British American Tobacco to pay $635 mn for violating North Korean sanctions

British American Tobacco (BAT) was ordered to pay $635 millionplus interest to US authorities, after admitting selling cigarettes to North Korea in breach of sanctions via a subsidiary.

The payment, according to US authorities, was linked to BAT activities in North Korea between 2007 and 2017, reported the BBC.

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 imposed harsh sanctions on the country.

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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.

In a statement, BAT said it had entered 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".

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According to the DOJ, BAT also planned to deceive financial institutions into processing transactions on behalf of North Korean entitiesby defrauding them.

Kim Jong Un, the leader of North Korea, is a well-known routine 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 said that BAT was engaged in an "elaborate scheme to circumvent US sanctions and sell tobacco products to North Korea" via subsidiaries.

"Between 2007 and 2017 these third-party companies sold tobacco products to North Korea and received approximately $428m."

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Sim Hyon-Sop, a 39-year-old banker from North Korea, and Qin Guoming, 60, and Han Linlin, 41, two Chinese intermediaries, were also named in criminal complaints for aiding the sale of tobacco to North Korea.

In addition to $500,000 inincentives for each of the other two suspects, a $5 millionbounty was placed for any information that resulted in the capture or conviction of Sim.

They were charged with forging paperwork to deceive US banks into completing transactions totaling $74 million and purchasing leaf tobacco for North Korea's state-owned cigarette manufacturers. These agreements brought in around $700 million for North Korean enterprises, including one run by the military.

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