British American Tobacco reaches record $629M settlement with US over sales to North Korea
Largest North Korean sanctions related penalty in US history involved activities between 2007-2017
ISTANBUL
British American Tobacco (BAT) has agreed to pay $629 million in fines for selling cigarette materials to North Korea for years in violation of US sanctions, the US Justice Department announced Tuesday.
The Justice Department put the figure at $629 million. However, BAT said it was $635 million, without explaining the difference.
The company, which manufactures and sells cigarettes, tobacco and other nicotine products, said it has entered into a deferred prosecution agreement with the Justice Department and a civil settlement agreement with the Treasury Department's Office of Foreign Assets Control.
"On behalf of BAT, we deeply regret the misconduct arising from historical business activities that led to these settlements and acknowledge that we fell short of the highest standards rightly expected of us," Chief Executive Officer Jack Bowles said in a statement.
The business activities relating to North Korea took place between 2007 and 2017, according to the statement.
The Justice Department said in its statement that BAT in 2007 spun off its North Korea sales to a third-party company, issuing a press statement that it was no longer involved in North Korea tobacco sales. In reality, however, it continued to do business in North Korea through the third-party company.
To make these payments, North Korean purchasers used front companies so that US banks that processed the transactions would not know about the connection to North Korea, it added.
"British American Tobacco and its subsidiary engaged in an elaborate scheme to circumvent U.S. sanctions and sell tobacco products to North Korea, allowing funds to illegally flow into the coffers of the Democratic People’s Republic of Korea (DPRK)," said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division.
"Today’s action, which involves the largest North Korean sanctions penalty in the history of the Justice Department, should serve as a clear warning to companies everywhere about the costs and consequences of violating U.S. sanctions," he added.
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