Cigarette giant BAT being investigated by Serious Fraud Office over East Africa bribery allegations

An American Lucky Strike advert from the 1930s

Fraud investigators have launched a formal probe into allegations of bribes between tobacco giant British American Tobacco and African government officials two years after the claims originally surfaced.

The maker of Dunhill and Lucky Strike cigarettes is being investigated by the Serious Fraud Office.

The probe is understood to be linked to claims made by a whistleblower through the BBC’s Panorama programme in 2015 that illegal payments had previously been made to civil servants and politicians in East Africa.

The SFO confirmed it was investigating “suspicions of corruption” at BAT, its subsidiaries and people associated with the firm.

A spokesman for BAT said it had been conducting its own investigation into the claims since they emerged with the help of an external legal firm and had been liaising with the SFO during this time. It added it would continue to co-operate with the Government fraud watchdog.

In spite of the announcement, one analyst, who wished to remain anonymous, said the revelation that the SFO had launched formal proceedings did not change expectations about how the company would perform financially.

“BAT has said it has studied the claims and doesn’t think there is much in them,” the analyst said.

“A key thing is that it has got nothing to do with the American Department of Justice as their punishments can be more harsh.”

A fund manager which backs BAT said SFO headlines had generally been “buying opportunities in stocks or usually completely ignored by the stockmarket”.

The manager added that BAT’s share price was more impacted by last week’s announcement from the US Food and Drug Administration, which fired a shot across the industry’s bow by suggesting it wanted levels of nicotine in conventional cigarettes reduced.

On that announcement, BAT’s shares fell as much as 11pc while the stock was down just over 1pc at £48.14 on the news of the formal SFO probe. It has also not appeared to have any impact on it snapping up the remainder of rival Reynolds American it did not already own last week.

Scott Gottlieb, FDA commissioner, said last week the body wanted to “envision a world where cigarettes lose their addictive potential”.

BAT has been the focus of previous government probes. In the early 2000s, it was the focus of an investigation into allegations about illegal smuggling in Asia and Latin America.

But a three-year investigation by the then Department of Trade and Industry was dropped in 2004 after it failed to uncover anything warranting a criminal investigation – a move cheered by then chairman Martin Broughton who said at the time the company had always maintained it had acted legally.

The probe was launched on the back of allegations by Action on Smoking and Health (ASH) that BAT had “deliberately stimulated” tobacco smuggling. ASH claimed between £300m and £500m of BAT’s revenue was derived from smuggled tobacco but the Government at the time did not publish the report of its investigation.

Of the latest investigation, ASH chief executive Deborah Arnott said the SFO “must leave no stone unturned”.

Source: telegraph