Canadian companies shipped crates of cigarettes to American subsidiaries; the cigarettes were then sold to smugglers and brought illegally into Canada through native reserves and border checkpoints; once back in the country, the cigarettes were sold to consumers at a big discount - sometimes for about half the price of legally purchased smokes.
It noted that the federal and provincial governments filed claims for nearly $10 billion over contraband smokes. Mahood said that makes the $550-million settlement "a complete sellout."
"Canadian governments led by the feds had an opportunity to play hard ball, to build trust among Canadians in the rule of law related to white-collar crime. Instead, they blew away the opportunity to recoup billions of desperately needed lost tax revenues and made big tobacco financially stronger, with a greater capacity to prey on our children."http://www.cbc.ca/cp/national/100413/n0413113A.html