British American Tobacco to pay $635m for North Korea sanctions breaches

British American Tobacco is to pay $635m (£512m) plus interest to US authorities after a subsidiary admitted selling cigarettes to North Korea in violation of sanctions.

The US authorities said the settlement related to BAT activity in North Korea between 2007 and 2017.

BAT’s head Jack Bowles said “we deeply regret the misconduct”.

The US has imposed severe sanctions on North Korea over its nuclear and ballistic missile activities.

Tuesday’s settlement was between BAT and America’s Department of Justice (DOJ) and the Treasury Department’s Office of Foreign Assets Control.

BAT is one of the world’s largest tobacco multinationals and one of the UK’s 10 biggest companies. It owns major cigarette brands including Lucky Strike, Dunhill and Pall Mall.

In a statement, BAT said it had entered into a “deferred prosecution agreement with DOJ and a civil settlement agreement with OFAC, and an indirect BAT subsidiary in Singapore has entered into a plea agreement with DOJ”.

The DOJ said BAT had also conspired to defraud financial institutions in order to get them to process transactions on behalf of North Korean entities.

North Korean leader Kim Jong Un is known to be a heavy smoker. Last year the US attempted to get the UN Security Council to ban tobacco exports to North Korea, but this was vetoed by Russia and China.

The justice department also revealed criminal charges against North Korean banker Sim Hyon-Sop, 39, and Chinese facilitators Qin Guoming, 60, and Han Linlin, 41, for facilitating sales of tobacco to North Korea.

They were accused of buying leaf tobacco for North Korean state owned cigarette makers and falsifying documents to trick US banks into processing transactions worth $74m. North Korean manufacturers including one owned by the military made about $700m thanks to these deals.

The DOJ announced rewards of $1m for information leading to the capture of Mr Sim and $500,000 each for Mr Qin and Mr Han, who all remain at large.

Pyongyang has for years faced multiple rounds of tough sanctions in response to its ballistic missile launches and nuclear tests.

However that has not deterred Mr Kim from continuing to develop the country’s weapons programme.