(WASHINGTON) — The world’s second-largest tobacco company has agreed to pay what the Department of Justice is saying is “the single largest North Korean sanctions penalty in the history of the Department of Justice.”
The British American Tobacco subsidiary pleaded guilty to conspiring to commit bank fraud and violating U.S. sanctions against North Korea by selling tobacco products to the country between 2007 and 2017, according to newly unsealed court documents. North Korea rakes in as much as $20 for every $1 spent in the production and trafficking of counterfeit cigarettes, and “a substantial portion of this profit is believed to flow back directly to the North Korean government, its military and its WMD program,” according to U.S. Attorney for Washington, D.C., Matt Graves.
“To those companies and individuals thinking of evading international sanctions on North Korea, be forewarned. If you conspire with North Korea, you are helping to grow their illegal weapons of mass destruction and ballistic military programs.” Suzanne Turner, assistant director of the FBI’s Inspection Division, said at a press conference Tuesday.
The $508 million settlement BAT reached with the U.S. Department of the Treasury’s Office of Foreign Assets Control — the “maximum statutory penalty available” — is OFAC’s “largest settlement ever with a non-financial institution,” according to Undersecretary for Terrorism and Financial Intelligence Brian E. Nelson.
“The DPRK’s murderous repression at home and relentless pursuit of nuclear capabilities threaten not just its own people, but the entire international community. Allowing funds to illegally flow into the coffers of the DPRK is an unconscionable act,” said Assistant Attorney General for National Security Matthew Olsen, who added that the case would “serve as a warning shot to companies” that attempt to evade sanctions.
The company noted steps it has taken so that it is “better equipped to lead a responsible and sustainable business.”
“On behalf of BAT, 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,” Jack Bowles, chief executive of BAT, said in the Tuesday statement.
Beginning in 2007, BAT outsourced sales to North Korea to a third-party Singapore-based company, resulting in over $400 million in transactions passing through the banking system, according to the documents. North Korean buyers served as a front for the Hermit Kingdom, the documents add.
BAT says it has entered into a deferred prosecution agreement with DOJ while its Singaporean subsidiary entered into a plea agreement with the Department of Justice.
The company also entered into a settlement with the Treasury Department’s Office of Foreign Assets Control, with the total amount payable to the U.S. through all three cases reaching $635.2 million plus interest.
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