imperial tobacco canada - July 31- Imperial Tobacco Canada, Federal Government, and provinces reach resolution on contraband tobacco investigation
MONTREAL, July 31, 2008 – Imperial Tobacco Canada today announced that it has reached a resolution with the federal and all ten provincial governments with regards to the ongoing investigation related to the export to the United States of Imperial Tobacco Canada tobacco products in the late 1980s and early 1990s.
Today in Montreal, the Company entered a plea of guilty to a regulatory violation of a single count of section 240 (1) (a) of the Excise Act and has paid a fine. The Company has also entered into a 15-year civil agreement (the Comprehensive Agreement) with the federal and provincial governments.
“We are pleased to have resolved this issue,” said Benjamin Kemball, president and CEO of Imperial Tobacco Canada. “Today’s events give our business the stability it needs to move forward to address, with clarity and focus, the issues, opportunities and challenges it faces today and will face in the future. ”
The Company believes that this outcome is in the best business interests of Imperial Tobacco Canada as it provides closure to this issue that dates back many years, as well as providing a framework to work with the authorities on current and future illicit trade issues .
Imperial Tobacco Canada paid a one-time $200 million fine following the plea.
In addition to the fine set out above ($200 million), and in order, amongst other things, to assist governments in their ongoing future efforts against illicit trade, Imperial Tobacco Canada has agreed to a civil agreement (the Comprehensive Agreement), requiring a payment of $50 million in 2008 and a percentage of Imperial Tobacco Canada’s annual net sales revenue going forward for 15 years up to a maximum of $350 million.
The most significant determinant of Imperial Tobacco Canada’s future net sales revenue is expected to be the current and future levels of illicit tobacco sales in Canada.
Rothmans, Benson & Hedges Inc. (RBH) has entered into a similar resolution. As part of the civil agreement, the Company, the federal government, the provinces and RBH will work together on initiatives to fight the growth of illegal tobacco products, which in 2007 accounted for an estimated 20 percent of the tobacco market in Canada.
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Eric Gagnon
Manager, External Communications
Tel: (514) 932-6161, ext. 2113