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British American Tobacco Is Under Criminal Investigation

By Rich Duprey - Apr 14, 2020 at 8:09AM

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The DOJ and Treasury Department are examining a potential violation of sanctions against an unnamed country.

The tobacco industry continues to see tumultuous regulatory developments as the U.K.'s The Times reports British American Tobacco (BTI -0.03%) is under criminal investigation by the U.S. Justice Department and the Treasury Department's Office of Foreign Assets Control, a financial intelligence and enforcement agency, which are looking into suspected "breach of sanctions" allegations.

Although it's not clear where the breach is reported to have occurred, British American identifies both Cuba and Iran in its regulatory filings as two countries in which it does business that are subject to sanctions. 

Man breaking cigarette in half

Image source: Getty Images.

The tobacco company has also been under investigation for several years by the U.K.'s Serious Fraud Office for alleged bribes paid to East African officials.

The tobacco industry has been roiled by charges from regulators of improper dealing, as well as accusations of patent violations among the companies themselves. 

The Federal Trade Commission is demanding Altria (MO 0.04%) unwind its $12.8 billion investment in Juul Labs because of antitrust concerns. British American is suing Philip Morris International (PM -0.23%) over its IQOS heated tobacco device, which it says violates its patents.

In British American's annual report last month, the tobacco giant said it was aware of the DOJ and OFAC investigations, is cooperating with them, but cannot assess at the moment what the potential for fines, penalties or other consequences might be -- though they "may be material."

Some analysts think the new investigations may be related to those that have been going on for several years in the U.K.

 

Rich Duprey owns shares of Altria Group. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

British American Tobacco p.l.c. Stock Quote
British American Tobacco p.l.c.
BTI
$40.42 (-0.03%) $0.01
Altria Group, Inc. Stock Quote
Altria Group, Inc.
MO
$45.15 (0.04%) $0.02
Philip Morris International Inc. Stock Quote
Philip Morris International Inc.
PM
$99.24 (-0.23%) $0.23

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