British American Tobacco under criminal probe by U.S. regulators: The Times

British American Tobacco under criminal probe by U.S. regulators: The Times

April 20, 2020 2102 By tecnb

The world’s second-biggest tobacco group on Tuesday said it was cooperating with the U.S. Department of Justice (DoJ) and Office of Foreign Assets Control (OFAC) without elaborating and declined to say whether the case was a criminal investigation.

“As the investigations are ongoing, it would be inappropriate for us to provide further comment at this time,” company spokeswoman Anna Vickerstaff said in an email.

BAT, which makes Lucky Strike and Dunhill cigarettes, last month disclosed in its annual report that it was aware of the investigation by the DoJ and OFAC, a financial intelligence and enforcement agency under the U.S. Treasury department. It did not provide detail on the nature of the investigation.

Shares in the company fell 5.5% to 28.54 pounds in early trading, erasing gains made last week.

BAT’s annual report for 2019 said the group has operations in a number of nations that are subject to various sanctions, including Iran and Cuba, and that operations in these countries expose the company to the risk of “significant financial costs”.

With respect to the U.S. investigation, the company said in its annual filing that “the potential for fines, penalties or other consequences cannot currently be assessed but may be material”.

Britain’s Serious Fraud Office (SFO) is conducting a separate ongoing investigation into BAT, relating to “suspicions of corruption in the conduct of business by group companies and associated persons”.

Jefferies analyst Owen Bennett said on Tuesday that the U.S. investigation could be linked to the SFO inquiry but that it “likely sounds worse than it is”.

“If we are right, and it (the 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.