Tobacco giant capitalises on North Korean regime By Ian Cobain and David Leigh in London October 18, 2005 the world's second-largest cigarette company, has been secretly operating a factory in North Korea for the past four years.
The company opened the plant in a joint venture with a state-owned corporation shortly before the North Korean regime was denounced by the US President, George Bush, as a member of the "axis of evil", and despite widespread concern over the nation's human rights record.
BAT has never mentioned the factory in its annual accounts.
The discovery of the secret factory comes two years after BAT was forced to pull out of Burma, under pressure from the British Government and human rights campaigners.
The anti-smoking group ASH said: "It seems that there is no regime so awful and no country so repressive that BAT does not want to do business there."
BAT launched its business in North Korea in September 2001 after forming a joint-venture company with a state-owned enterprise called the Korea Sogyong Trading Corporation, whose main interest had previously been exporting carpets.
BAT made an initial investment of $US7.1 million in the enterprise and owns 60 per cent of the company formed, known as Taesong-BAT. BAT has since increased its investment but declines to say by how much.
Taesong-BAT employs 200 people at its factory in Pyongyang, producing up to 2 billion cigarettes a year. Despite its previous involvement in smuggling, BAT denies any of the cigarettes are intended for China, insisting they are all for North Korean consumption.
The company says it has worked to improve the working conditions of its employees in Pyongyang, that it provides workers with free meals, and that they are "well paid".
Questioned about its apparent reluctance to disclose the existence of its North Korean operation, BAT said it listed only its "principal subsidiaries" in its accounts, and added that it was not obliged to inform investors about an investment of that size.
The spokeswoman denied the factory was a secret: "If we are asked about our investment there, we respond appropriately. The investor community know of it."
Asked about North Korea's human rights record, the spokeswoman said: "It is not for us to interfere with the way governments run countries." She said BAT could "lead by example" and assist the country's development by meeting internationally accepted standards of businesses practice and corporate social responsibility.
In launching its North Korean enterprise, however, BAT is doing business in a country regarded by some as having the worst human rights record in the world. Even one of BAT's own public relations officers, in Japan, was astonished when asked about the joint venture. "Business with North Korea?" he asked. "Where there are no human rights?"
Last August, in an excoriating report to the United Nations General Assembly, Vitit Muntarbhorn, special rapporteur on North Korea for the UN Commissioner on Human Rights, pointed to the "myriad publications" detailing violence against detainees. According to human rights observers in South Korea, about 200,000 people are held as political prisoners in the north.
Human Rights Watch describes the Pyongyang regime as being "among the world's most repressive governments".
British American Tobacco PLC's Brown & Williamson unit and R.J. Reynolds Tobacco Holdings Inc. are also well-positioned. Both companies are represented by Barbour, Griffith & Rogers, a lobbying firm stocked with Republican operatives, including former GOP Chairman Haley Barbour and Lanny Griffith, a former White House aide to Mr. Bush's father.
The industry's first objective is to get rid of a massive federal lawsuit, launched by the Clinton administration, that accuses cigarette makers of "racketeering" and lying about the health risks of smoking for 50 years. The case is pending in federal court in Washington.
Tobacco companies are so confident the Bush team will drop the suit that they claim to have no plans even to ask for it to be withdrawn. "We are not lobbying on this at all," says Philip Morris spokeswoman Peggy Roberts. Many in the industry say they think an aggressive push to kill the suit would be counterproductive, causing the Bush administration to worry about the perception that it is eager to do a huge favor for one of its most-generous donors.
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Bush ended with an attack on North Korean dictator Kim Jong Il. 'He's starving his own people,' Bush said, and imprisoning intellectuals in 'a Gulag the size of Houston.' The president called him a 'pygmy' and compared him to 'a spoiled child at a dinner table.'
Newsweek
"I Sniff Some Politics"
May 27, 2002
I'm Sure BAT will become pariahs for doing business with the last Stalinist state on earth.
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