Tobacco Giant to Pay $635 Million Penalty for Violating North Korea Sanctions

The U.S. Department of Justice building in Washington on March 28, 2023. Madalina Vasiliu/The Epoch Times

British American Tobacco (BAT), one of the world’s largest manufacturers of tobacco products, will pay more than $635 million in fines to resolve bank fraud and sanctions violations charges brought by the U.S. government after a subsidiary of the company admitted to selling tobacco products to North Korea.

The agreement to defer prosecution was announced Tuesday by the U.S. Department of Justice (DOJ).

“British American Tobacco and its subsidiary engaged in an elaborate scheme to circumvent U.S. sanctions and sell tobacco products to North Korea in violation of U.S. law,” said Matthew G. Olsen, assistant attorney general of the DOJ’s National Security Division, in a statement. “With today’s action, which involves the largest settlement payment in the department’s history, these entities have been held to account.”

According to the DOJ, while the tobacco company publicly claimed in 2007 that it was no longer involved in North Korean tobacco sales, it continued to do business in North Korea through a third-party company in Singapore while maintaining control over “all relevant aspects” of those business dealings.

In total, roughly $415 million in payments—made by North Korean front companies—were run through the third-party company, which then passed the funds on to BAT and its subsidiary, BAT Marketing Singapore.

As part of the agreement, BAT Marketing Singapore pleaded guilty to conspiracy to commit bank fraud and conspiracy to violate the International Emergency Economic Powers Act.

“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,” said Jack Bowles, BAT’s chief executive officer, in a statement.

“Adhering to rigorous compliance and ethics standards has been, and remains, a top priority for BAT,” he continued. “In recent years we have transformed our compliance and ethics program, which encompasses sanctions, anti-bribery, anti-corruption, and anti-money laundering. The significant steps already taken, as well as the continued refinements to the program that will be made as part of these settlements, will leave us even better equipped to lead a responsible and sustainable business.”

News of the settlement coincided with the Tuesday decision of a federal judge in the District of Columbia to unseal charges against North Korean banker Sim Hyon-Sop, 50, and Chinese nationals Qin Guoming, 60, and Han Linlin, 41, both of Liaoning Province, who engaged in a scheme to facilitate the sale of tobacco to North Korea from 2009 to 2019.

Warning that the trafficking of tobacco products to North Korea generates revenue for the country’s nuclear weapons programs, U.S. Attorney Matthew Graves said, “The charges unsealed today illustrate that the Department of Justice will hold North Korean facilitators accountable for their illegal efforts to prop up the North Korean regime, and assist it in obtaining funds to develop nuclear weapons.”

For information leading to the defendants’ capture, the U.S. State Department has announced a $5 million reward for Sim and $500,000 rewards for Qin and Han.