British American Tobacco fined for selling North Korean cigarettes – Kommersant

US Department of Justice announced on Tuesday to fine British American Tobacco (BAT) and its subsidiary BAT Marketing Singapore (BATMS) for trading in North Korea in violation of US sanctions. As part of the settlement of a criminal case under articles of fraud and violation of the sanctions regime, the companies agreed to pay the US authorities $629 million.

In addition, the Department of Commerce announcedthat BAT has agreed to pay $508 million to settle potential civil claims against the company for violating U.S. sanctions against the DPRK.

Thus, the total fine against BAT and its subsidiary amounted to more than $1.1 billion.

Back in 2001, BAT Marketing Singapore set up a joint venture with a North Korean company in North Korea to manufacture and distribute BAT cigarettes in the country, regulators said. In 2007, BATMS sold its 60% stake in the JV to a Singaporean trading company for a symbolic €1, so that BAT would no longer be associated with business in the DPRK. At the same time, the parent company announced that it no longer intends to do business in North Korea.

However, as the investigation showed, in fact, BAT continued to fully control the production and sale of its cigarettes in the DPRK. The North Korean company involved in the JV continued to pay for shipments in dollars through a network of front companies and bank accounts in other countries, including Singapore, China and the United States.

Kirill Sarkhanyants