BAT faces full UK probe into African tobacco bribe report

[PARIS] British American Tobacco Plc faces a formal probe by the UK's Serious Fraud Office following reports that the maker of Dunhill cigarettes bribed African government officials to influence tobacco legislation.

BAT said Tuesday it is running its own investigations, via external legal advisers, into allegations of misconduct and is cooperating with the UK prosecutor.

A BBC report two years ago said BAT had a lobbyist arrange bribes totaling US$26,000 for three public officials in Rwanda, Burundi and the Comoros Islands in 2015. The British broadcaster said the bribery was revealed by a former employee, Paul Hopkins.

At the time, BAT said "we do not tolerate corruption in our business, no matter where it takes place." The SFO investigation adds to BAT's woes after the US Food and Drug Administration on Friday proposed stripping cigarettes of their addictive qualities by regulating the level of nicotine. That caused shares of the company, which also completed its acquisition of Reynolds American Inc in July, to plunge 11 per cent in the last two trading sessions. The stock rose 0.3 per cent to 4,731 pence at 8:32am in London.

"The case is one man's word against another's," Duncan Fox, an analyst at Bloomberg Intelligence, said of the SFO probe. "For BAT, the situation with the FDA will lead to a new regulatory environment and that is of far greater importance right now."

The SFO confirmed in a separate statement that it is investigating "suspicions of corruption in the conduct of business" by BAT, its subsidiaries and associated people.

The prosecutor had several significant outcomes this year despite being targeted for closure by Prime Minister Theresa May in an election promise that drew criticism from the legal industry. The agency extracted a £500 million (S$892 million) fine from Rolls-Royce Holdings Plc in January for bribery, followed by £129 million from Tesco Plc over mis-stated accounts. The SFO also still has a number of investigations open involving blue-chip companies including GlaxoSmithKline Plc and Airbus SE.

BLOOMBERG