Amerikaanse regering probeert gezicht te redden
Na haar nederlaag in de rechtszaak waarin men de tabaksindustrie 280 miljard dollar probeerde te ontfutselen is de Amerikaanse overheid desperate pogingen in het werk aan het stellen om haar gezicht te redden. Naar enige vergoeding via een rechtszaak kunnen ze inmiddels door de uitspraak in hoger beroep fluiten. Maar de federale overheid heeft inmiddels wel grote uitgaven gedaan op kosten van de belastingbetaler: 35 van de 800 juristen die de staat in dienst heeft zijn inmiddels bij de zaak betrokken. Volgens de Washington Times levert dit de staat een schade op van $200 miljoen.
En dan hebben ze, na 10 jaar procederen, nog helemaal niets bereikt……
Bipartisan foolishness
By Joel Mowbray
When the defense starts presenting its case today in the civil RICO case against Big Tobacco, it will be the federal government on the defensive. The Department of Justice has taken so long to lose so much that it has but one goal left: saving face.
And with the government headed for near-certain defeat — despite spending at least $135 million before the actual trial started — it is the Bush Department of Justice that stands to suffer from a snowball that started rolling downhill early in the Clinton administration.
The roots of the current litigation stretch back almost a decade, to a criminal investigation that a spokesman at Phillip Morris parent Altria estimates was launched in 1995. No charges were ever filed. And it appears that the criminal probe was shuttered almost on the same day the current civil lawsuit was filed. The closing line of the DOJ press release announcing the lawsuit was as follows: “There are no pending Criminal Division investigations of the tobacco industry.” This was a clumsy and cryptic way of saying the criminal probe had ended as recently as the day before.
On the heels of the failed criminal investigation, the federal government sought hundreds of billions of dollars for reimbursement of Medicare costs. DOJ’s original complaint, filed in September 1999, alleged that the federal government spends more than $20 billion per year treating people with smoking-related illnesses.
Just over a year later, the judge tossed out the Medicare reimbursement portion of DOJ’s lawsuit, stripping the government of the cornerstone of its case. All that remained was a civil racketeering charge, which relied on a law Congress created in 1971 to fight the mafia.
It was September of an election year at this point, no time to drop a lawsuit against the most vilified industry in America. So President Clinton’s DOJ redoubled its efforts, using a forward-looking statute — civil RICO was only intended as an additional tool to help thwart future bad behavior — to win damages for past actions. You don’t need to be a lawyer to know that sounds fishy.
To get to its damages figure, DOJ employed creative accounting to accompany its creative use of the law. Since RICO does not allow the government to collect damages, it argued instead that to stop future wrongdoing by Big Tobacco, the court should disgorge all ill-gotten gains over the past fifty years.
Using some combination of alchemy and blind guessing, DOJ’s experts calculated $75 billion in total fraudulently earned profits. But then they tacked on an extra $205 billion as interest that could have been earned on that money. The resulting dollar figure that DOJ was then seeking was $280 billion, remarkably close to what it probably would have asked for had the Medicare reimbursement part of the case not been tossed out so early.
Although the trial-court judge, a Clinton appointee, approved the novel civil RICO approach last May, a three-judge panel on the D.C. Court of Appeals last month said that the government could not seek any monetary damages. Thus, no more $280 billion. Not even $280, for that matter. No wonder the trial judge described the ruling as a “body blow” to the government’s case.
Most legal experts agree that although the government plans to appeal en banc, meaning before the full appeals court, odds of the disgorgement option being reinstated are slim. Odds are slimmer still that the Supreme Court would do so.
Even if the government wins the civil RICO case, it would be a hollow victory. It is almost certain that the defendants will have to pay nothing, regardless of the outcome of the actual trial (which is ongoing while DOJ files its appeal on RICO). Moreover, the non-monetary relief sought by the government consists mostly of things like disclosing health risks and funding public-awareness campaigns. But the top tobacco companies are already taking such steps as a result of the $246 billion settlement with 46 states.
What has DOJ sacrificed? Plenty. When the case started more than five years ago, it dedicated 16 highly skilled attorneys to the case. Today, that number has ballooned to 35 full-time lawyers, out of a total civil attorney staff of more than 800. At a time Justice Department attorneys could be used to target the financing of terrorists and their front groups, the Bush administration is wasting 35 of them in a quixotic campaign to flagellate Big Tobacco.
Of course it’s hard to have sympathy for the makers of cancer sticks, but almost a decade of toiling by the government — and likely well over $200 million when it’s all over — will yield next to nothing. All the government is playing for at this point is something it can claim as a victory, which at this point is the modest changes in cigarette marketing.
To which taxpayers should ask: How many more millions will be spent to salvage the government’s pride?
