EU sues tobacco giants

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The European Commission is suing US tobacco giants Phillip Morris and RJ Reynolds over alleged cigarette smuggling into the EU. "This civil action alleges breaches by these corporations of the US Racketeer Influenced and Corrupt Organisation act," EU Budget Commissioner Michaele Schreyer said.

"The Commission seeks compensation for financial losses the EU has suffered and injunctive relief in order to prevent further smuggling," she said. "The protection of the financial interests of the European Union is a high priority of the European Commission." The EC has filed lawsuits against the firms in a New York court.

The EU claimed that cigarette smuggling is the biggest single fraud against its budget and said it was pursuing its claim in a civil, rather than criminal, court because it wanted financial compensation not punishment. It said smuggling operations involved shipping illegal cigarettes from unidentified third countries. Several thousand container loads were being imported, without duty of Euros 1 million ($0.85m) being paid on each, it said.