Federal authorities announced Tuesday $629 million in criminal fines and $508 million in a civil settlement with a subsidiary of British American Tobacco for selling products to North Korea for years despite sanctions against the transactions.
The complex scheme featured the company selling tobacco products through its Singapore subsidiary to North Korean companies in China, to avoid detection.
The transactions provided North Korea with tobacco to produce counterfeit cigarettes for sale at home and aboard, officials said. The profits flowed back to the North Korean government and its military, which have been sanctioned by the international community to deter the development of nuclear weapons.
“This is the single largest North Korean sanctions penalty in the history of the Department of Justice,” Matthew Olsen, head of the department’s national security division. “Sanctions and export controls are among the most powerful weapons in our arsenal.”
Here is what we know about the case: What were the charges?
The Justice Department agreed to defer prosecution of British American Tobacco, but its subsidiary, BAT Marketing Singapore, pleaded guilty to conspiracy to commit bank fraud and conspiracy to violate sanctions for its “egregious conduct,” Olsen said.
British American Tobacco had announced in 2007 it halted all sales to North Korea, Olsen said. But it continued to sell tobacco to North Korea from 2007 to 2017, he said.
“The profits from this scheme are staggering, and a substantial portion of them are believed to flow back to the North Korean government and its military,” said Matthew Graves, U.S. attorney for the District of Columbia.
The Treasury Department also imposed a $508 million civil settlement with British American Tobacco for violating sanctions.
“It’s not just banks that need to comply with sanctions, it’s all businesses including foreign companies that seek to avail themselves of the U.S. banking system,” Brian Nelson, undersecretary of the Treasury for terrorism and financial intelligence. “If you try to circumvent our sanctions, there will be serious consequences.”
Uganda
At the beginning of the month, Uganda Revenue Authority (URA) bust a racket of BAT agents who sell smuggled cigarette exorbitantly.
The company has taken advantage of the loopholes in tobacco control governance systems and control the illicit trade of Tobacco products to dump illicit cigarettes into the country.
This website on spot check market survey established that several cigarette packets clearly labeled with digital export tax stamps for Rwanda, Tanzania and Democratic Republic of Congo have been dumped into the Ugandan Market.
In an operation by URA tones of the illicit products were seized from the secret hideouts in Kampala with packet of Dunhill Switch priced at shs 30,000 to 50,000.
