British American Tobacco to Pay US Authorities $635m for Selling Cigarettes to North Korea

 

British American Tobacco (BAT) was forced to pay $635 million (£512 million) in fines and interest to US authorities after a subsidiary acknowledged to selling cigarettes to North Korea in breach of UN sanctions.

 

The United States has imposed harsh sanctions on North Korea in response to its nuclear and ballistic missile activities.

According to the Department of Justice, BAT also colluded to deceive financial institutions into processing transactions on behalf of North Korean organizations.

 

North Korean leader Kim Jong Un is known to be a heavy smoker. 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.

 

 

Tuesday’s settlement was between BAT and America’s Department of Justice (DOJ) and the Treasury Department’s Office of Foreign Assets Control.

The US authorities said the settlement related to BAT activity in North Korea between 2007 and 2017.

BAT’s head Jack Bowles said “we deeply regret the misconduct”.

 

BAT is one of the world’s largest tobacco multinationals. It owns major cigarette brands including Lucky Strike, Dunhill and Pall Mall.

In a statement, BAT said it 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”.

 

At a briefing on Tuesday, April 25, 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 that BAT was engaged in an “elaborate scheme to circumvent US sanctions and sell tobacco products to North Korea” via subsidiaries.

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

 

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 (£4.4m) bounty was put for any information leading to the arrest or conviction of Mr Sim, and $500,000 (£402,905) 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.

 

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