BAT shrugs off UK probe into bribes

Full co-op­er­a­tion promised

The Star Early Edition - - COMPANIES - Sandile Mchunu

BRI­TISH Amer­i­can To­bacco (BAT) shares rose on the JSE yes­ter­day, shrug­ging off a probe by Bri­tish au­thor­i­ties over claims that the com­pany paid bribes to gov­ern­ment of­fi­cials in Rwanda, Bu­rundi and Co­moro Is­lands in 2015.

The share rose 2.03 per­cent to close at R842.01 on the JSE yes­ter­day, de­spite the Lon­don stock fall­ing 3.7 per­cent in early trade on the news.

The com­pany said that it would co-op­er­ate with the for­mal probe by the UK’s Se­ri­ous Fraud Of­fice (SFO) on re­ports that the bribes were paid to in­flu­ence to­bacco leg­is­la­tion.

“As pre­vi­ously an­nounced, we are in­ves­ti­gat­ing, through ex­ter­nal le­gal ad­vis­ers, al­le­ga­tions of mis­con­duct,” BAT said.

“We have been co-op­er­at­ing with the SFO, and BAT has been in­formed that the SFO has now opened a for­mal in­ves­ti­ga­tion. BAT in­tends to co-op­er­ate with that in­ves­ti­ga­tion.”

Two years ago, the Bri­tish Broad­cast­ing Cor­po­ra­tion re­ported that a BAT lob­by­ist ar­ranged bribes to­talling $26 000 (R340 750) to of­fi­cials in the three coun­tries.

The broad­caster said the graft was re­vealed by a for­mer em­ployee, Paul Hop­kins.

BAT said it would not tol­er­ate cor­rup­tion, and its un­der­tak­ing to co-op­er­ate was a proof how se­ri­ously it viewed the al­le­ga­tions.

Ja­son Forss­man, a fund man­ager at Ash­bur­ton In­vest­ments, said BAT con­firmed that it had been in­formed by the SFO of a for­mal in­ves­ti­ga­tion into al­le­ga­tions of mis­con­duct in a state­ment yes­ter­day morn­ing.

“Our un­der­stand­ing, based on prior me­dia re­ports, is that the al­le­ga­tions re­late to bribes being paid by a lob­by­ist to pub­lic of­fi­cials in Rwanda, Bu­rundi and the Co­moro Is­lands.

“The group has launched its own ex­ter­nal in­ves­ti­ga­tion into the mat­ter and has stated its com­mit­ment to co-op­er­at­ing with the SFO. Al­though any mat­ter of this na­ture serves to tar­nish the rep­u­ta­tion of the group, should a fine tran­spire, it will most likely prove im­ma­te­rial from a group earn­ings point of view,” Forss­man said.

The SFO in­ves­ti­ga­tion adds to BAT’s prob­lems after the US Food and Drug Ad­min­is­tra­tion last week pro­posed strip­ping cig­a­rettes of their ad­dic­tive qual­i­ties by reg­u­lat­ing the level of nico­tine.

Mer­gence In­vest­ment Man­agers’ Dirk Steyn said the al­le­ga­tions have put the com­pany’s rep­u­ta­tion at risk.

“BAT is a global com­pany and has worked hard to build its im­age as a responsible cor­po­rate cit­i­zen,” Steyn said.

Last week, BAT an­nounced it had com­pleted the pur­chase of the 57.8 per­cent of Reynolds it did not al­ready own.

BAT paid $54.5bn for to­tal own­er­ship of Reynolds, boost­ing its next gen­er­a­tion prod­ucts.

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