Tobacco firms to pay $360bn to settle law suits

After decades of resistance, the tobacco giants yesterday acknowledged the health risks of smoking by signing a watershed agreement in the United States to pay $360bn (pounds 218bn) to settle suits against the industry and fund anti-smoking campaigns.

The deal, which still needs the approval of both President Bill Clinton and the US Congress, represents a stunning capitulation by an industry that has consistently dismissed the dangers of smoking. In return, it will receive sweeping protection from existing and future lawsuits in the US.

Under the settlement's provisions, the companies will accept harsh new restrictions on their marketing strategies - it is goodbye time for the Marlboro Man and Joe Camel - as well as power being granted to the US Food and Drug Administration to control the nicotine content of cigarettes.

"We wanted to settle on something that would punish the tobacco industry," remarked Michael Moore, the Attorney General of Mississippi. "This is the most important public health agreement in history. This is the beginning of the end of the way the tobacco industry has treated the public."

At the table since the negotiations began in early April were the world's three largest tobacco combines: Philip Morris, RJR Reynolds and the London- based British American Tobacco (BAT). In the opposing camp were public health advocates and the attorneys general of 40 US states that had planned to sue the industry to reclaim billions in medical costs.

If it is ratified, the settlement will sweep away all the state and class- action lawsuits ranged against the industry, and outlaw future class-action lawsuits. Of the total payout being asked of the companies, to be disbursed over 25 years, $300bn will settle state medicare suits and help to finance future anti-smoking programmes.

The extra $60bn was agreed in the last stages of the negotiations as "punishment" to be paid by the industry for past sins in selling an addictive product. That sum will be put aside by the government to pay for health insurance for children not presently covered.

Britain's largest tobacco company, the Gallaher Group, which makes Benson & Hedges and Silk Cut, said the ruling would increase pressure for anti- smoking advertising in this country. But a spokesman said the company would continue vigorously to defend claims against it here. "We have full confidence in the judicial process."

The first test case brought by a lung cancer victim goes to the High Court on 1 July. Forty- seven people have started proceedings against Gallaher and Imperial Tobacco.