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CONTENTS: JULY 7, 2000

Click. FBI bugged by NTT's plans to buy Verio, newspaper says.

Click. Biofem exec is on his guard.

Click. U.S. MERCENARIES AND FOREIGN POLICY.

Click. HOW INDIAN RESERVATIONS ARE USED TO AVOID TAXES.  U.S. Judge Kills Canadian Tobacco Lawsuit


HOW INDIAN RESERVATIONS ARE USED TO AVOID TAXES. U.S. Judge Kills Canadian Tobacco Lawsuit

SYRACUSE, N.Y. (AP) - A federal judge dismissed Canada's $1 billion lawsuit
accusing R.J. Reynolds Tobacco Co. of smuggling cigarettes into Canada
through an Indian Talk About It Should tobacco companies pay for the health of smokers?

U.S. District Judge Thomas McAvoy ruled that American courts have no
jurisdiction.

An 18th-century English common-law rule adopted by the United States
prohibits using federal courts to collect another country's revenue. Critics
say the so-called Revenue Rule is outdated in an era of closely linked
economies and tax treaties, and McAvoy suggested in his ruling Friday that
he would like to see a higher court consider its validity.

``Obviously, we are disappointed,'' said Gordon Bourgard, a Canadian general
counsel. He said Wednesday that the Canadian government is reviewing its
options, which include appealing in the U.S. courts or pursuing the case in
Canada.

Canada filed the civil case in the United States because it could pursue triple damages under federal racketeering law. The United States also has stronger mail and wire fraud statutes, Bourgard said.

The lawsuit, filed in December, alleged that RJR and related companies set
up an elaborate network of smugglers and a shell company - Northern Brands
International - to flood Canada with cheap cigarettes after the government
doubled taxes and duties on tobacco in 1991.

Authorities said the ring smuggled $687 million worth of cigarettes and alcohol into Canada from 1991 to 1997 through the St. Regis Mohawk Reservation that straddles the Canada-New York border.

Nearly two dozen people were convicted, including several Mohawk businessmen, a former tribal chief and a top tobacco executive with Northern
Brands.

RJR has denied it played any role in the smuggling ring.

``We are pleased that the federal court dismissed this case, which should have never been brought in the first place,'' the tobacco company said in a statement Wednesday.

The case marked the first time a foreign government used the civil provisions of U.S. racketeering law to target a tobacco company for alleged cigarette smuggling.

Colombia and Ecuador have followed suit. In May, Colombia sued Philip Morris
Cos. in New York for $3 billion, demanding tax revenue lost because of alleged smuggling and laundering of drug money.

Last month, Ecuador sued more than a dozen U.S. tobacco companies in
Florida, including Philip Morris and RJR, alleging they smuggled tobacco
products in and out of the South American country without paying taxes.

http://news.findlaw.com/news/s/20000705/tobacco.html

Copyright © 1994 - 2000 FindLaw, Inc.



U.S. MERCENARIES AND FOREIGN POLICY.

Published: July 07, 2000 Author: Justin Brown, Christian Science Monitor

WASHINGTON: Faced with more overseas commitments and fewer resources, the US is increasingly relying on private military companies to do some of its most difficult international jobs. These aren't the mercenaries who parachute into hot spots, guns blazing, for cold cash. But they're controversial nonetheless.

Over the past 10 years, private military companies, or PMCs, have quietly taken a central role in the exporting of security, strategy, and training for foreign militaries. In the proc-ess, PMCs are raising questions about the privatisation of foreign policy, and whether a profit-seeking company can be accountable with limited government oversight. Often, the companies are training armies in turbulent areas. And, once granted an export license, they are minimally supervised.

Most recently, for example, the State Department approved a license for a US company to help bolster security in Equatorial Guinea, an African country of half a million people that is run by a military dictator and has no US embassy.

It is noted that the PMCs are staffed mostly by retired military officials and have eased the pressure on US troops, which are increasingly burdened by foreign interventions and peacekeeping missions.

And PMCs dovetail with a larger US policy of encouraging military-to-military ties, in the hope that a professional army can stabilise a fragile democracy. Thus in some countries, the military firms may be tools of nation-building, not destruction. In Nigeria, where the US recently restored military aid after an era of dictatorship, some aid will pay for a private firm to train a more responsible military.

Because PMCs are not categorized by the US government, and they have received little public attention, it is difficult to determine their scope.

But the industry has been expanding for the past 10 years, and is thought to be worth several billion dollars. During the 1990s, PMCs trained militaries in some 42 countries. Analysts estimate that there are as many as 20 legitimate companies in the US, the largest of which claims to do about $25 million a year in overseas business.

Smaller organizations, which sometimes provide overseas security, are thought to be more numerous, but are hard to track - little more than a company president and a Rolodex full of names.While some of the companies, particularly those from South Africa and Britain, have been labelled "mercenaries," and have indeed provided firepower for hire, the US firms have far better reputations, and often work hand-in-hand with the Pentagon. Their ranks include former four-star generals.

In the US, the training services are sometimes paid out of the annual foreign aid bill, doled out to friendly or promising countries that may have unstable governments or militaries, such as Nigeria and Colombia. Other times, companies are hired directly by the host country and approved by the US.

Advocates of PMCs say they are more cost-efficient than traditional military forces, although some critics question that. The only government regulation of PMCs comes through the State Department, which handles their export licensing in much the same manner as it would a crate of guns, says a State Department spokeswoman.

The largest US company, Military Professional Resources Inc. (MPRI) in Alexandria, Va., made a name for itself by training the Croatian Army near the end of the Yugoslav wars. It was viewed as the brains behind the army's most successful campaign,Operation Storm, although MPRI denied that. It also worked in Bosnia, including a mission to prevent cross-border arms transfers. The firm's employees are never armed, but, military experts say, knowledge and training are often just as valuable as firepower in most armed conflicts.

"No one has ever carried a gun while at MPRI," says Harry Soyster, a company spokesman who is a retired lieutenant general and a former head of the Defense Intelligence Agency. "Sure, it gets in the way of business every now and then, but that's all right."

This week, MPRI expects to get government approval to go into Equatorial Guinea, an agreement that illustrates the questions some critics have with a so-called privatisation of foreign policy.

The contract was initially rejected by two State Depart-ment desks, holding it up for two years, Soyster says. It was approved only after MPRI lobbied the department's Africa desk, arguing that if it was not allowed to do the job, someone else would. Equatorial Guinea, most of which is an island off western Africa, will pay for the contract. It wants to develop a coast guard to protect its vast oil resources, which are being tapped by Mobil Oil, Soyster says.

In doing so, the government could secure probably strengthen its grip on power. Yet the government of President Teodoro Obiang Nguema is a rampant violator of human rights, accused of political killings, election fraud, and questionable monetary practices, according to the 1999 State Department world report on Human Rights. Equatorial Guinea's closest allies seem to be North Korea and Cuba, and it was once the brunt of State Department jokes as the worst overseas post. In 1993, US ambassador John Bennett receiv-ed a death threat for trying to save local political prisoners. "The question is, 'Do you want to train a military in modern techniques so it can preserve itself?'" says Arvind Ganesan, who follows the issue for Human Rights Watch.

David Isenberg, an arms-control analyst at DynMeridian, a consulting firm, says PMCs are often used in these borderline situations, when working through official channels is either too cumbersome or politically difficult. "The administration likes it because it avoids the prospect of creating a furore if [something goes wrong]," he says. But, he explains, the US needs to do a better job of regulating PMCs, which by and large are willing to follow clearly laid rules.

"If the government wants to get the most out of them, they need to regulate them," he says. "That would quiet ... fear that they could become rogues or soldiers of fortune." -Dawn/LATS (c) The Christian Science Monitor.


Biofem exec is on his guard.

CRIME: Aftermath of being shot in the face has been a 'sobering experience,' CEO James Riley says.

July 7, 2000. By BILL RAMS © 2000. The Orange County Register

James Patrick Riley now sleeps with a gun next to his bed. He screens his calls and activates his home alarm every night. He has grown a moustache to cover the scar where the bullet exited his face.

The chief executive of Biofem Inc. said in an interview Thursday that he still has a difficult time with the idea that his former business partner masterminded a plot to kill him.

"You can't believe anybody you know would try to murder you," said Riley. "I am not in a profession where that's an occupational hazard."

Riley, 58, said he has been reluctant to talk publicly about the shooting. He came forward only after repeated urgings from investigators, who believe his talking publicly will help them find the shooter.

He spoke first with the television show "America's Most Wanted," which will recreate the events leading to the shooting for a show to air Saturday night. Riley has also offered a $10,000 reward for information leading to the arrest and conviction of the gunman. Police said Wednesday that they are looking for a man named Tony or Antonio Rodriguez for questioning. He was an employee of the alleged getaway driver.

"It's still hard for me to put it all together," Riley said. "I am still waiting to see all the facts, but I do want all the parties involved in this brought to justice."

Riley was shot in the face as he exited his Audi in front of Biofem's Irvine Spectrum office Feb. 28. He said he turned his head away from the office just as the masked gunman shot him from about a foot away.

"I am fortunate to be alive. I have a responsibility now to make my days count."

After being shot, Riley said, he fell to the ground and said a little prayer.

Then he ran to a nearby deli and asked them to call 911. Remembering his cell phone, Riley dialed his business partner, Dr. Larry Creed Ford.

Ford rushed down and applied pressure to the wound.

Riley thought that he was the victim of a random attack.

"Later I was told by police that it wasn't random at all," he said. Riley said he was shocked at the investigators' theory: Ford was involved in an attempt to assassinate him.

As Riley's wounds healed, the attempted-killing investigation began to take a series of bizarre twists.

Police arrested Dino D'Saachs, a longtime friend of Ford's. Two days after the shooting, police searched Ford's home. A day later, Ford shot and killed himself.

An informant had told police that Ford had stored dangerous biochemicals in his home.

Officials evacuated 200 homes and later unearthed illegal firearms and bottles filled with cholera- and typhoid-fever causing bacteria from Ford's home on Foxboro in Irvine. An informant also told police that Ford and his mistress, Biofem employee Valerie Kesler, were experimenting on humans with dangerous drugs. That allegation could not be confirmed, and Kesler never returned to work at Biofem.

The FBI also began investigating Ford for possession of weapons of mass destruction. His ties to the South African government as an apartheid-era adviser on biochemical warfare were examined.

Riley said he has no knowledge of Ford helping the South African government with biochemical weapons.

He said he traveled to that country with him three or four times, but Ford was never away long enough to do anything like what was alleged. They had planned to do their clinical trials.

"I thought he was one of the most brilliant people that I ever met," Riley said.

Riley said he went back to work almost immediately and still has plans to make Biofem successful in development of a suppository for women that prevents the spread of AIDS and other sexually transmitted diseases. But Ford's death has been a setback, he said.

"It's just been a sobering, sobering experience," he said. "I just would really like to see them catch this guy."


FBI bugged by NTT's plans to buy Verio, newspaper says.

The Associated Press

NEW YORK (July 6, 2000 7:24 a.m. EDT) - The FBI has raised security concerns over a Japanese company's attempt to purchase a U.S. Internet service provider, The Wall Street Journal reported Thursday.

The agency registered concerns with the Treasury Department about Tokyo-based Nippon Telegraph and Telephone Corp.'s planned purchase of Verio Inc. of Englewood, Colo., the Journal said, citing lawyers and government officials familiar with the matter.

NTT has offered $5.5 billion for Verio, which links to the Web more than 20 percent of the companies on Standard & Poor's 500-stock index.

An NTT spokesman told the Journal a pending U.S. government review of the deal is a response to FBI and Justice Department concerns that law-enforcement agencies maintain access to Verio's Internet structure to obtain wiretaps and serve subpoenas for information.

In telecommunications deals, the FBI has asked for assurances that only U.S. facilities be used to handle U.S. traffic. The FBI has insisted the companies employ U.S. citizens to handle wiretapping activities.