After admitting to providing cigarettes to North Korea in breach of sanctions through a subsidiary, British American Tobacco was ordered to pay $635 million (£512 million) plus interest to US authorities.
The payment, according to US authorities, was connected to BAT activities in North Korea between 2007 and 2017.
Jack Bowles, the CEO of BAT, said, “We deeply regret the misconduct.”
As a result of North Korea’s nuclear and ballistic missile programmes, the US has slapped harsh sanctions on the country.
BAT and the US Department of Justice (DOJ) and Treasury Department’s Office of Foreign Assets Control reached a settlement on Tuesday.
One of the top 10 largest firms in the UK and one of the biggest tobacco giants in the world is BAT. Major cigarette brands owned by this company include Lucky Strike, Dunhill, and Pall Mall.
BAT announced in a statement that it had “entered into plea agreements with the DOJ, a civil settlement agreement with OFAC, and a deferred prosecution agreement with the DOJ with an indirect BAT subsidiary in Singapore.”
According to the DOJ, BAT also planned to trick financial institutions into processing transactions on behalf of North Korean businesses by defrauding them.
Kim Jong Un, the leader of North Korea, is a well-known habitual smoker. The US tried to get the UN Security Council to forbid the export of tobacco to North Korea last year, but Russia and China blocked the proposal.
The settlement was the “culmination of a long-running investigation,” according to Matthew Olsen, assistant attorney general for the DOJ, who also called it “the single largest North Korean sanctions penalty in the history of the Department of Justice.”
He claimed that BAT was using subsidiaries as part of a “elaborate scheme to evade US sanctions and sell tobacco products to North Korea.”
“These third-party companies sold tobacco products to North Korea between 2007 and 2017 and received about $428 million in revenue.”
Sim Hyon-Sop, a 39-year-old North Korean banker, and Han Linlin, a 60-year-old and Qin Guoming, a 41-year-old Chinese facilitator, were all charged with crimes for enabling the sale of tobacco to North Korea.
Sim was the subject of $5 million (£4.4 million) in prizes for information that led to his capture or conviction, as well as $500,000 (£402,905 apiece) for the other two suspects.
They were charged with purchasing leaf tobacco for state-owned North Korean cigarette manufacturers and fabricating paperwork to deceive US banks into completing transactions totaling $74 million. Due to these agreements, North Korean manufacturers, including one owned by the military, made nearly $700 million.
Due to its nuclear tests and launches of ballistic missiles, Pyongyang has endured years of harsh sanctions.
That hasn’t stopped Mr. Kim from advancing the nation’s weapons programme, though.
