State seeking $8.1 million in tobacco case

The state of Mississippi hasn’t received millions of dollars in tobacco settlement money because one of the companies who entered into the 1998 tobacco settlement failed to report profits from the sale of 7.8 billion cigarettes made for Star Tobacco and Pharmaceuticals, Inc., the state argued Monday.

Brown and Williamson Holding, Inc., which later merged with R.J. Reynolds, manufactured and shipped the cigarettes to Star as part of a contract they’d entered into. However, special counsel Gary Wilson argued Monday, the cigarettes were sold for profit in the United States, though Brown and Williamson failed to report those sales as part of the profits that went into calculating the payments in the tobacco settlement.

Attorney General Jim Hood filed suit in 2010 alleging that the miscalculations “resulted in artificially low payments in Mississippi for 2001 and for every year thereafter in which Mississippi was entitled to a net operating profits adjustment.”
Star sold the cigarettes using such brand names as Gunsmoke and Vegas, research showed, between 1999 and 2002. The company that manufactured their cigarettes, Brown and Williamson, were a part of the master tobacco settlement agreement in 1997 that encompassed 46 states.
Mississippi, Wilson said, is due to be repaid the $3.6 million it was denied plus interest for the years it went unpaid, bringing the total amount to an estimated $8.1 million at the end of June.