Big Tobacco’s Liggett Group Agrees to Aid Federal Probe

Ratcheting up the pressure on Big Tobacco, the Justice Department announced Tuesday that renegade cigarette maker Liggett Group Inc. has agreed to assist its long-running criminal investigation of the tobacco industry.

In a terse written statement, Justice officials said that, under the cooperation agreement, which does not include a promise of immunity, Liggett will furnish “truthful, complete and accurate information” about alleged industry wrongdoing. Since 1994, Justice has been investigating whether tobacco companies defrauded Congress and public health agencies by lying about their knowledge of the risks of smoking.

“We see [the agreement] as a great breakthrough--legally and from a morale standpoint,” said John Russell, a Justice Department spokesman.

Cliff Douglas, an anti-tobacco lawyer who has closely monitored the investigation, said he believes that the agreement “raises the likelihood that indictments will be issued in the near future.”

Others questioned the significance of Liggett’s decision.

“If they’ve announced that they’re cooperating, that’s good because they should be cooperating,” said Michael York, an attorney for industry leader Philip Morris. “Philip Morris has been cooperating with the Department of Justice from the outset of the investigation.”

Justice officials, who have been extremely secretive about the inquiry, listed areas in their statement in which Liggett might be helpful--and in the process went further than they had previously in discussing the scope of the investigation.

They said Liggett will provide information about:

* Industry knowledge of the health risks and addictiveness of smoking.

* The practice of trying to market cigarettes explicitly to children.

* Manipulation of nicotine by the industry.

* Control of scientific research through the putatively independent Council for Tobacco Research.

* Involvement of lawyers in “crafting false or misleading statements” made by the companies to Congress and the public.

For Liggett, the agreement is the latest step in a calculated strategy of distancing itself from its larger and more successful rivals. A former industry giant that now accounts for less than 2% of U.S. cigarette sales, the company rocked the industry in 1996 and again last year in a pair of settlement agreements with state attorneys general who had sued cigarette makers to recover smoking-related health-care costs.

As part of the second of the settlements, Liggett became the first tobacco company to admit that smoking causes cancer and heart disease and is addictive. It also stated that the industry deliberately targeted underage smokers.

Over the strenuous objections of its larger rivals, the company also provided attorneys general with a trove of previously secret documents, which since have been turned over to the Justice Department.

In a statement issued Tuesday, Bennett S. LeBow, chairman of Brooke Group Ltd., Liggett’s corporate parent, said the company two years earlier “broke ranks with Big Tobacco” and was continuing to pursue “a policy of cooperation rather than confrontation.”

LeBow took Liggett’s helm only in 1986, after most of the conduct under Justice Department scrutiny had occurred.

A Justice Department official, who declined to be identified, said: “LeBow has his own approach and must have decided that the best way out is to switch rather than fight. . . . He sees salvation as being on the side of the government.”

In a letter to Liggett attorney Stanley S. Arkin from a key Justice official, the agency emphasized that no favors were being promised.

“Your clients’ offer of cooperation and the government’s acceptance of it is unconditional,” said the letter signed by Mary C. Spearing, chief of Justice’s fraud section.

“The government has made, and is making, no promises or representations of immunity to your clients . . . and retains full discretion to bring appropriate charges in the future.”

Rep. Martin T. Meehan (D-Mass.), who made the original request to Justice to launch the criminal investigation, said the fact that investigators did not offer immunity to Liggett “is an indication that the department has a very strong case against the industry.”

But a lawyer familiar with the case said there must be more to the deal than Liggett’s unconditional promise to cooperate.

For one thing, he said, a corporation does not have 5th Amendment privileges and so must respond to a criminal subpoena. For another, he said, a corporation cannot waive the 5th Amendment rights of individual employees or officers who elect not to testify.

On another front in the smoking wars, sources close to the tobacco litigation said representatives of more than 30 Blue Cross-Blue Shield plans will announce plans today to sue the tobacco industry over expenditures to treat sick smokers.

The suits would be similar to the one filed by Blue Cross of Minnesota, which along with the state of Minnesota has been in trial against the industry in St. Paul for more than three months.

And in another development, the Senate set May 18 to begin floor debate of a Commerce Committee bill that would require tobacco firms to pay $516 billion over 25 years to repay health-care costs and fund health programs and would restrict tobacco advertising and marketing.

House leaders, however, continued to fall short in efforts to reach agreement on how to handle tobacco legislation.

Republican leaders shot down a proposal by Commerce Committee Chairman Thomas J. Bliley (R-Va.) to move ahead on a narrow bipartisan bill with Rep. Henry A. Waxman (D-Los Angeles) and John D. Dingell (D-Mich.), according to Republican sources.

Bliley’s approach would have dropped controversial provisions to raise the price of cigarettes and to give the tobacco industry limited protections from future lawsuits. His bill also would have excluded limits on fees for the lawyers involved in tobacco litigation--a provision that many Republicans insist on.

“This was the first time the leadership heard [Bliley’s] plan and they needed some time to think about it,” said a senior staff aide. “There was nothing about the lawyers’ fees in it and that was a problem.”

Levin reported from Los Angeles and Ostrow from Washington. Times staff writer Alissa J. Rubin in Washington contributed to this story.