British giant British American Tobacco (BAT) agreed on Tuesday to pay more than $600 million to US authorities for selling cigarettes to North Korea over the years in violation of sanctions, AFP reported.

According to the US Department of Justice, BAT created a complex system of subsidiaries and shell companies to evade US sanctions between 2007 and 2017.

And even when BAT decided to end the system in 2016 due to increased international sanctions against Pyongyang, it continued to sell cigarettes to the North Korean embassy in Singapore in 2017.

The biggest sanctions concerned North Korea

“This is the largest North Korea-related sanction in the Department of Justice’s history and another warning to companies around the world about the cost and consequences of violating US sanctions,” US Attorney Matthew Olsen said at a news conference.

The United Nations imposed sanctions on North Korea after Pyongyang conducted a nuclear test in 2006. But the US unilaterally introduced even tougher restrictions on trade with the country.

According to the US agency, sanctions against BAT amount to $629 million. In a separate statement, the company valued them at “more than $635 million” before interest.

BAT said it had “already recorded a provision of £450 million ($540 million)” related to the matter in its July 2022 half-year accounts. It said “this announcement has not affected the group’s outlook for the whole year 2023″.

“We deeply regret the setbacks associated with the historic trading performance (…) and recognize that we have not demonstrated the highest standards that have rightly been expected” of the group, said Jack Bowles, chief executive of BAT.

Since then, the company has improved its “compliance and ethics program, which includes sanctions, anti-bribery, anti-corruption and anti-money laundering,” the executive said in a statement.

BAT says it “ceased all business related to North Korea in September 2017”.

The Justice Department also announced Tuesday that it has indicted North Korean banker Sim Hyun-seop and two Chinese nationals, Qin Homing and Han Linlin, for helping North Korean cigarette manufacturers obtain tobacco leaves. (photo: Nomadsoul1 / Dreamstime.com)