Cdn tobacco companies fined $1.1 billion

by Rob Peters | August 1, 2008 at 08:15 am

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After an eight-year investigation, Canada's biggest tobacco companies have pleaded guilty to 'aiding and abetting' cigarette smugglers in the late 80s and early 90s, a tactic that saw the companies keep a share of the Canadian market and elude billions of unpaid taxes.

These are the largest criminal fines and civil settlements in Canadian history, according to officials. Part of the settlement involves the two companies funding a new contraband tobacco enforcement strategy.

I say they should go straight to the source. It's unrealistic I know, but if tobacco companies were forced to add something to cigarettes that made people fat, think people would light up? Pictures of diseased mouths and disgusting lungs haven't worked so far, but if they appealed to people's vanity, I bet there would be results.

MONTREAL -- Canada's two major tobacco manufacturers, Imperial Tobacco Canada and Rothmans Benson & Hedges, have pleaded guilty to aiding and abetting in the smuggling of cigarettes and loose tobacco in the 1980s and 1990s and have agreed to pay fines and penalties totaling over $1.1-billion.

An eight-year RCMP investigation showed that Imperial Tobacco and Rothmans, Benson & Hedges were shipping cases of cigarettes to the United States in the knowledge they would be purchased by people intent on smuggling them back into Canada to sell at between $20 and $30 per carton, according to police and an agreed statement of facts filed with the Ontario Court of Justice.

The circuitous distribution methods allowed the two companies to avoid the steep federal and provincial excise taxes they would have had to pay if they had legally sold the cigarettes in Canada.

Details about the fines:

Imperial has agreed to pay $200-million in fines and to plead guilty to one count of violating the Excise Act. Rothmans has agreed to pay $100-million by Oct. 29 and also has pleaded guilty to one count of the Excise Act.

In addition, Imperial and Rothmans will each pay $50-million to establish a new government Contraband Tobacco Enforcement Strategy. The payments are due by Dec. 15.

As a settlement of its civil liability, Imperial will pay the federal government and the 10 provinces a percentage of its annual net sales revenue over the next 15 years up to a maximum of $350-million, said Catherine Doyle, a spokeswoman for Imperial.