Tobacco companies colluded to addict smokers, U.S. says

Justice Department uses firms' internal memos as racketeering trial opens

September 22, 2004|By NEW YORK TIMES NEWS SERVICE

WASHINGTON - Federal prosecutors alleged yesterday that the nation's tobacco companies colluded for half a century to addict Americans to nicotine in cigarettes that the industry knew caused cancer.

Opening the largest civil racketeering trial ever, Justice Department attorneys used the cigarette companies' own internal documents to show how the industry set up sham research groups to counter medical evidence that smoking causes cancer and other diseases, even after industry scientists had secretly conceded the harmful effects on health.

Industry memos detailed how the companies were developing cigarettes to more effectively deliver addictive doses of nicotine even while industry executives contended publicly that there was no proof that nicotine was addictive, prosecutors said in opening statements.

"Why did the defendants pursue this course of action?" asked U.S. Attorney Frank Marine. "Money, pure and simple."

The federal government is seeking a record $280 billion in "ill-gotten gains" that the Justice Department says the tobacco industry earned through an ongoing fraud that has lasted more than 50 years.

The defendants in the case are the leading cigarette manufacturers and their representatives: Philip Morris USA Inc. and its parent, Altria Group Inc.; R.J. Reynolds Tobacco Co.; Brown & Williamson Tobacco Co.; British American Tobacco Ltd.; Lorillard Tobacco Co.; Liggett Group Inc.; Counsel for Tobacco Research-U.S.A., and the Tobacco Institute.

Attorneys for the tobacco companies will present their opening statements today. But they are already saying that the industry practices did not constitute fraud.

"Fraud is, `I have a specific intention to mislead you or take money from you by deceiving you,'" said Philip Morris USA attorney William Ohlemeyer. "Fraud is a very high bar."

Opening a nonjury trial expected to last six months, prosecutors outlined their case before U.S. District Judge Gladys Kessler.

Using a slide presentation to highlight the industry's internal documents, the prosecutors recapped the history of a "fraudulent enterprise" that allegedly was born at the Plaza Hotel in New York in 1953.

At that meeting, chief executives of the country's leading cigarette companies and officials of the Hill & Knowlton public relations firm developed a "unifying strategy" to "achieve their shared objectives through fraud," Marine said.

Prosecutors said the supposedly competitive companies cooperated to counter criticism of cigarettes as a health hazard.

They said the industry set up the Center for Tobacco Research, and later the Center for Indoor Air Research, as supposedly independent research arms, but the groups were really tools to thwart scientific findings about the harm of smoking and second-hand smoke. The industry also established the Tobacco Institute as a lobbying and public relations arm.

"The overriding purpose was to maximize defendants' profits through fraud," said Sharon Eubanks, director of the Justice Department's tobacco litigation trial team. The industry engaged in "a half-century campaign of deceptions, half-truths and flat-out lies."

The industry mantra was that the statistics did not prove that cigarette smoking caused cancer and other diseases - even though internal documents indicated that industry officials recognized the link, prosecutors said.

One memo said that by casting doubt on heath risks, the industry gave smokers a "psychological crutch and self rationale" for not quitting.

"The defendants' strategy of denial worked, and they knew it," said Eubanks. "That's why they continued it for decades."

In the past decade, the tobacco industry agreed to pay $246 billion to the states in a settlement of a lawsuit over the cost of smoking-related health care. That settlement included limits on advertising, marketing and lobbying.

Some observers say a $280 billion "disgorgement" of alleged "ill-gotten gains" would drive the tobacco industry into bankruptcy.

"The goal of this case is not to bankrupt or crush the tobacco industry," said Associate Attorney General Robert McCallum. Nor it is "an attempt to regulate an industry through litigation as some have asserted."

"Rather, it is a case to obtain equitable remedies" through the federal Racketeer Influenced and Corruption Organizations Act, McCallum said outside the courthouse.

Prosecutors said the foundation of the tobacco industry was nicotine, the addictive agent that "hooked" smokers on cigarettes.

As far back as 1953, a tobacco company executive said in a memo, "It's fortunate for us that cigarettes are a habit they can't break," the prosecutors showed in a slide. Another said later, "Think of a cigarette pack as a container for a day's supply of nicotine."

But the industry contended publicly that there was no proof that nicotine was addictive. Prosecutors showed an internal industry memo that said, "We can't continue to defend smoking as `free choice' if the person was `addicted.'"

Meanwhile, the companies manipulated the nicotine in cigarettes to make sure smokers stayed addicted, prosecutors said.

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