LeBow, Bennett S.

▪ 1998

      On March 20, 1997, the Liggett Group, the fifth largest tobacco company in the United States, took an unprecedented step in the controversy over the dangers of smoking. Bennett S. LeBow, chairman, president, and CEO of Liggett's owner, Brooke Group Ltd., admitted in a settlement with 22 states that cigarette smoking is addictive and causes cancer.

      Liggett, whose brands included Chesterfield, Eve, Lark, and L&M, held only 2% of the U.S. tobacco market and continued to lose business. The company had a negative net worth and was unable to pay its debts. LeBow's move was seen by many as a strictly financial one, intended both to prevent Liggett from sliding into bankruptcy and to make it attractive to potential buyers; the settlement would limit the amount of money Liggett had to pay in other tobacco industry legal settlements and thereby protect new owners from financial backlash. LeBow called Liggett's agreement "a business, a moral, and a personal decision."

      LeBow was born in Philadelphia in 1938. He received an engineering degree from Drexel University, Philadelphia, and did postgraduate work at Princeton University. In 1961 he formed a computer company, DSI Systems, Inc. During the 1970s and 1980s, he was successful as a financial speculator. In one notable venture he made a profit of $30 million on sales of stock in cigarette maker American Brands. LeBow acquired Liggett in 1986, 20 years after he himself had quit smoking. As recently as 1993 in a lawsuit, he maintained solidarity with the heads of the other big tobacco companies by refusing to admit any knowledge of the dangers of smoking. In early 1996, however, Liggett became the first tobacco company to arrange a monetary settlement in a class-action lawsuit, although the amount was small. Some said LeBow's plan at the time was to merge Liggett with the much larger firm RJR Nabisco, which would participate in the settlement and be free from future litigation. LeBow then hoped to profit by splitting RJR into two parts, food and tobacco.

      The statement signed by LeBow in March included frank admissions about the hazards of smoking. In it he affirmed that "we at Liggett know and acknowledge that, as the Surgeon General and respected medical researchers have found, cigarette smoking causes health problems, including lung cancer, heart and vascular disease and emphysema. We at Liggett also know and acknowledge that . . . nicotine is addictive." Later in the document he also admitted that " the tobacco industry markets to 'youth,' which means those under 18 years of age." The statement also promised that Liggett would turn over pertinent documents to plaintiffs' lawyers in tobacco lawsuits. LeBow's settlement was immediately attacked by larger tobacco companies such as Philip Morris, which claimed it was made simply as a business ploy and had no basis in fact.

      By mid-1997 Liggett had begun labeling its cigarette packages with the warning "Smoking is addictive." In June LeBow announced the company's intent to list all ingredients, including nicotine levels, on all cartons of cigarettes. Liggett was the first company to take such a step.

WENDY TANNER

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