NEW YORK (Reuters) - A federal grand jury is looking into charges that top cigarette companies have ties to smugglers who move billions of dollars of cigarettes across international borders without paying taxes, Newsweek magazine reported Sunday.

Newsweek also said the World Bank and the World Health Organization (WHO) will release a report next week detailing a three-year investigation of whether the tobacco industry has blocked international efforts to control tobacco. Newsweek said it does not know the names of the companies being investigated by the grand jury in North Carolina. But it said that Leslie Thompson, a former executive with Northern Brands International (NBI), a now-defunct export company owned by RJR Nabisco, was set to be questioned by federal prosecutors. Citing U.S. and Canadian prosecutors, the magazine said Thompson is accused of working with smugglers who shipped billions of R.J. Reynolds cigarettes to Canada, where black marketers awaited them. Newsweek said Thompson is serving a six-year term in federal prison after pleading guilty to money laundering charges in connection with the smuggling case. Thompson was the only cigarette executive charged. Two years ago, NBI paid $15 million in fines and forfeiture under a plea bargain arrangement, according to the Newsweek report in its July 31 issue available on Monday. The magazine cites R.J. Reynolds officials as saying the company had no knowledge that NBI or Thompson had been breaking the law. A Philip Morris spokesman also denied the company is allied with smugglers. A spokesman for British American Tobacco, meanwhile, said high taxes, not tobacco companies, are responsible for creating the conditions that encourage smuggling. The report of the grand jury investigation comes days after U.S. officials arrested alleged cigarette smugglers with links to Middle East rebels and less than two weeks after a Florida jury ordered America's big tobacco companies to pay $145 billion in punitive damages. On Friday, federal agents arrested 18 alleged supporters of the Hizbollah guerrilla group in raids in North Carolina and Michigan, accusing them of trafficking in contraband cigarettes to raise funds for the anti-Israeli Islamist organization. The suspects were charged with conspiracy to violate immigration laws, conspiracy to traffic in contraband cigarettes and money laundering, North Carolina U.S. Attorney Mark Calloway said. Hizbollah has dismissed allegations that it received illegal donations from smugglers based in North Carolina. The July 14 Miami verdict against tobacco companies for injuring hundreds of thousands of smokers dwarfs other U.S. damage judgements. But the penalties, including a $73.96 billion award against Marlboro-maker Philip Morris, should have little immediate effect. Tobacco lawyers have pledged to spend years appealing the jury's stinging liability and damages verdicts and may negotiate a more modest settlement.

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