BRUSSELS, Oct 31: The European Commission on Thursday sued tobacco giant RJ Reynolds for money-laundering, in the latest salvo in a long-running case about alleged cigarette smuggling involving organised crime and Iraq.

The new case is a “civil money-laundering action” against RJ Reynolds filed in New York by the Commission and 10 members of the European Union, which are seeking to recoup millions of dollars in tax revenues lost to contraband tobacco.

The fresh attempt, brought under the Racketeer Influenced and Corrupt Organizations (RICO) act, comes after the New York District Court threw out an EU action against RJR, Philip Morris and Japan Tobacco in February.

“The Commission is determined to win its fight against money-laundering, cigarette smuggling and connected serious cross-border crimes,” said EU Budget Commissioner Michaele Schreyer.

The EU alleges that US tobacco companies are involved in smuggling cigarettes into the 15-nation bloc, costing member states several hundred million euros (dollars) a year in lost customs revenues.

RJR is the second-biggest tobacco company in the United States after Marlboro maker Philip Morris.

RJR brand cigarettes, which include Camel, Winston and Salem, are a lucrative money-spinner for sinister interests, a source close to the case said.

Crime groups including the Italian and Russian mafias launder ill-gotten gains through the purchase of RJR cigarettes, the source said on condition of anonymity.

He said the lawsuit also cites Uday Hussein, son of Iraqi leader Saddam, as being involved in a sanctions-busting racket in which RJR cigarettes are smuggled from the United States via European ports.

“The main purpose of this complaint is to obtain injunctive relief, to stop the laundering by RJ Reynolds of the proceeds of illegal activities,” the Commission said.

“In addition, the complaint will provide the opportunity to seek compensation for economic and other losses the EC or the 10 member states have sustained in the past resulting from the defendants’ money-laundering activities.”

The 10 EU members taking part in the civil action are Belgium, Finland, France, Germany, Greece, Italy, Luxembourg, the Netherlands, Portugal and Spain.

The Commission argued that the February ruling was made on a US legal technicality that prevents countries from suing in the United States for lost tax revenue.

The District Court had ruled that the dismissal was “without prejudice” to any further action over money-laundering.

A Commission source said the EU states had agreed only to pursue RJR for now and not Philip Morris or Japan Tobacco.

But he added: “I don’t exclude that further actions will be taken against other companies. We are confident we have a good legal argument in this case.”—AFP