British American Tobacco to pay $635 mln of sanctions

By Yassmine Elbehnaihy On Apr 27, 2023

Credit: https://www.telegraph.co.uk/business/2019/02/28/british-american-tobacco-hails-higher-vaping-sales/

British American Tobacco (BAT) is set to pay $635 million in addition to interest to U.S. authorities following the selling of cigarettes to North Korea by a subsidiary, violating sanctions, the Justice Department said on Tuesday.

The settlement was between BAT and the U.S. Department of Justice (DOJ) and the Treasury Department’s Office of Foreign Assets Control’s settlement, after it was proven that there has been BAT activity in North Korea between 2007 and 2017.

“BAT had entered into a deferred prosecution agreement with DOJ and a civil settlement agreement with OFAC, and an indirect BAT subsidiary in Singapore has entered into a plea agreement with DOJ,”, said the tobacco manufacturer in a statement.

“The settlement was the “culmination of a long-running investigation”, describing it as “the single largest North Korean sanctions penalty in the history of the Department of Justice,” said the DOJ’s assistant Attorney General, Matthew Olsen.

“Between 2007 and 2017 these third-party companies sold tobacco products to North Korea and received approximately $428m,” Olsen added.

BAT had conspired to defraud financial institutions in order to get them to process transactions on behalf of North Korean entities, DOJ stated.

The U.S. has attempted to get the UN Security Council to ban tobacco exports to North Korea before, but this was vetoed by Russia and China.

Criminal charges were revealed against North Korean banker Sim Hyon-Sop, and Chinese facilitators Qin Guoming, and Han Linlin, for facilitating sales of tobacco to North Korea.

The charged men were accused of buying leaf tobacco for North Korean state-owned cigarette makers and falsifying documents to trick US banks into processing transactions worth $74m.

North Korean manufacturers including one owned by the military made about $700m thanks to these deals.

BAT is one of the world’s largest tobacco multinationals and one of the UK’s 10 biggest companies, owning major cigarette brands including Lucky Strike, Dunhill and Pall Mall.