Imperial Tobacco Canada, federal government and provinces reach resolution on contraband tobacco investigation

    MONTREAL, July 31 /CNW Telbec/ - Imperial Tobacco Canada today announced
that it has reached a resolution with the federal and all ten provincial
governments with regards to the ongoing investigation related to the export to
the United States of Imperial Tobacco Canada tobacco products in the late
1980s and early 1990s.
    Today in Montreal, the Company entered a plea of guilty to a regulatory
violation of a single count of section 240 (1) (a) of the Excise Act and has
paid a fine. The Company has also entered into a 15-year civil agreement (the
Comprehensive Agreement) with the federal and provincial governments.
    "We are pleased to have resolved this issue," said Benjamin Kemball,
president and CEO of Imperial Tobacco Canada. "Today's events give our
business the stability it needs to move forward to address, with clarity and
focus, the issues, opportunities and challenges it faces today and will face
in the future."
    The Company believes that this outcome is in the best business interests
of Imperial Tobacco Canada as it provides closure to this issue that dates
back many years, as well as providing a framework to work with the authorities
on current and future illicit trade issues.
    Imperial Tobacco Canada paid a one-time $200 million fine following the
    In addition to the fine set out above ($200 million), and in order,
amongst other things, to assist governments in their ongoing future efforts
against illicit trade, Imperial Tobacco Canada has agreed to a civil agreement
(the Comprehensive Agreement), requiring a payment of $50 million in 2008 and
a percentage of Imperial Tobacco Canada's annual net sales revenue going
forward for 15 years up to a maximum of $350 million.
    The most significant determinant of Imperial Tobacco Canada's future net
sales revenue is expected to be the current and future levels of illicit
tobacco sales in Canada.
    Rothmans, Benson & Hedges Inc. (RBH) has entered into a similar
    As part of the civil agreement, the Company, the federal government, the
provinces and RBH will work together on initiatives to fight the growth of
illegal tobacco products, which in 2007 accounted for an estimated 20 percent
of the tobacco market in Canada.

    Imperial Tobacco Canada is and has been committed to educating Canadians
on the current problem of illicit trade, which is very different to the
situation 20 years ago; to financing research into the phenomenon; and to
working with governments and business partners. Imperial Tobacco Canada looks
forward to continued cooperation between all those concerned with this social,
economic and business issue.
    Further information on Imperial Tobacco Canada is available on the
Internet at:

For further information:

For further information: Media: Catherine Doyle, Manager, Corporate
Communications, (514) 932-6161, ext. 2113

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