AGs face possible lawsuit by US tobacco firm

CNMI Attorney General Pamela Brown may face a lawsuit, after a major tobacco company based in Miami, Florida reportedly threatened to sue state attorneys general over alleged lenient treatment of another company that recently joined the multi-billion-dollar Master Settlement Agreement.

Brown’s office disclosed that the CNMI received some $143,439.20 from Vibo Corp. over the weekend, as part of the $78 million immediate payment made by the firm to 46 states that participated in the MSA.

The Associated Press reported that Vector Group Ltd., the parent of cigarette maker Liggett Group, is planning to sue state attorneys general for allegedly violating the MSA, accusing them of leniently accepting Vibo to the settlement without its consent.

Vector reportedly alleged that the attorneys general extended favorable financial terms to Vibo, another Miami-based firm that does business as General Tobacco, which sells value-priced cigarette brands such as GT One, Bronco, and Silver.

“We believe our consent was required for them [General Tobacco] to come in under amended terms,” the AP report quoted Vector president and chief executive Ronald Bernstein as saying. “The MSA is an agreement that is the foundation of this industry today, and we don’t take it lightly when our rights under the agreement are being violated.”

The MSA required participating tobacco companies to make payments and agree to a wide range of restrictions, including those governing the way the companies promote their products. The attorneys general and tobacco companies reached the MSA in 1998. Since that time, more than 40 other companies have joined the MSA.

The CNMI’s Attorney General’s Office, through CNMI consumer counsel Brian Caldwell, said the state attorneys general initiated negotiations with Vibo, which reportedly made an immediate payment of $78 million. Caldwell said the settlement with Vibo is estimated to reach $1.7 billion in 10 years. Vibo would make quarterly payments to participating states, he said.

“Among other things, Vector alleges that General Tobacco is not being expected to make back payments in a ‘reasonable period’ of time. In addition, the company is being charged of a lower interest payment than is required under the agreement,” the AP report stated.

Vector also reportedly accused the attorneys general of depriving the states of funds due them by providing Vibo improper benefit.

Caldwell refused to comment on the threat of lawsuit.

CNMI’s attorney general Brown earlier said that Vibo’s decision to join the MSA is “especially significant” because the company represents the largest tobacco product manufacturer remaining outside the MSA.

Brown’s office, in a media statement, said that Vibo is the exclusive U.S. importer of cigarettes from Protabaco, S.A., of Bogota, Colombia. She said Protabaco is bound to sell all of its cigarettes in the U.S. through Vibo and in accordance with the MSA.

Participating manufacturers under the MSA are bound by a wide array of restrictions on the advertising, promotion and marketing of cigarettes, including outright bans on targeting youth, outdoor advertising, and distribution of any merchandise advertising a cigarette brand.

Since the MSA took effect, youth smoking rates nationally have dropped by more than 25 percent and overall smoking has declined nearly 20 percent, Brown’s office said.