British American Tobacco (BAT) has agreed to pay $635m plus interest to US authorities after a subsidiary admitted selling cigarettes to North Korea in violation of sanctions. The settlement relates to BAT’s activity in North Korea between 2007 and 2017, and the US authorities have imposed severe sanctions on North Korea over its nuclear and ballistic missile activities.
BAT’s head, Jack Bowles, has expressed regret over the misconduct. 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.
The settlement was reached between BAT and America’s Department of Justice (DOJ) and the Treasury Department’s Office of Foreign Assets Control. The DOJ said BAT had also conspired to defraud financial institutions to get them to process transactions on behalf of North Korean entities.
The DOJ’s assistant Attorney General, Matthew Olsen, said 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”. He said BAT was engaged in an “elaborate scheme to circumvent US sanctions and sell tobacco products to North Korea” via subsidiaries.
Between 2007 and 2017, third-party companies sold tobacco products to North Korea and received approximately $428m, according to the DOJ. Criminal charges were also revealed against North Korean banker, Sim Hyon-Sop, 39, and Chinese facilitators Qin Guoming, 60, and Han Linlin, 41, for facilitating sales of tobacco to North Korea.
A $5m bounty was put for any information leading to the arrest or conviction of Mr Sim, and $500,000 rewards for each of the other two suspects. They 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.
Last year, the US attempted to get the UN Security Council to ban tobacco exports to North Korea, but this was vetoed by Russia and China. North Korean leader, Kim Jong Un, is known to be a heavy smoker.
Pyongyang has faced multiple rounds of tough sanctions for years in response to its ballistic missile launches and nuclear tests. However, this has not deterred Mr Kim from continuing to develop the country’s weapons programme.
