TN says Colombian cigarette maker owes $300,000

Tennessee's attorney general has filed suit against a South American cigarette maker, claiming the company failed to make legally required payments.
In a lawsuit, the state claims Bucaramanga, Colombia-based cigarette company Procesadora Nacional Cigarillera S.A., also known as Pronalci S.A., owes $300,000 for cigarettes sold in 2009.

The state claims that money should have been paid into an escrow account to help Tennessee pay health-care costs the state must cover to treat smokers.

Tennessee and 45 other states signed a legal settlement agreement with the country's four largest tobacco companies in 1998 to end state lawsuits over smoking-related illnesses and deaths.

Since 2000, Tennessee has received more than $1.5 billion from those companies through the settlement agreement, which expires in 2025.

Some states use the settlement money for payments to farmers to offset tobacco crop losses or for anti-smoking programs such as helping smokers quit.

Tennessee has been criticized because it funnels the payments directly into the state's general fund, where it pays for government operations.

The agreement restricted the advertising, marketing and promotion of cigarettes. It also ordered the country's largest tobacco companies to pay set costs based on cigarette sales to states to help offset the cost of smoking-related health care.

In exchange, states gave up claims that the tobacco companies had violated deceptive practice and consumer protection laws, Deputy Attorney General John Sinclair said.

Penalties also sought

Because they weren't part of the original settlement, smaller companies like Pronalci don't have to follow the same advertising rules, Sinclair said. But to get licenses to sell their products in Tennessee, all cigarette manufacturers are required to pay into separate escrow accounts.

Sinclair said 23 smaller cigarette companies pay into escrow accounts quarterly. If the state decided to sue those companies for tobacco impact payments, Sinclair said, it would seek access to the money in those accounts.

Tennessee is asking a judge to force Pronalci, which makes Poker brand cigarettes, to pay the full amount into the escrow account and is also seeking penalties.

Contact Clay Carey at 615-726-5933 or mcarey@tennessean.com.

Washington Report: Good Faith Estimate Mortgage DisclosuresTN unemployment fund may need a loan