US dollars 368bn tobacco damages deal collapses

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The Independent Online
THE LANDMARK tobacco settlement in the United States that had promised an end to litigation against the cigarette manufacturers as well as voluntary curbs on teenage smoking and tobacco advertising appeared to be history last night.

One week after the Senate presented a bill that would have substantially modified the deal to make it much harder on the industry, the chairman of RJR Nabisco, Steven Goldstone, said his company was walking away from it. The other tobacco giants were expected quickly to follow suit.

"The extraordinary settlement, reached on 20 June last year, that could have set the nation on a dramatically new and constructive direction regarding tobacco, is dead," Mr Goldstone said in a speech in Washington.

He accused both the US Congress and the White House of "playing the politics of punishment" in a "coercive, Big Brother-type tone". London-based British American Tobacco, which is the third biggest maker of cigarettes in the US, had already said the Senate bill would have driven it to bankruptcy.

Negotiated by the companies with the attorneys general of some 40 US states, last June's deal obliged tobacco companies to pay out no less than $368bn in damages over 25 years and enact measures to end sales to minors. In return, the industry was promised immunity from further lawsuits.

The Senate version, however, envisaged billing the companies for around $600bn. Moreover, it offered them only the flimsiest of protection from civil liability and class action suits in the future.

There remained the slimmest possibility last night that Mr Goldstone's outburst might persuade Congress to rethink its approach and offer tobacco an improved deal. Most observers thought the settlement beyond saving, however.

Expressing his dismay, President Clinton retorted: "I have been working on this for two years and I do not intend to give up now."