Sanctions and illicit trade: British American Tobacco’s activities in Iran (2000–2014)

Benoît Gomis, Allen W. A. Gallagher, Raouf Alebshehy and Andrew Rowell

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Previous research has documented how British American Tobacco (BAT) and other transnational tobacco companies (TTCs) smuggled their own products into Iran in the 1990s in order to circumvent sanctions and other trade restrictions. In the early 2000s, BAT, along with other TTCs, signed legal agreements with Iranian authorities to sell its products legally and curb illicit tobacco trade (ITT). Our analysis of previously unreleased internal BAT documents (covering 2000–2014) suggests BAT remained potentially involved in ITT after those agreements were signed. Meanwhile, BAT engaged with government authorities to tackle ITT primarily for reputational and commercial purposes. With a business model based on a high number of contractors and distributors, extensive engagement with government authorities, and an anti-illicit trade strategy focusing more on reputation and growth than on effectively controlling its supply chain, further investigation into BAT’s activities in Iran – including potential sanctions breaching – may be warranted. This is especially relevant as, in April 2023, BAT agreed to pay penalties exceeding US$629 million to resolve charges of bank fraud and sanctions violations in North Korea, following a criminal investigation by the US Department of Justice and Office of Foreign Assets Control. Exploration of BAT’s activities in Iran would provide insight into the credibility of BAT’s response following these penalties, with the company having claimed that “Adhering to rigorous compliance and ethics standards has been, and remains, a top priority”.

Keywords: tobacco; cigarettes; sanctions; illicit trade; Iran; smuggling (search for similar items in EconPapers)
JEL-codes: F53 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2024-01-30
New Economics Papers: this item is included in nep-ara and nep-int
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Published in Journal of Illicit Economies and Development, 30, January, 2024, 5(1), pp. 34 - 46. ISSN: 2516-7227

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