MANHATTAN (CN) – Tobacco conglomerate RJR Nabisco must face claims by the European Union that it directs a money-laundering plot for Colombian and Russian drug traffickers, the 2nd Circuit ruled today.
For more than a decade, the 26 member states of the European Community have failed to advance a federal lawsuit in New York that blames RJR and its subsidiaries for a globe-hopping conspiracy involving bribery, border fraud and money laundering.
The most recent version of the lawsuit alleges that R.J. Reynolds executives bribed Colombian border guards, misled U.S. customs officials and shipped cigarettes through Panama to exploit secrecy laws that shield illicit dealings from government oversight.
The third dismissal of the lawsuit by U.S. District Judge Nicholas Garaufis in 2009 complained of “a structureless morass of allegations, devoid of any sequential description of events.”
“Nothing in plaintiffs’ complaint even remotely suggests that defendants had any hand in the planning, orders, or ‘overall corporate policy’ of the drug smuggling, currency swap, or currency purchase steps,” Garaufis wrote at the time. “In fact, the complaint very clearly and repeatedly articulates that the ‘overall corporate policy’ regarding these steps originates with organized criminal organizations in Europe and South America.”
The dismissal nevertheless centered more upon procedural grounds than the merits. Garaufis ruled that the European Community lacked standing to accuse R.J. Reynolds of violating U.S. anti-racketeering law because the RICO statute could not be applied outside the United States.
Overturning that finding Wednesday, a three-judge panel with the 2nd Circuit pointed out that two subclauses of that law apply only to conduct abroad.
One section of criminalizes killing, or attempted killing, of “a national of the United States, while such national is outside the United States,” and another prohibits “engaging in illicit sexual conduct in foreign places.”
“Indeed, it is hard to imagine why Congress would incorporate these statutes as RICO predicates if RICO could never have extraterritorial application,” Judge Pierre Leval wrote for the unanimous panel.
R.J. Reynolds spokesman Bryan Hatchell said the tobacco giant is considering filing its own appeal.
“In the meantime, several alternative grounds for dismissing the case exist, and we will ask the District Court to dismiss the case again on those grounds,” Hatchell said in a statement. “We continue to believe that the lawsuit is entirely baseless in both fact and law.”
Algirdas Semeta, the EU’s anti-fraud commissioner, said he “warmly welcomed” the decision.
“It is an important step forward for the EU in its quest to combat the illicit tobacco trade, and protect its citizens and its financial interests,” Semeta said in a statement.
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