In the first case growing out of the Justice Department’s criminal investigation of the tobacco industry, a California biotechnology firm agreed Wednesday to plead guilty to scheming with tobacco giant Brown & Williamson to breed a high-nicotine plant.
The company, DNA Plant Technology Corp. of Oakland, is cooperating with the government’s 3-year-old investigation. The charges of export-law violations come as the tobacco industry is trying to win congressional approval for a national settlement of lawsuits against it and may give industry foes extra ammunition to push for more concessions.
In court papers, the Justice Department did not name the tobacco company cited as an unindicted co-conspirator. But officials familiar with the inquiry said it was Brown & Williamson Tobacco Corp., the third-largest cigarette maker, which produces the Kool, Raleigh and Viceroy brands.
In a statement, Brown & Williamson said it had not been charged with any violation, so it would be inappropriate to comment specifically on the charges. The company did acknowledge the experiment but said it began as part of an effort to produce safer cigarettes, not to manipulate the level of nicotine.
The Justice Department probe began in 1994 after several lawmakers wanted to know whether industry executives committed perjury when they testified before Congress tobacco is not addictive. Since then, the continuing investigation has expanded to cover fraud allegations.
Rep. Martin Meehan, D-Mass., one of the lawmakers who requested the criminal investigation, called Wednesday’s charges “just the tip of the iceberg.” He predicted they would have a “major impact” on efforts to pass a $368.5 billion settlement that would include limits on the industry’s future liability for deaths and illness caused by cigarette smoking.
“Members of Congress will likely have reservations about providing sweeping protections to tobacco companies that have either been indicted or have pleaded guilty to criminal charges,” Meehan said.
Scott Ballin, a policy consultant for the Campaign for Tobacco-Free Kids, an anti-smoking group, added, “It’s one more piece of ammunition that puts pressure on the industry to give more.”
But Steve Duchesne, an industry spokesman, said the companies do not expect Wednesday’s charges to affect negotiations. “I think the issues raised Wednesday by some will be addressed in the agreement,” he said.
Court papers filed here Wednesday say in 1983 the biotech company, known as DNAP, entered into a contract with the tobacco company to grow and improve high-nicotine tobacco. Higher levels of nicotine are believed to help hook smokers on cigarettes.
One variety of flue-cured tobacco included in the contract had a nicotine level of about 6 percent of the leaf’s weight, twice the normal nicotine level of flue-cured tobacco. The tobacco company code named the potent strain Y-1, legal papers said.
The court papers said DNAP conspired with the tobacco company and its Brazilian affiliates to export tobacco seed from the United States without a permit, in violation of federal law. DNAP was charged with one misdemeanor count.
Between 1984 and 1991, when the export law was repealed, employees of DNAP and the tobacco company also illegally exported tobacco seeds to Nicaragua, Honduras, Chile, Nigeria, Costa Rica, Argentina, Zimbabwe and Canada, government documents said.
Growing the plants in Brazil helped conceal the Y-1 work from competing tobacco companies, government documents say. At the same time, the research could proceed more quickly because the timing of the Brazilian growing season enabled companies to grow two tobacco crops a year instead of just one.
In addition, working abroad had appeal because U.S. regulations prohibited the commercial growing of such high-nicotine tobacco, according to government documents.
The government charged employees of DNAP and the tobacco company illegally shipped the seed by air express or courier.
DNAP said Wednesday the misdemeanor charge relates to work performed under the 1983 research contract on tobacco with elevated levels of nicotine.
The maximum penalty for the misdemeanor violation is a fine of $200,000, or twice the monetary gain to DNAP under the contract.
In its statement, Brown & Williamson said there was nothing secretive about the development of Y-1 tobacco.
The effort goes back to the 1970s, the tobacco company said, when an official of the U.S. Department of Agriculture was attempting to produce what was then characterized as a potentially “safer” cigarette, meaning one that would yield lower tar while maintaining the same level of nicotine.