British American Tobacco will pay US authorities $635 million (£512 million) plus interest after a subsidiary admitted selling cigarettes to North Korea in violation of sanctions.
US authorities stated that the settlement involved BAT activities in North Korea from 2007 to 2017.
Jack Bowles, the CEO of BAT, stated, “We deeply regret the misconduct.”
In response to North Korea’s nuclear and missile programmes, the United States has imposed severe sanctions.
BAT and the United States Department of Justice (DOJ) and the Treasury Department’s Office of Foreign Assets Control reached a settlement on Tuesday.
BAT is one of the ten largest companies in the United Kingdom and one of the world’s major tobacco multinationals. It possesses significant cigarette brands such as Lucky Strike, Dunhill, and Pall Mall.
BAT stated in a statement that it had engaged into a “deferred prosecution agreement with DOJ and a civil settlement agreement with OFAC, and an indirect BAT subsidiary in Singapore has entered into a plea agreement with DOJ”
The Department of Justice alleged that BAT also conspired to deceive financial institutions in order to induce them to process transactions for North Korean entities.
Kim Jong Un, the commander of North Korea, is notoriously a heavy smoker. Last year, the United States attempted to get the United Nations Security Council to ban tobacco exports to North Korea, but Russia and China vetoed this.
During a press briefing on Tuesday, Assistant Attorney General Matthew Olsen of the Department of Justice described the settlement as “the culmination of a lengthy investigation” and “the single largest North Korean sanctions penalty in the history of the Department of Justice.”
Through subsidiaries, BAT allegedly engaged in a “complex scheme” to circumvent US sanctions and export tobacco products to North Korea.
Between 2007 and 2017, these third-party corporations sold approximately $428 million worth of tobacco products to North Korea.
In addition, Sim Hyon-Sop, 39, a North Korean financier, and Qin Guoming, 60, and Han Linlin, 41, Chinese facilitators, were charged with facilitating tobacco sales to North Korea.
Mr Sim has a $5m (£4.4m) reward for information leading to his arrest or conviction, while the other two suspects each have a $500,000 (£402,905) reward.
They were accused of purchasing leaf tobacco for state-owned cigarette manufacturers in North Korea and forging documents to deceive US banks into conducting transactions totaling $74 million. Thanks to these transactions, North Korean manufacturers, including one owned by the military, earned approximately $700 million.
As a result of its ballistic missile launches and nuclear tests, Pyongyang has encountered multiple rounds of severe sanctions for years.
Mr. Kim continues to develop the nation’s armaments programme despite this.
