WASHINGTON -- The Justice Department has convened a grand jury in New York to investigate whether tobacco companies misrepresented to federal regulators the contents and ill effects of cigarettes. The department is likely to convene a second panel here to investigate whether company executives lied to Congress about tobacco products.
It is the first time the federal government has moved against tobacco companies or their executives.
Investigators at the Justice Department's criminal division in Washington and the Manhattan office of the U.S. attorney have been reviewing industry documents and congressional testimony for some time.
The inquiry in Manhattan has now been expanded to a full investigation in which corporate executives have been subpoenaed to testify and provide access to the thousands of private company documents on nicotine and the health hazards of smoking.
The possible convening of grand juries was reported yesterday by the Wall Street Journal.
The top executives of the seven leading U.S. tobacco companies were questioned individually by a congressional committee in April 1994, and all testified under oath that they did not think that nicotine was addictive, that cigarettes caused disease or that their companies manipulated the level of nicotine in tobacco products.
But shortly after that testimony, documents from Brown & Williamson Tobacco Corp. were made public that appeared to contradict the testimony. Critics of the tobacco industry contend that the documents showed that company officials had known for years through their own research that cigarettes were addictive and harmful, and that they did research on these subjects to help design cigarettes while still denying knowledge of the hazards publicly.
As a result, several members of Congress wrote to Attorney General Janet Reno asking her to consider charges of perjury and fraud against the executives and the companies. She referred the matter to the department's criminal division.
At first, Justice Department officials said, the matter was treated as a routine request from members of Congress seeking an investigation. But in recent months the inquiries turned more serious and potentially ominous as the government moved toward convening grand juries, a step that could lead to criminal charges.
It is unusual for the government to seek perjury charges against people for their testimony before Congress. A Justice Department spokesman said the most recent federal perjury prosecution involving Congress related to testimony in 1986 about the Iran-contra investigation.
Philip Morris U.S.A. confirmed late yesterday that it had received a subpoena for "some company documents" from the U.S. attorney for the Southern District of New York.
In a statement, the company said the subpoena was served "following a June 8 New York Times article that made allegations about company documents and supposedly secret research, which we refuted in an as yet unpublished letter to the Times."
The accusations of perjury and fraud are "wholly without merit," the statement went on.
"It is clear from the recent news leaks and attacks against the company and industry that the FDA and many of its anti-smoking allies are engaged in a carefully orchestrated campaign to assert greater regulatory control over tobacco and to limit the rights of adults to make decisions for themselves."
Officials at the White House, including President Clinton and Vice President Al Gore, met Monday to discuss two approaches to the proposed regulation of tobacco.
The Food and Drug Administration has proposed classifying nicotine as a drug and restricting children's access to tobacco by banning vending machines and promotional campaigns intended for children.
A second option suggested at the meeting was to ask the companies to agree to similar actions voluntarily. White House spokesman Michael McCurry said the president was leaning toward the "voluntary" option.
Tobacco regulation of any kind was made especially troublesome by the takeover of Congress by Republicans, who have named some of the strongest proponents of tobacco to important committee positions.
House Speaker Newt Gingrich, a Georgia Republican, and Republican Rep. Thomas J. Bliley Jr. of Virginia, head of the Commerce Committee, which oversees the FDA, are among those in Congress who have received the largest campaign contributions from tobacco interests.
Television advertising of tobacco products has been illegal for more than 20 years, under restrictions enforced by the Federal Trade Commission. In June, the Justice Department reached an agreement with Philip Morris in which the company agreed not to place cigarette advertising in places likely to be visible in televised sports events.
Tobacco companies are also under assault in the courts, where class action lawsuits and lawsuits by four state governments are seeking billions of dollars in damages for smoking-related diseases.