11th March 00:29
__ Quebec demands $1.05 BILLION from JTI-Macdonald Corp __
Tobacco Company Seeks Protection After Quebec Govt. Demands $1.05B in Taxes for
Smuggled Cigarettes [08/26-1]
Excerpts from: Tobacco Company Seeks Protection
LA Times [08/26/04]
The Canadian unit of Japan Tobacco Inc. filed for court protection from
creditors after the Quebec government demanded $1.05 billion in taxes it alleges
is owed on smuggled cigarettes.
JTI-Macdonald Corp., Canada's third-largest cigarette maker, said it needed
court protection to avoid bankruptcy because Revenue Quebec had moved to seize
up to 40% of its national revenue.
JTI-Macdonald denied involvement in any smuggling operation, which tax
investigators allege occurred in the 1990s and involved shipping Canadian-made
cigarettes to the United States and then secretly bringing them back to Canada
to avoid high taxes.
The company complained that Revenue Quebec had declared it guilty of smuggling
without giving it a proper court hearing, and that it filed for creditor
protection under the Companies' Creditors Arrangement Act, the Canadian version
of Chapter 11, after considering other legal options.
The company, based in Toronto but with manufacturing operations in Montreal,
said business would continue as usual while under court protection. The filing
was made Monday in Ontario and the preliminary hearing in the case is not
scheduled until April, it said.
JTI-Macdonald also faces a federal lawsuit in Ontario and fraud and conspiracy
charges filed by police because of tobacco smuggling, which soared after
governments raised tobacco taxes sharply in the 1990s.
"The other major companies, Imperial Tobacco and Rothmans Benson & Hedges, have
to be paying very close attention," said Rob Cunningham, senior policy ****yst
at the Canadian Cancer Society. "In the '90s, they exported vast quantities of
cigarettes to the United States and these cigarettes came back as contraband as
Japan Tobacco said in a statement in Tokyo that the Canadian subsidiary's filing
was by no means an acknowledgment of responsibility for the accusations, and the
unit would continue taking all possible measures, including legal action, to
protect its business