Smoking

British American Tobacco Settles with US Over Business in North Korea

Published APR 26 2023

Story

Image credit: Getty Images [via BBC News]

The Facts

British American Tobacco (BAT) — the maker of Lucky Strike, Dunhill, and Pall Mall cigarettes — has agreed to pay the largest penalty ever levied on a company for violating US sanctions on North Korea.
The Wall Street Journal
On Tuesday, the Treasury Dept. announced a $508M settlement with BAT, with the Dept. of Justice (DOJ) criminally fining the company $630M for selling tobacco products through its Singapore subsidiary to North Korean companies in China.
USA Today
This comes as a deferred prosecution agreement was struck between the world's second-largest tobacco group and the DOJ, while its indirect subsidiary entered into a plea deal.
www.ft.com
BAT outsourced sales to North Korea to its subsidiary British American Tobacco Marketing Singapore (BATMS) from 2007 to 2017, resulting in more than $400M in transactions passing through the banking system, according to newly unsealed court documents.
ABC News
North Korea's state-owned North Korean Tobacco Company reportedly created a joint enterprise with BATMS in 2001 to manufacture BAT cigarettes within North Korea for domestic sales. Though the parent company announced in 2007 that it would sell its shares, it kept taking profits despite the introduction of US sanctions two years later.
CNN
Additionally, the DOJ has disclosed criminal charges against a 39-year-old North Korean banker and two Chinese facilitators — all of whom remain at large — over "a multi-year scheme to facilitate the sale of tobacco to North Korea."
Al Jazeera

Sources Split

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The Spin

Pro-establishment narrative

This unprecedented penalty is a clear warning to companies that have complied with the repressive North Korean regime, blatantly violating decades-old sanctions put in place to curb its nuclear and missile programs. BAT must pay for their wrongdoing, particularly as smuggled tobacco products represent a major source of revenue for North Korea's development of weapons of mass destruction.

NPR

Establishment-critical narrative

The West has imposed economic sanctions of increasing intensity on North Korea for three decades, prompting the regime to militarize its society and ramp up its high-profile weaponry. Instead of persisting with this failed policy, which has been counterproductive by destroying the mercantile middle class from which opposition to a regime might emerge, the focus should shift to the promotion of cultural exchange.