Tobacco company to pay largest-ever fine for violating US sanctions in North Korea: report

A tobacco giant headquartered in the United Kingdom pleaded guilty to secretly conducting business through a proxy corporation in North Korea in clear violation of sanctions imposed on the reclusive nation by the United States, The Washington Post reported on Tuesday.

"British American Tobacco, a London-based company with a subsidiary based in Singapore, must pay $630 million in fines to the U.S. government. Company officials admitted to selling tobacco through a North Korean government-connected business between 2009 and 2017 and receiving payments in U.S. dollars," according to court documents obtained and reviewed by the Post.

"British American Tobacco and co-conspirators 'enacted an elaborate scheme of utilizing a network of front companies located throughout the world' to conceal the origin of the payments' through American banks that are forbidden from "processing transactions that originate in North Korea," the Post explained.

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"The documents lay out how the company allegedly tried to deceive banks and regulators by issuing a statement in 2007 that said it would no longer be doing business in North Korea and had 'agreed in principle' to sell its share of a cigarette company in North Korea," the Post revealed. "But, in reality, the Singapore-based subsidiary of British American Tobacco maintained significant control over the North Korea operations, the documents state."

Assistant Attorney General Matthew Olsen, who runs the Justice Department's national security division, said at a press conference that "this activity ultimately benefits the North Korean regime" and that the $630 million punishment "is the single largest North Korean sanctions penalty in the history of the Department of Justice."

Court documents outlined how the financial institutions were unaware of the true nature of what they were doing.

The Post noted that "at the plea agreement and sentencing hearing Tuesday morning, U.S. District Judge Beryl A. Howell said that while British American Tobacco terminated its business with North Korea in 2017, before U.S. officials launched their investigation, the company failed to properly disclose the violations."

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BAT Chief Executive Officer Jack Bowles also reflected on his company's deceptive practices.

"We deeply regret 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," Bowles said. "Adhering to rigorous compliance and ethics standards has been, and remains, a top priority for BAT. In recent years we have transformed our compliance and ethics programme, which encompasses sanctions, anti-bribery, anti-corruption and anti-money laundering."

But it gets worse.

CBS News pointed out that "according to the indictment, the profits of the alleged plot benefited North Korea's weapons of mass destruction program" and that "he defendants are wanted by the FBI, which is offering a reward for information leading to their detention."

The Washington Post's full report continues here (subscription required). CBS News' article is here.