AGO sues Philippine tobacco firm

The Attorney General’s Office sued a Philippine tobacco maker at the Superior Court yesterday to compel the firm to deposit close to $5,000 into the Commonwealth’s tobacco escrow fund.

The AGO also asked the court for an order imposing a penalty of over $14,000 on La Suerte Cigar & Cigarette Factory.

CNMI consumer counsel Brian Caldwell said the company has failed to meet certain obligations required by Public Law 13-15, which requires tobacco manufacturers selling products in the Commonwealth to participate in the Master Settlement Agreement entered into by leading tobacco manufacturers in the United States and the nation’s states and territories.

Otherwise, a non-participating manufacturer should deposit a certain amount into the CNMI’s tobacco escrow fund by April 15 of the year following the year when it sold products locally. The law provides a formula to compute the amount a manufacturer is supposed to deposit in escrow, which is proportionate to its sales.

Caldwell said that cigarette brands “Astro” and “Cannon,” manufactured by La Suerte, were sold in the Commonwealth. In 2003, he said sales of those cigarettes—whether directly, by distributor or retailer—reached at least $250,000.

Caldwell said the estimate was based on excise taxes collected by the Division of Customs and reports by licensed cigarette wholesalers in the CNMI.

“La Suerte failed to comply with its obligations under the Commonwealth Tobacco Escrow Statute, including failing to certify to the Attorney General that it has established a qualified escrow fund and that it made a proper deposit into this fund with regard to the units of cigarettes it sold in the Commonwealth during the year 2003,” Caldwell said.

He said La Suerte should have deposited in escrow some $4,188.48 by April 15, 2004.

The consumer counsel also said that La Suerte knowingly failed to comply with its obligation, despite being notified by his office via letter sent to the company on Aug. 10, 2004. La Suerte reportedly failed to respond to the AGO’s letter.

Citing the statute, Caldwell said La Suerte should pay the government a civil penalty of $14,621.49. Should the court find the violation unintentional, Caldwell said the civil penalty may reach some $4,873.83.

The consumer counsel also asked the court to prohibit La Suerte—whether directly or through a distributor, retailer or similar intermediary—from selling its products in the CNMI until it fully complies with the tobacco escrow law.