The US$629 million fine BAT is paying to the US Department of Justice is the largest North Korean sanctions penalty in history. Photo credit: BAT
British American Tobacco (BAT) and its Singaporean subsidiary is paying a US$629 million criminal fine to the US Department of Justice and a US$508 million civil settlement with the Treasury Department for selling tobacco products to North Korea in violation of US sanctions on the country’s government and its military, aiming to prevent the development of nuclear weapons by North Korea.
According to assistant attorney general Matthew Olsen, the fine is the largest North Korean sanctions penalty in Justice Department history.
The Justice Department agreed to defer prosecution of BAT, but BAT Marketing Singapore, its subsidiary, admitted guilt to conspiring to commit bank fraud and conspiring to violate sanctions for its "egregious conduct," according to Olsen.
A BAT statement said the settlement concerns sales from 2007 through 2017. Jack Knowles, BAT c.e.o., said the company regrets “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,” adding that the company had since transformed its ethics and compliance programs.
According to court documents, BAT enacted an elaborate scheme of utilizing a network of front companies located throughout the world” to conceal the origin of payments for tobacco products which were sold to North Korean businesses in China through its Singaporean subsidiary.
Justice Department officials said the transactions gave North Korea tobacco to make counterfeit cigarettes that they could sell both domestically and abroad.