BRAZIL CO. DENIES TOBACCO CHARGES

RIO DE JANEIRO, Brazil (AP) -- Brazil's largest tobacco company on Thursday
denied reports that it buys, markets and exports high-nicotine tobacco
grown secretly in Brazil.

Souza Cruz, which is owned by British conglomerate B.A.T. Industries, said
in a statement that it ``does not promote the cultivation or marketing of
any variety of high-nicotine tobacco.''

The denial was in response to an Associated Press report that farmers in
southern Brazil grow high-nicotine strains known as ``fumo louco'' -- crazy
tobacco in Portuguese -- by the ton and sell them to Souza Cruz.

The AP's investigation found that Souza Cruz created hundreds of
crossbreeds based on a high-nicotine line known as Y-1, resulting in the
strains known generically as fumo louco.

Souza Cruz said it grew Y-1 exclusively between 1990 and 1994 and shipped
it all to the Brown & Williamson Tobacco Corp., the third largest U.S.
cigarette maker. After that, the company said, ``no Y-1 or any derivative
of it remained in Brazilian territory.''

Gerson Cardoso, Souza Cruz's director of tobacco, said fumo louco was not
related to Y-1 but to strains of a variety of Virginia tobacco that grows
bigger than normal plants but has ``absolutely normal levels'' of nicotine.

The company also said it uses only natural selection in developing strains
and has never employed recombinant DNA or other techniques to genetically
alter plants.

In January, the DNA Plant Technology Corp. of Oakland, Calif., agreed to
plead guilty to conspiring to grow high-nicotine tobacco secretly in
foreign countries, including Brazil, so Brown & Williamson could ``control
and manipulate the nicotine levels in its cigarettes.''

In Brazil, the Agriculture Ministry and the federal prosecutor's office in
Rio Grande do Sul state are investigating the cultivation of fumo louco.

Souza Cruz controls 85 percent of the Brazilian cigarette market and is
among the world's top exporters of tobacco, with major customers in the
United States, Britain, Japan and Germany.