Tobacco execs charged with fraud
Tobacco company JTI-Macdonald Corp. and some of its former executives have been charged with fraud after an investigation into alleged smuggling of cigarettes in the 1990s.
The RCMP announced the charges Friday, after a four-and-a-half year investigation.
Police laid six counts of fraud and one count of conspiracy against JTI-Macdonald Corp., formerly known as RJR-Macdonald, Inc., and several of its subsidiaries. Eight former senior executives were also charged.
Investigators accuse the firms of conspiring to defraud the governments of Canada, Ontario and Quebec out of $1.2 billion in tax revenue between 1991 and 1996.
The companies are alleged to have supplied the Canadian black market with Canadian-brand tobacco products manufactured in Canada and Puerto Rico. Police claim the firms provided the cigarettes "knowing that these products were being smuggled back into Canada and onto the commercial market."
At a news conference, the RCMP emphasized the cost of smuggling to Canadians.
"As Canadian taxpayers, we all pay for corporate fraud," said Insp. Robert Davis, head of the RCMP commercial crime section in Toronto.
"We pay in revenue losses that contribute towards our social welfare programsprograms that support our seniors, educate our children and take care of our ill and less fortunate."
The company strongly denies the charges, which it called "an abuse of the Canadian criminal justice system." JTI-Macdonald said the action was taken by the RCMP because Ottawa failed to recover tax revenue in a U.S. civil action started a decade ago.
"We are disappointed that the RCMP has decided to proceed with politically motivated criminal charges against our company, including current and former employees who are honest and law-abiding individuals," said JTI spokesman Guy Côté.
He said the RCMP's case appears to be "based on false evidence offered by convicted felons, encouraged by government-sponsored anti-tobacco activists."
Côté added: "JTI-Macdonald does not, and never did, condone smuggling or illegal activity."