1st charge in tobacco conspiracy Biotech firm helped Brown & Williamson boost nicotine content

'Only the opening act'

Result of 3-year probe by Justice could rock industry, settlement

January 08, 1998|By Scott Shane | Scott Shane,SUN STAFF

In the first criminal charge to result from the three-year Justice Department investigation of the tobacco industry, a California biotechnology company admitted yesterday that it illegally conspired with cigarette maker Brown & Williamson to develop a high-nicotine tobacco.

People familiar with the continuing federal probe said the relatively minor charge against DNA Plant Technology Corp. -- that it violated a tobacco seed-export law that has since been repealed -- has ominous implications for Brown & Williamson and for the industry as a whole.

Separate teams of prosecutors and FBI agents are investigating the top three U.S. cigarette manufacturers: Philip Morris, R. J. Reynolds Tobacco and Brown & Williamson. People familiar with their work say it focuses on fraud reaching far beyond the high-nicotine tobacco case, including discrepancies between the companies' internal documents and sworn submissions to federal agencies, efforts to squelch research on safer cigarettes, and schemes by industry lawyers in covering up damaging research.

But yesterday's first salvo was cheered by anti-tobacco forces.

"The expectation is that Brown & Williamson almost certainly will be indicted," said Clifford E. Douglas, a Michigan attorney and anti-tobacco activist who helped push the Justice Department to pursue criminal charges in 1994 and has followed the case closely.

"This is only the opening act," said Richard A. Daynard, chairman of the Tobacco Products Liability Project and a law professor at Northeastern University in Boston. "You start with the weak link, the small fish, and then you try to reel in the big fish."

Daynard and other legal experts said the prospect of further criminal charges could derail the national civil settlement of tobacco lawsuits currently under consideration by Congress, under which the industry would gain limited protection from lawsuits in return for at least $368 billion and strict limits on advertising.

"I don't see any way that Congress can grant civil immunity to the tobacco companies if, down the street, the Justice Department is indicting them for fraud," Daynard said.

The charging document made public by the Justice Department's fraud section states that DNA Plant Technology was directed by a tobacco company -- not named in the document, but identified by officials as Brown & Williamson -- to use code words in all correspondence to disguise references to the so-called "Y-1" tobacco variety. Grown under contract in Brazil, the Y-1 plant was genetically engineered to contain about 6 percent nicotine, twice the average level of the addictive chemical in tobacco.

DNA Plant Technology said in a statement that it is cooperating with investigators. Douglas said a company official, Janis A. Bravo, has been granted immunity from prosecution in exchange for her cooperation. Bravo's Washington attorney, Henry W. Asbill, did not return calls seeking comment.

Brown & Williamson issued a statement yesterday noting that it has not been charged with a crime and saying: "There was nothing secretive about the development of Y-1 tobacco." The company said it revealed the nicotine content of Y-1 in a patent application.

"B&W has, and continues to cooperate fully with the authorities in this investigation," the statement said.

Legal experts said the scale of the federal investigation suggests that it is very unlikely to conclude with the charge against DNA Plant Technology, which carries a maximum penalty of a $200,000 fine or twice the profit earned by the company in the illegal transactions. The law prohibiting export of tobacco seed without a permit was repealed in 1991.

"This charge is only the first shoe to drop," said David Sweanor, a Canadian anti-tobacco lawyer who advises the World Health Organization and various U.S. health organizations. "There may be enough additional shoes that we're dealing with a millipede."

"They'll go to Brown & Williamson executives and retirees and say, 'Do you want to be indicted or do you want to cooperate?' " said John Banzhaf, a George Washington University law professor who heads Action on Smoking and Health.

The existence of the Y-1 tobacco plant was revealed in 1994 in a public dispute between Brown & Williamson and the Food and Drug Administration that is now a topic of the criminal inquiry. After then-FDA Commissioner David A. Kessler decided to seek to regulate nicotine as a drug, FDA investigators questioned officials of the Lexington, Ky., tobacco company on May 3, 1994.

In sworn affidavits, the FDA investigators later said they had asked the company whether it had bred tobacco for high or low nicotine levels, and company officials said they had not. Then, after an anonymous tip, the FDA investigators checked patent records and found a Brazilian patent that referred to the Y-1 plant and it's 6 percent nicotine content.

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