BAT under investigation

BAT under investigation
UK tobacco giant, British American Tobacco (BAT) is under official investigation by Britain’s Serious Fraud Office (SFO). The company is facing allegations..

UK tobacco giant, British American Tobacco (BAT) is under official investigation by Britain’s Serious Fraud Office (SFO).

The company is facing allegations of having paid bribes in East Africa.

Background

In November 2015, a BBC Panaroma program claimed that BAT paid bribes to MPs and public officials in East Africa. It also allegedly paid bribes to suppress its competition in the region. The allegations were made after a five month investigation into the matter. One of BAT’s former employees, Paul Hopkins, who had worked in Kenya for 13 years, turned whistleblower and admitted to paying bribes on behalf of BAT. At the time, BAT told BBC that it was committed to the highest standards of corporate conduct and transparency. It also said that it strictly enforced anti-bribe policies.

BBC also said that bribes were paid to undercut anti-smoking laws in countries like Rwanda and Burundi.

Started in 1902, BAT is one of the four largest selling tobacco brands across the world. It has operations in over 180 countries and is a market leader in over 50 countries across the world. It’s revenue in 2016 was £14,751 billion.

Analysis

When the allegations became public, BAT authorities said that an internal investigation was being conducted to verify the claims of bribery and corruption.

Britain’s SFO has currently confirmed the investigation by stating, “The SFO confirms it is investigating suspicions of corruption in the conduct of business by BAT p.l.c., its subsidiaries and associated persons.” It also solicited people to come forward if they have relevant information. 

BAT has responded noting that it will be cooperating with the officials. It said, “As previously announced, we are investigating, through external legal advisers, allegations of misconduct. We have been co-operating with the Serious Fraud Office (“SFO”) and British American Tobacco (“BAT”) has been informed that the SFO has now opened a formal investigation. BAT intends to co-operate with that investigation.”

If found guilty, SFO is likely to levy a substantial fine on BAT. In 2017 alone, SFO fined Rolls-Royce £500m for bribery and Tesco £130m for mis-stating its accounts.

Assessment

Our assessment is that as governments start enforcing stricter anti-corruption laws, industry will have to prepare itself to operate in a more transparent manner. Multi-national companies irrespective of their gender have exploited some of the poorer countries to create larger surface areas for their corporations. This needs to be curbed as promoting smoking is extremely hazardous to the population. African nations are already amongst the most exploited countries in world and large conglomerates should take personal responsibility in not promoting corruption. 

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