British American Tobacco would pay more than $600 million for violating US-imposed sanctions against North Korea.
Washington:
British American Tobacco has agreed to pay more than $600 million to charge it for years of selling cigarette materials to North Korea in violation of U.S. sanctions, the U.S. Justice Department announced Tuesday.
In the harshest action ever taken by US authorities against a company for violating sanctions against North Korea, BAT’s Singapore subsidiary also agreed to plead guilty to bank fraud and sanctions violation charges.
The Justice Department said that from 2007 to 2017, BAT operated a web of front and shell companies to supply cigarette manufacturers in North Korea.
The company knew it was violating sanctions imposed on Pyongyang over its nuclear weapons development, US officials said.
In 2007, BAT’s Standing Committee, including top executives from the London company, approved the plan “because of concerns about public association with North Korea and difficulties in transferring profits from the country,” the U.S. State Department said. Finance in a statement.
– Selling to the Embassy of North Korea –
In addition to trade with North Korea, the BAT operation diverted dollar payments from trade through U.S. banks, masking the origin of the funds, according to the allegations.
BAT’s subsidiary in Singapore “retained control over all relevant aspects of North Korean affairs,” the Justice Department said.
And although BAT withdrew from the setup in 2016 due to mounting international sanctions against Pyongyang, it continued to sell cigarettes to the North Korean embassy in Singapore in 2017, US officials said.
“British American Tobacco and its subsidiary were involved in an elaborate scheme to circumvent US sanctions and sell tobacco products to North Korea through a business freeze in Singapore,” said Assistant Attorney General Matthew Olsen.
“This is the largest sanction on North Korea in Justice Department history, and the latest warning to businesses around the world about the costs and consequences of violating U.S. sanctions,” said Olsen.
– Deep regret –
The Justice Department estimated the full figure at $629 million; BAT said it was $635 million, without explaining the difference.
The company, which has already set aside $540 million to cover the settlement, said it would have no impact on its financial guidance to investors for 2023.
“We deeply regret the misconduct resulting from historic business activities that led to these settlements, and recognize that we did not meet the highest standards that are rightly expected of us,” said BAT CEO Jack Bowles.
The company said it ended its business with North Korea in 2017.
The United Nations imposed sanctions on North Korea after Pyongyang conducted a nuclear test in 2006, with the United States unilaterally imposing even tighter restrictions on trade with the country.
— Separate NKorea Tobacco Ring Targeted —
The Justice Department, meanwhile, has issued charges against North Korean banker Sim Hyon-Sop and Chinese nationals Qin Guoming and Han Linlin for an operation they conducted to acquire leaf tobacco for North Korean cigarette companies.
The Dubai-based Sim worked with the others to conduct trade and payments through a number of companies registered in New Zealand, the UK and Dubai.
Their operations included processing at least $74 million in payments through the US banking system, in violation of sanctions.
Meanwhile, North Korean manufacturers brought in some $700 million as a result of the trade, according to an indictment.
The indictment noted that the North Korean tobacco industry is known for exporting large quantities of counterfeit cigarettes under popular brand names such as Marlboro and Mild Seven, earning them large amounts of foreign exchange.
The US State Department offered a $5 million reward for Sim and $500,000 each for Qin and Han.
If caught and convicted, they could face up to 30 years in prison for bank fraud.
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