Big Tobacco Coughs Up $325M for Smuggling

Source from:  Canwest News Service 04/15/2010

Two tobacco giants paid fines yesterday that totalled $325 million for their role in cigarette smuggling in the early 1990s - the largest criminal levies ever imposed in Canada. JTI-Macdonald Corp. and R.J. Reynolds also reached a settlement in a lengthy civil suit with the provincial and federal governments. The companies paid their fines yesterday morning after pleading guilty in the Ontario Court of Justice, the federal government said in a news release. "Taken together, this is the largest amount ever levied in Canada," National Revenue Minister Keith Ashfield told a news conference. The fines, along with the civil settlement, will put $550 million in provincial and federal coffers, bringing an end to a decade of litigation involving contraband tobacco shipped between the United States and Canada. Cigarette smuggling raged through the early 1990s, forcing governments in Canada to eventually reduce tobacco taxes to stem the tide of contraband flowing across the border. JTI paid $150 million after pleading guilty to "aiding persons to be in possession of tobacco not packaged in accordance with the Excise Act," the federal government said in a release. Northern Brands International Inc. - a company affiliated with R.J. Reynolds - pleaded guilty to a Criminal Code conspiracy and paid a $75-million fine ordered by the court. The civil settlements with the two companies come two years after the federal and provincial governments settled with other cigarette-makers - Imperial Tobacco and Rothmans, Benson and Hedges. They were fined $200 million and $100 million, respectively, just $25 million short of the fines paid out yesterday. The money in the latest civil settlement will be shared between the federal government and the provinces, with Ontario, Quebec, British Columbia and Ottawa receiving the biggest settlements because they were the ones that lost the most. A spokesman for the Canada Revenue Agency said the fines and settlement amount to more than the governments lost in excise taxes. Enditem