…By Henry George for TDPel Media.
British American Tobacco (BAT) has agreed to pay $635 million to US authorities after one of its subsidiaries admitted to violating historic sanctions linked to North Korea.
The settlement has been reached with the Department of Justice and the Office of Foreign Assets Control, and relates to BAT’s business activities in North Korea between 2007 and 2017.
Subsidiary Pleads Guilty to Sanction Breaches
The sanctions breaches committed by the subsidiary have resulted in BAT agreeing to pay a hefty fine.
BAT had set aside £450 million to pay the fine last year, and said that the broader financial guidance had not been affected by the settlement.
Apology from CEO
The CEO of BAT, Jack Bowles, issued an apology over the misconduct, stating that they deeply regret the historical business activities that led to the settlement.
Bowles acknowledged that the company fell short of the highest standards that are rightly expected of them, and committed to maintaining rigorous compliance and ethics standards.
Transformation of Compliance and Ethics Programme
Bowles emphasized that in recent years, BAT has transformed its compliance and ethics programme to include sanctions, anti-bribery, anti-corruption, and anti-money laundering measures.
He said that the significant steps already taken, as well as continued refinements to the programme that will be made as part of the settlement, will leave BAT even better equipped to lead a responsible and sustainable business.
Commentary
This development represents a significant blow to BAT’s reputation, as the company has a global presence and is one of the world’s largest tobacco firms.
The admission of guilt by its subsidiary, coupled with the hefty fine imposed, underscores the importance of adhering to rigorous compliance and ethics standards in conducting business operations.
The CEO’s apology and commitment to maintaining high standards is a step in the right direction, and the company’s transformation of its compliance and ethics programme should help prevent future violations.