British American Tobacco agreed to pay a $629 million fine to the U.S. government over charges of selling tobacco to North Korea in violation of sanctions. File Photo by Stephen Shaver/UPI | License Photo
April 25 (UPI) -- British American Tobacco has agreed to pay a record $629 million in fines to the U.S. government after a subsidiary pleaded guilty to violating sanctions by selling tobacco products to North Korea, the U.S. Justice Department announced.
The London-based tobacco giant and a Singapore subsidiary admitted in a Washington court on Tuesday that they sold nearly $428 million in tobacco to the North through a third-party company from 2007 to 2017, according to the Justice Department.
North Korean purchasers then used front companies to hide the transactions from U.S. banks, the department said.
"This is the single largest North Korean sanctions penalty in the history of the Justice Department -- and the latest warning to companies everywhere about the costs and consequences of violating U.S. sanctions," Assistant Attorney General Matthew Olsen of the Justice Department's national security division said in a statement Tuesday.
"The cornerstone of U.S. sanctions on North Korea is that the DPRK's murderous repression at home and relentless pursuit of nuclear capabilities threaten not just its own people but the entire international community," Olsen said. "Allowing funds to illegally flow into the coffers of the DPRK is an unconscionable act."
The Democratic People's Republic of Korea is the official name of North Korea.
British American Tobacco, whose brands include Dunhill, Kent, Lucky Strike and Pall Mall, said in a statement Tuesday that it had agreed to pay more than $635 million to U.S. authorities. The discrepancy in the amount of the fine was not explained.
"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," BAT CEO Jack Bowles said.
In a separate action, a U.S. federal court unsealed charges Tuesday against a North Korean banker, Sim Hyon-Sop, and two Chinese nationals, Qin Guoming and Han Linlin, in connection with a scheme to facilitate the sale of tobacco to North Korea.
According to the Justice Department, between 2009 and 2019, the defendants worked to purchase leaf tobacco for North Korean state-owned cigarette manufacturers, using front companies and false documentation to process at least 310 transactions with U.S. banks. Their efforts resulted in nearly $700 million in revenue for the North Korean companies, one of which was owned by the military.
Counterfeit cigarettes are a major source of income for the North Korean regime, the indictment said, with smuggled tobacco products estimated to garner revenue of up to $20 on every $1 spent in cost.
The suspects have not been arrested and the State Department on Tuesday announced a reward of up to $5 million for information leading to the capture of Sim and $500,000 each for information leading to the captures of Han and Qin.
If convicted, the defendants face a maximum penalty of 30 years in prison for bank fraud.
"The FBI remains steadfast in its commitment to investigate North Korea's evasion of sanctions placed on its government," assistant director Suzanne Turner of the FBI's counterintelligence division said. "This illegal conduct and the levied penalties show how serious of an offense it is to assist the North Korean regime to the detriment of the international community."
Sim was also hit with sanctions alongside two Chinese individuals, Wu Huihui and Chen Hung Man, for providing support to the North Korean hacking collective Lazarus Group, the U.S. Treasury Department announced on Monday.