Two major tobacco companies are in trouble after being exposed that they illegally sold their products to North Korea.
The Blaze News reports that these companies have agreed to pay $635 million in penalties for sanctions violations against North Korea. Those sanctions have long existed to help cut down on the potential for American companies to sell to the hermit kingdom..
The Department of Justice reports that British-American Tobacco Marketing Singapore and its parent company, British American Tobacco, have been slapped with the penalties mentioned here.
The charges against these companies include violating North Korean sanctions, conspiracy to commit bank fraud, and conspiracy to violate the International Emergency Economic Powers Act.
The New York Times reports that about $5 million of the penalty was part of a civil settlement with the U.S. Treasury Department. The Justice Department will obtain the rest of the penalty. This is the most significant penalty leveraged against a company because of the sanctions against North Korea.
The Justice Department said that BAC stated in a press conference in 2007 that it was no longer selling its products in North Korea. However, the DOJ reports that BAC continued to do business through a third-party company, and that BATMS had complete control over the operations in North Korea.
Blaze News reports that between 2007 and 2017, BAT and BATMS received roughly $418 million through a third-party company in Singapore. That company received money from North Korean entities and passed it along to the parent company.
British American Tobacco and its subsidiary engaged in an elaborate scheme to circumvent U.S. sanctions and sell tobacco products to North Korea, allowing funds to illegally flow into the coffers of the Democratic Peoples Republic of Korea (DPRK), said Assistant Attorney General Matthew G. Olsen of the Justice Departments National Security Division.
He continued by saying:
On behalf of BAT, we deeply regret the misconduct arising from historical business activities that led to these settlements, BATs chief executive, Jack Bowles, said in a statement. [We] acknowledge that we fell short of the highest standards rightly expected of us.
Law enforcement officials in the United States say that roughly $74 million in transactions were made through U.S. banking institutions. A North Korean banker and two Chinese nationals processed 310 transactions to buy leaf tobacco for North Korean state-owned cigarette manufacturers. According to the DOJ, this turned into a more than $700 million profit for the manufacturers. They say that the North Korean military even owned one of the companies.
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