Ecuador Files Tobacco Suit
MIAMI (AP) - The Republic of Ecuador filed a lawsuit Monday against more than a dozen U.S. tobacco companies, alleging they smuggled tobacco products in and out of the country without paying duties and taxes.
The suit, filed in Florida Circuit Court, alleges the tobacco companies participated in a smuggling ring to illegally ship tobacco leaves out of the country as a tax-free export, and then reimport cigarettes free of taxes by using foreign trade zones.
The activities were orchestrated in the United States by Philip Morris Inc. and R.J. Reynolds Tobacco Co., according to the suit.
The government of Ecuador charges that the black market has made tobacco products more accessible, hindering the country's efforts to discourage smoking. The suit seeks to recover lost tax revenue and to restrain the companies from such activities.
The suit is part of a crackdown on corruption and tax evasion, which is key to the country's effort to fight poverty, said Ecuador's Attorney General, Ramon Jimenez Carbo. The tax revenues lost could be in the millions, even billions of dollars, Jimenez said.
RJR spokeswoman Carole Crosslin declined to comment, because the company had not yet seen the complaint. Philip Morris spokesman John Sorrells said the suit had ``no basis in law or fact'' and he was confident the company would prevail in court.
This is at least the third smuggling suit filed against the industry. The governors of 22 states in Colombia filed a civil racketeering case against Philip Morris in New York federal court last month. Also, the government of Canada filed a similar suit last year against R.J. Reynolds Tobacco in U.S. District Court in Syracuse, N.Y.