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• White House Sought to Soften Anti-Terrorism Legislation in Support of Tobacco Companies 

The Bush administration sought to use anti-terrorism legislation, rushed through Congress in the wake of the Sept. 11 attacks, to shield U.S. tobacco companies from foreign lawsuits alleging cigarette smuggling and money laundering.

The White House backed a tobacco industry proposal that would have blocked foreign governments from using U.S. courts to go after corporate tax cheats. Canada, the European Union and the governors of Colombia have filed federal civil racketeering lawsuits, seeking billions of dollars in lost revenue and damages from the world’s largest tobacco companies. The suits allege the companies smuggled their cigarettes to evade taxes and duties on their products.

Known in legislative parlance as a "rule of construction," the administration-backed measure was added to the Financial Anti-Terrorism Act of 2001 late on Oct. 16, on the eve of its passage in the Republican-controlled House of Representatives. But the rule ran into strong opposition from Democratic senators and was not part of the USA PATRIOT Act, which President Bush signed into law on Oct. 26. House wording that would have expanded existing law on money laundering crimes to include specifically fraud against foreign governments, however, was eliminated.

The rule of construction did not refer directly to tobacco companies. But it was backed by the White House, Rep. Tom DeLay, R-Tx., and lobbyists for the tobacco industry, including the U.S. Chamber of Commerce, congressional sources said.

Proposed wording in the Oct. 15 U.S. Chamber of Commerce letter to Treasury Secretary Paul O’Neill

"Notwithstanding this Act or any other provision of law, no federal or state court shall have jurisdiction over any civil action or claim that has as its aim or effect the recovery of damages for the non-payment of taxes or duties under the revenue laws of a foreign state, or any political subdivision thereof, except as such actions or claims are authorized by a United States treaty that provides the United States and its political subdivisions with reciprocal rights to pursue such actions or claims in the courts of the foreign state and its political subdivisions."

The "Rule of Construction" wording from the Oct. 16 version of H.R. 3004

"None of the changes or amendments made by the Financial Anti-Terrorism Act of 2001 shall expand the jurisdiction of any Federal or State court over any civil action or claim for monetary damages for the nonpayment of taxes or duties under the revenue laws of a foreign state, or any political subdivision thereof, except as such actions or claims are authorized by United States treaty that provides the United States and its political subdivisions with reciprocal rights to pursue such actions or claims in the courts of the foreign state and its political subdivisions."

"The White House wanted it there," one source said, adding, "The White House put pressure on us to make the case even stronger for the Chamber."

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None of the changes or amendments made by the Financial Anti-Terrorism Act of 2001 shall expand the jurisdiction of any Federal or State court over any civil action or claim for monetary damages for the nonpayment of taxes or duties under the revenue laws of a foreign state, or any political subdivision thereof, except as such actions or claims are authorized by United States treaty that provides the United States and its political subdivisions with reciprocal rights to pursue such actions or claims in the courts of the foreign state and its political subdivisions.
The "Rule of Construction" wording--backed by the White House, Rep. Tom DeLay, R-Tx., and lobbyists for the tobacco industry, including the U.S. Chamber of Commerce-- from the Oct. 16 version of H.R. 3004. Encountering strong opposition from Democratic senators, the rule was not part of the USA PATRIOT Act, which President Bush signed into law on Oct. 26. Beelman, M.