14 April 2020
LUCKY Strike cigarette maker British American Tobacco is under a criminal investigation by U.S. regulators over suspected sanctions-busting, The Times reported on Tuesday.
The company is being probed for “suspicions of breach of sanctions” by the Department of Justice (DoJ) and the Office of Foreign Assets Control (OFAC), a financial intelligence and enforcement agency under the U.S. Treasury department, the report said, adding it was not clear which country or countries the regulators were focusing on.
The company and the DoJ did not immediately respond to Reuters’ requests for comment. The OFAC could not immediately be reached.
BAT shares fell 4% to 2,899.5 pence in early trading, erasing all the gains made last week. It was among the top percentage losers on the FTSE on Tuesday.
In its annual report released in March, the second-biggest tobacco company in the world disclosed it was “aware” of the investigation and was liaising with the DOJ and OFAC in the United States.
The Dunhill maker had said it could not assess the potential financial impacts of the probe, but said they could be material. It also said it could not identify when the probe would be resolved.
The U.S. probe follows an investigation by Britain’s Serious Fraud Office (SFO) into BAT on “suspicions of corruption in the conduct of business by group companies and associated persons” – an inquiry that is still on.
Jefferies analyst Owen Bennett said in a note on Tuesday the U.S. probe could be linked to the SFO investigation, but it “likely sounds worse than it is”. “If we are right, and it (U.S. probe) does relate to the same accusations (as in SFO probe), the fact this has been ongoing in some form since 2017, with no apparent conclusion, we would not worry too much about it for now,” Bennett wrote. – Reuters