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RCMP LAYS
CRIMINAL CHARGES AGAINST CANADIAN TOBACCO COMPANY

(TORONTO, February 28, 2003) - After a four and a
half year criminal investigation into allegations of the Canadian tobacco
industry’s complicity in smuggling contraband tobacco products from the
United States into Canada, the RCMP has laid six counts of Fraud and one
count of Conspiracy to Commit Fraud and to Possess Proceeds of Crime
against a major Canadian tobacco manufacturing company and a number of
its' subsidiaries and current and former senior executives.

These charges are laid under Section 380 (1) (a) and
Section 465 (1) (c) of the Criminal Code of Canada. The charges pertain to
activities of the company, its affiliates, its senior officers and others
involved in the smuggling of contraband Canadian blend tobacco products
between 1991and 1996 inclusive.

The companies charged are:

JTI-MACDONALD, CORP., formerly known as RJR-Macdonald, Inc.,
Toronto, Ontario.

R.J. REYNOLDS TOBACCO CO., (Delaware), USA.

R.J. REYNOLDS TOBACCO INTERNATIONAL, INC., (Delaware), USA.

NORTHERN BRANDS INTERNATIONAL, INC., (Delaware), USA.

These companies were all either affiliated companies or
subsidiaries of R.J. R. Nabisco Holdings, Corp., (Delaware), USA during
the time of the alleged offences. A series of mergers and restructuring
resulted in the creation of a holding company now known as R.J. Reynolds
Tobacco Holdings, Inc., (Delaware), USA.

Also charged are current and former employees of these
companies. They are:

EDWARD LANG of Naples, Florida - former member of the Board Of
Directors of RJR-Macdonald, Inc. and former Senior Vice President of
Manufacturing for R.J. Reynolds Tobacco Co.

DALE SISEL of Gillette, Wyoming - former President and Chief
Executive Officer for R.J. Reynolds Tobacco International , Inc.

JAAP UITTENBOGAARD of Jupiter, Florida - former Chief Financial
Officer and Vice President of Finance for R.J. Reynolds Tobacco
International, Inc. and former Director of Northern Brands
International, Inc.

PIERRE BRUNELLE of Geneva, Switzerland and the Province of Quebec -
former President and Chief Executive Officer of RJR-Macdonald, Inc. and
former member of the Board of Directors of RJR- Macdonald, Inc.

PAUL NEUMANN of Geneva, Switzerland - former Vice President of
Finance for RJR-Macdonald, Inc. and current employee of Japan Tobacco
International, Geneva.

ROLAND KOSTANTOS of Geneva, Switzerland - former Chief Financial
Officer for R.J. Reynolds Tobacco International, Inc. and former Vice
President of Finance, Chief Financial Officer, and Vice President of
Finance and Administration for RJR- Macdonald, Inc. Mr. Kostantos is a
current employee of Japan Tobacco International, Geneva.

STANLEY SMITH of British Columbia - former Vice President of Sales
for Canada for RJR- Macdonald, Inc.

And PETER MacGREGOR of Atlanta, Georgia - former Manager of Finance
and Administration for Northern Brands International, Inc.

Also identified in this indictment as an unindicted co-conspirator is
LARRY MILLER of Las Vegas, Nevada and Messena, New York. Mr. Miller is
currently serving seventeen and one-half years in the United States
federal corrections system for smuggling-related offences and for
conspiring to conduct financial transactions that defrauded the United
States and Canada of tax revenue.

All accused have been summoned to appear in court at Old
City Hall in Toronto, Courtroom 111 on Wednesday, March 26th, 2003.

The RCMP alleges that, between 1991 and 1996, the accused
conspired together to commit fraud by agreeing to deal in Canadian blend
cigarettes and fine-cut tobacco in a manner which fraudulently deprived
the governments of Canada, Ontario and Quebec of more than $1.2 billion
dollars in lost revenue through evaded federal excise duties and taxes and
provincial tobacco taxes.

The RCMP also alleges that the revenue of RJR- Macdonald
Inc. derived from the sale of Canadian blend tobacco products into the
United States between 1991and 1996 was a result of this fraudulent
activity, and as such, this revenue is proceeds of crime.

The RCMP
alleges that, between 1991 and 1996, the accused supplied the Canadian
black market with Canadian blend tobacco products manufactured both in
Canada and Puerto Rico, knowing that these products were being smuggled
back into Canada and onto the commercial market.

In addition, the RCMP alleges that the accused furthered
this criminal activity by knowingly facilitating the flow of Canadian
blend tobacco products to Canada through an affiliated company in the
United States and third parties in the Caribbean in order to ensure a
constant supply of the contraband to smuggling channels.

"As Canadian taxpayers, we all pay for corporate fraud,"
said Inspector Robert Davis, Officer in Charge of the RCMP Greater Toronto
District Commercial Crime Section. " We pay in revenue losses that
contribute towards our social welfare programs - programs that support our
seniors, educate our children and take care of our ill and less
fortunate."

"To give you some idea of the impact, the more than $l.2
billion dollars in lost revenue identified during this investigation is
enough money to buy two MRI machines for each and every public hospital in
Ontario and Quebec. $1.2 billion dollars is also enough money to supply
every high school student in Ontario and Quebec with new text books for
one year."

"This investigation is part of the RCMP’s on-going
efforts to investigate allegations of impropriety by corporations
operating in Canada," added Inspector Davis. "Large multi-national
corporations will be held accountable for their criminal activity. Senior
executives of those companies will not be allowed to hide behind a
'corporate veil' to protect themselves from criminal prosecution."

This investigation is on-going and the possibility exists
that further charges will be laid.

-30-

Media Contact:
Constable Howard Adams
RCMP Media Relations Officer
"O" Division (Toronto)
(905) 876-9674 (office)
(416) 565-8012
(cell)

Content created: 2003-02-28
Content
revised: date

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