British American Tobacco faces Africa fraud probe

Britain’s Serious Fraud Office has opened a formal investigation into possible historic misconduct by British American Tobacco (BAT) in Africa, the company said Tuesday.

The maker of tobacco brands including Dunhill and Lucky Strike said it has been investigating a number of allegations of misconduct, that were originally made towards the end of 2015, through its legal advisers and by liaising with the SFO.

The company said in a statement that it intends to co-operate with the investigation.

In Bloomberg’s report, according to a BBC two years ago BAT had a lobbyist arrange bribes totaling $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 U.S. 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 percent in the last two trading sessions. The stock rose 0.3 percent to 4,731 pence at 8:32 a.m. 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.