American lawmakers have asked US authorities to formally investigate BAT for alleged bribery of public officials across East and Central Africa, opening a new battle-front against the cigarette maker.
Nine members of US Congress have written to the Department of Justice asking for a criminal investigation into claims that BAT plc paid hefty bribes to top Kenyan tax officials, legislators and rival company insiders in order to undermine competition and stifle anti-smoking laws.
The London-based cigarette maker is listed on the New York Stock Exchange – making BAT plc subject to the US Foreign Corrupt Practices Act, which prohibits use of inducements to influence decisions and win business deals abroad.
“We encourage your agency to thoroughly investigate the facts to determine the extent and nature of BAT’s illegal activities,” reads the letter dated February 3, 2016.
“If you determine such violations did occur, we respectfully request that the Department of Justice seeks appropriate enforcement measures against BAT,” say the Congress led by Representative Lloyd Doggett of Texas.
The letter is signed by Senators Edward Markey (Massachusetts), Jeff Merkley (Oregon), Jack Reed (Rhode Island) and Richard Blumenthal (Connecticut).
The Congressmen, who signed the petition are Niki Tsongas (Massachusetts), John Conyers (Michigan), Bill Keating (Massachusetts) and Jerome Nadler (New York).
Kenya’s anti-graft agency EACC Monday said it had also opened an inquiry into BAT’s bribery allegations.
“When an investigation is active, we don’t give details,” said Benson Kairichi Marimba, a spokesman at the Ethics and Anti-Corruption Commission (EACC).
BAT plc also owns 42 per cent of Reynolds American Inc. – the second-largest American tobacco company – whose flagship brands include Newport, Camel, Pall Mall, and Vuse e-cigarettes.
“The corporation’s (BAT plc) involvement in other illicit activities, such as smuggling, has been well-documented in Africa and other regions,” the US Congress members said in the letter addressed to Andrew Weissmann, who heads DoJ’s fraud section in the criminal division.
The impending Justice Department enquiry into claims that BAT ran a systematic bribery syndicate in Nairobi is likely to unearth fresh details on the so-called ‘cigargate’ scandal, which has already entangled five high-ranking Kenyan officials.
The quintet entangled in the ‘cigargate’ affair includes former Prime Minister Raila Odinga, former Justice minister Martha Karua, ex-Trade minister Moses Wetang’ula, Mary M’Mukindia, and corporate executive Julie Adell-Owino.
Mr Wetang’ula last December moved to court and secured orders barring BBC from linking him to the BAT bribery scam.
A probe by the US Justice Department also means that BAT plc could face double punishment as the United Kingdom’s Serious Fraud Office (SFO) is also investigating the alleged bribery scam.
SFO declined to provide details of the probe with a spokesman saying the agency “cannot comment further at this stage.”
The UK’s Bribery Act (2010) outlaws use of bribes by both persons and corporations to influence decisions, win or retain business.
BAT plc said it was yet to hear from the US Department of Justice regarding the bribery allegations and added that it was ready to cooperate with the SFO.
“We have not heard from the US Department of Justice regarding any of the historic allegations made by Panorama last year but, if we do, we will of course co-operate with them,” said a BAT plc spokesperson.
“While we do not know what the SFO’s next steps will be, we will co-operate with them.”
Whistleblower Paul Hopkins, who worked for BAT in Africa for 13 years, confessed to BBC’s Panorama that he was the man tasked with arranging and delivering bribes to Kenya Revenue Authority (KRA) officials, legislators, rival Mastermind Tobacco executives, and United Nations representatives.
Mr Hopkins said handsome kickbacks were paid to KRA officers to hand over tax files belonging to rival Mastermind Tobacco – maker of the Supermatch brand of cigarettes - to BAT plc.
Top KRA bureaucrats are also alleged to have pocketed huge bribes from BAT to slap Mastermind Tobacco with numerous tax demand notices, a strategy to intimidate the rival cigarette maker and damage the reputation of the homegrown Kenyan company.
The ensuing drama roped in Mr Odinga’s office, which ordered KRA to freeze the multi-million shilling tax demands issued to Mastermind Tobacco, according to an expose by Britain’s Independent newspaper.
Ms Adell-Owino, a former BAT Kenya lobbyist, is alleged to have organised payment of bribes to senior government officials, for reasons that were not explained.
She resigned from East Africa Breweries Ltd where she was a corporate affairs executive, when news of her involvement in the BAT scandal was aired by BBC.
According to the Independent, Ms Karua allegedly received £50,000 from BAT in bribes to block a rival firm from winning a multi-million pound excise stamps contract at KRA meant to fight smuggling of tobacco products.
But Ms Karua has disputed the sum of cash received and its purpose, saying she received a Sh2 million “donation” to her 2013 presidential campaign.
“At no time did I ever discuss the award or influence of contracts/tenders whether at KRA or indeed within any other government entity with Paul or anyone else,” Ms Karua said in response to the allegations.
The BAT bribe was supposedly paid to Ms Karua through her aide, Mary M’Mukindia, currently a board member at KRA. Ms M’Mukindia served as campaign adviser and fundraiser for Ms Karua’s unsuccessful presidential bid in 2013.
Ms M’Mukindia – a board member at Unga Ltd and part-time consultant at Tullow Oil – has denied the bribery allegations.
“This has made it necessary for Ms M’Mukindia to once again categorically deny the allegations despite not wishing to dignify them with a response,” her publicists said.
The KRA tender for the supply of excise tax stamps and related technology was finally awarded to Swiss firm SICPA in December 2012.
Both KRA and the Swiss security printing firm have refuted claims that the tender was influenced by the BAT bribes paid through Ms Karua.