetts Democrat and the original author of many of the money-laundering provisions in the act, told the Senate "smuggling, money laundering, and fraud against our allies are an important part of the schemes by which terrorism is financed."

Kerry emphasized "it is the intent of the legislature that our allies will have access to our courts and the use of our laws if they are the victims of smuggling, fraud, money laundering, or terrorism.

The Senate approved the bill on Oct. 25 and President George W Bush signed it into law the next day.

David Merner senior counsel on Canada's tobacco litigation team, said he wasn't surprised the tobacco industry would have pushed for this kind of amendment. "The tobacco industry has a history of using every means available to it to advance its cause." It's not clear from the Congressional Record who in Congress pushed the amendment. Nor is it clear whether the tobacco industry acted through other organizations.

Canada has not faired well in U.S. courts. RJ Reynolds claims that the Revenue Rule bars a foreign government from using the U.S. courts to collect foreign taxes. A U.S. federal judge and an appeals court agree. Canada has appealed for a rehearing before the full II.S. Court of Appeal. Lawyers expect a decision by December.

Tobacco-company spokesmen did not return phone calls for this story.

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