British American Tobacco Fined $635M For Trading In North Korea
British American Tobacco “BAT” (LON: BATS), the world’s largest tobacco products manufacturer by net sales, will pay a considerable fine…
British American Tobacco “BAT” (LON: BATS), the world’s largest tobacco products manufacturer by net sales, will pay a considerable fine for violating American sanctions. The company has agreed to pay $635mn to settle charges filed by the U.S. Department of Justice for breaching sanctions on conducting business in North Korea.
The charges stem from BAT allegedly selling tobacco products in North Korea between 2007 and 2017. The company has reached a deferred prosecution agreement with the U.S. Justice Department and a civil settlement with the U.S. Office of Foreign Assets Control (OFAC), for a price of $635mn.
- BAT had previously announced setting aside $540mn for an expected penalty. It turns out the tobacco products giant has to add some more money.
U.S. prosecutors accused BAT of transacting with North Korean state-owned companies and obfuscating transactions to prevent American banks from flagging them. The company claimed it stopped doing business in North Korea in 2007, but U.S. prosecutors alleged that it continued until at least 2017.
In its 2019 annual report, BAT acknowledged trading in some nations subject to Western sanctions, including Iran and Cuba, and that operations there risked “significant financial costs.” North Korea wasn’t mentioned in the report.
- Paying the monetary penalty doesn’t mean it’s all said and done for BAT. The company is facing a separate investigation from the U.K.’s Serious Fraud Office (SFO) into “suspicions of corruption in the conduct of business by Group companies and associated persons.”
- BAT reported an operating profit of £10.5bn ($13bn) on £27.7bn ($34.3bn) in revenue in 2022. It’ll pay a minor percentage of those profits to the U.S. government, meaning business will go on as usual, and shareholders need not worry.