Armed with new information, Canada has sued R.J. Reynolds Tobacco Holdings, accusing it of masterminding a booming smuggling trade that cost the government millions of dollars in taxes.
The $1 billion lawsuit, filed Tuesday in U.S. District Court in Syracuse, alleges R.J. Reynolds and related companies set up an elaborate network of smugglers and offshore companies to flood Canada with cheap cigarettes after the government doubled taxes and duties on tobacco in 1991.
"The tobacco companies cannot and will not be permitted to frustrate public policy in Canada, and that in large part is what this lawsuit is all about," Canadian Health Minister Allan Rock said.
Seth Moskowitz, a spokesman for R.J. Reynolds Tobacco in Winston-Salem, N.C., said company officials could not comment until they had seen a copy of the lawsuit.
The suit alleges that R.J. Reynolds companies set up a shell company in the United States -- Northern Brands International -- to protect itself from charges that it sold to smugglers.