Pleads Guilty To Cigarette Smuggling Scheme
Complete New York Times account by
RJ Reynolds International affiliate Northern Brands International (NBI)
pleaded guilty to charges that it smuggled cigarettes into Canada to avoid
paying over $2.5 million in US excise taxes. NBI agreed to pay a $15 million
fine for its involvement in a scheme to transfer cigarettes out of Canada
under the guise of exporting them to Eastern Europe, then smuggling the
cigarettes back into Canada through an Indian reservation in New York state
to avoid US excise taxes.
The smuggling operation, which involved at least 26 tractor loads of
cigarettes, took place from 1994 to 1995. US District Attorney Thomas Maroney
accused RJR of setting up Northern Brands specifically for smuggling. "This
company knew what it was doing and knew where its products were going,"
Maroney said. RJR issued a statement calling NBI's actions "inconsistent
with the way Reynolds does business," and said the "company very
much regrets this episode."
Matt Myers, of the National Center for Tobacco-Free Kids, commented that
the guilty plea may explain tobacco companies' protests that high excise
taxes lead to smuggling: "Now we know why RJR executives knew how many
packs of cigarettes fit into a tractor trailer.
Public health advocates have suspected for years that the tobacco industry
was behind the black market between the United States and Canada. The guilty
plea demonstrates that the primary black market that occurred is directly
tied to the tobacco industry or its affiliates." US Customs Commissioner
Raymond Kelly expressed his hopes that the smuggling activities "are
not indicative of a new kind of cancer that can be linked to the tobacco
companies in the future."
- WASHINGTON POST, (12/23/98) "Tobacco Affiliate Pleads
Guilty To Role In Smuggling Scheme", John Schwartz and Saundra Torry,
- NEW YORK TIMES, (12/23/98)"RJR Subsidiary Pleads Guilty To Smuggling",
Christopher Drew, p. A1
- USA TODAY, (12/23/98) "Tobacco Fine", John Bacon, p. A3
- ASSOCIATED PRESS, (12/23/98) "$15M Fine In Tobacco Smuggling Case",
- UPDATE: March 26, 1999: RJR Executive Pleads Guilty In Smuggling Case
- A former executive at Northern Brands International, a
subsidiary of RJR Nabisco Holdings, pled guilty yesterday to
helping smugglers sell $700 million worth of cigarettes on the
Canadian black market.
Leslie Thompson, a former regional
director, was the first tobacco executive charged in the
investigation. Thompson could face up to seven years in prison.
Nineteen other people have been convicted in the case and are
- WALL STREET JOURNAL, (3/26/99)
"Former RJR Official Pleads Guilty To Role In Cigarette Smuggling", Associated Press, p. C19
- ASSOCIATED PRESS, (3/26/99)
"Tobacco Exec. Charged With Smuggling"
1999 -- All Rights Reserved|