JACKSON, Miss. -- Mississippi Attorney General Jim Hood in June announced a settlement of claims against R. J. Reynolds Tobacco Co. (RJR) and Brown & Williamson Tobacco Corp. (B&W) for $15 million.
“Several years ago, we discovered that [B&W] manufactured cigarettes for a company called Star Tobacco, but failed to pay what they were required to pay us under the original 1997 tobacco settlement agreement,” said Hood.
The original settlement requires the company to pay Mississippi for every cigarette it makes and ships to the state. B&W avoided this payment by manufacturing cigarettes for Star Tobacco, according to Hood; the company then sold those cigarettes to Mississippians without paying the state, he said.
“During the investigation of [B&W’s] conduct, we also discovered other instances where RJR/B&W tobacco companies shortchanged the state of Mississippi,” said Hood. The $15 million represents principal and interest on what RJR and B&W’s companies should have paid years ago, he said.
The tobacco company paid the state’s attorneys’ fees, because it agreed in 1997 to the pay those fees anytime it becomes necessary to go to court to enforce the settlement.
“The 1997 settlement with the tobacco companies is perpetual, and contributes on average over $100 million per year to the state’s health care budget,” said Hood. “I will continue to closely monitor the tobacco companies and hold them accountable for their actions.”
B&W, formerly owned by British American Tobacco, merged with RJR in 2004 to create Reynolds American Inc.
“It was in our business interest to resolve this longstanding matter on favorable financial terms, as the case was settled for substantially less than was sought by the state. Additionally, the settlement contained no admission of liability with respect to any of the claims brought by the state, and resolved all claims the state could have pursued," David Howard, spokesperson for R.J. Reynolds Tobacco Co., told CSP Daily News.
Winston-Salem, N.C.-based RJR, an indirect subsidiary of Reynolds American, is the second-largest tobacco company in the United States. Its brands include Newport, Camel and Pall Mall. These brands, and its other brands, including Doral, Misty and Capri, are manufactured in a variety of styles and marketed in the United States.
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