British American Tobacco fined for North Korea sanctions breaches

The world’s second-largest tobacco company has agreed to pay $635m (£510m) in fines plus interest after a subsidiary admitted violating sanctions by selling cigarettes to North Korea.

The US had imposed “severe sanctions” on North Korea in recent decades over its nuclear and ballistic missile activities, said the BBC. “Almost all Western multinationals cut ties with the pariah state – now led by Kim Jong Un, himself a chain smoker – by the late 2000s,” said the Financial Times (FT).

In 2007, British American Tobacco (BAT) sold its shares in a joint enterprise with the state-owned North Korean Tobacco Company to a third-party company, and claimed to have exited the North Korean market. But according to the US Justice Department, “in reality, BAT continued to do business” there through its subsidiary BAT Marketing Singapore.

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A long-running US investigation found that in the following decade, the Singapore-based subsidiary earned about $418m through the sale of tobacco products in North Korea.

Brian E. Nelson, Treasury undersecretary for terrorism and financial intelligence, said BAT “partnered” with the hermit kingdom to “establish and operate a cigarette manufacturing business and relied on financial facilitators linked to North Korea’s weapons of mass destruction proliferation network in the process of enriching itself”.

In effect, said Quartz, the company was “accused of funding North Korea’s nuclear programme”.

The settlement is a “victory” for the Joe Biden administration “during a period of rising tensions with North Korea”, said The New York Times. Biden has “taken a tougher stance on corporate misconduct,” said the FT, “after critics accused former president Donald Trump’s White House of excessive leniency”.

BAT chief executive Jack Bowles said “we deeply regret the misconduct arising from historical business activities” that “fell short of the highest standards rightly expected of us”.