Daily Management Review

British American Tobacco fined for selling cigarettes to North Korea


British American Tobacco (BAT) and its subsidiary BAT Marketing Singapore (BATMS) were fined by the U.S. Justice Department for engaging in business in the DPRK in order to evade American sanctions. The corporations agreed to pay $629 million to U.S. authorities as part of the settlement for fraud and sanctions violations.

In addition, BAT agreed to pay $508 million to settle future civil lawsuits alleging that the business violated American sanctions against North Korea, according to a statement from the Commerce Department.

The total fine imposed on BAT and its subsidiary now exceeds $1.1 billion.

In order to manufacture and market BAT cigarettes in the country under sanctions, BAT Marketing Singapore and a North Korean business formed a joint venture there in 2001, as mentioned in the regulatory filings. In order to distance BAT from doing business in North Korea, BATMS sold its 60 percent ownership in the joint venture to a Singaporean trading company in 2007 for the pittance of €1. The parent company also said that it will no longer conduct business in North Korea at the time.

However, as the inquiry made clear, BAT actually kept complete control over the manufacture and distribution of its cigarettes in the state. The North Korean company that was a part of the joint venture continued to pay for goods in dollars through a network of front firms and bank accounts in other nations, including as Singapore, China, and the United States,.

source: bbc.com