BAT has suspended manufacturing of its brands at a state-owned factory in Belarus accused of fueling cigarette smuggling and helping finance the country’s oppressive regime, reports Inews.
The multinational said it had stopped ordering from the Grodno Tobacco Factory (GTF) Neman, which has a longstanding agreement to manufacture some of BAT’s best-selling brands for the Belarusian market.
Belarus has come under heavy international criticism for its heavy-handed suppression of protests against the outcome of last year’s disputed presidential elections.
Last month, the United States announced sanctions targeting individuals and entities it accused of supporting Belarus’ de facto dictator, Alexander Lukashenko, and his cronies by providing funds for sustaining the violent crackdown.
Accounting for 70 percent of domestic cigarette sales, Neman effectively has a monopoly on the Belarusian tobacco market. Washington says it is one of several entities that receive preferential treatment from the regime in return for providing funds to Lukashenko.
“This patronage network sustains [his] violent regime at the expense of the Belarusian people,” according to the U.S. Treasury.
“Following the recent imposition of international sanctions against several Belarusian persons and entities, including GTF Neman, as well as restrictions targeting tobacco manufacturing materials, we have taken steps to ensure all activities remain compliant,” BAT was quoted as saying by Inews.
“BAT has suspended its operations with GTF Neman and currently does not order manufacturing of its product from this factory.”
The company added, however, that as a result of the sanctions, it was now unable to complete a planned on-site independent audit of workplace conditions at GTF Neman, where there have been allegations of human rights abuses against workers who took part in anti-regime protests.
The Neman factory has also been fingered as a major source of illicit cigarettes in the EU. Around 10 percent of the 5.5 billion cigarettes sold illegally in the U.K. annually are believed to have originated in Belarus.
There is no suggestion that BAT is aware of any illicit trade, and the firm says it has “strong controls” to stop its products entering the black market.
“We are satisfied that BAT Belarus applies all the relevant BAT group policies and procedures with regard to combating illicit trade to ensure that products manufactured by GTF Neman under BAT Group’s trademarks are consumed in the Republic of Belarus,” a BAT spokesperson was quoted as saying by Inews earlier this year.