EU fails to agree on dividing money from Philip Morris ...

[FaGal]

EU fails to agree on dividing money from Philip Morris settlement
www.eubusiness.com - April 12, 2005


EU finance ministers failed Monday to agree on how to split 1.25 billion dollars cigarette manufacturer Philip Morris has agreed to pay in order for a smuggling case against the US company to be dropped, diplomatic sources said.

The proposal under consideration would have distributed the money among the 10 countries which had brought the smuggling case against the tobacco giant using two principles: sales of Philip Morris products and the amount of cigarettes seized in each of the countries.

But the ministers did not agree on using just the two measures, with several wanting to add other criteria such as national wealth, said the diplomatic sources.

Philip Morris agreed in January 2004 to pay 1.25 billion dollars, around one billion euros, over 12 years in order for the EU to drop its case, and has already paid 200 million euros.

The EU commission had attacked Philip Morris, RJ Reynolds and Japan Tobacco in a New York court, accusing them of having organised the smuggling of cigarettes in Europe, thereby depriving EU and national budgets of hundreds of millions of euros in uncollected taxes.

But the court rejected that suit in February 2002, ruling that foreign governments could not ask it to enforce their fiscal laws and collect taxes on their behalf.

An appeal was lodged, but the commission also filed a new complaint against RJ Reynolds for money laundering, and did not rule out a similar action against Philip Morris.

The countries to benefit from the settlement are; Belgium, Finland, France, Germany, Greece, Italy, Luxembourg, the Netherlands, Portugal and Spain.

According to one diplomatic source Italy was demanding the biggest share of the settlement, while Germany is seeking up to a quarter of the money.

The EU Commission, which is also trying to get a share of the settlement for its budget, said it was confident a deal would be reached.

"We are ready to reach an agreement based on some adjustments to the existing proposal," said Valerie Rampi, spokeswoman for EU anti-fraud commissioner Siim Kallas, who attended the meeting.

The funds from the settlement are to help with anti-smuggling policing.

Philip Morris agreed to boost cooperation with European law enforcement agencies and produce only enough cigarettes to meet legitimate consumer demand.