NORTH KOREA: British American Tobacco, the world's second-largest cigarette company, has secretly been operating a factory in North Korea for the past four years.
The company opened the plant in a joint venture with a state-owned corporation shortly before the regime was denounced by George Bush as a member of the "axis of evil" and despite widespread concern over the country's human rights record.
BAT has never mentioned the factory in its annual accounts and it is thought that many shareholders are unaware of its links with the country. The discovery of the secret factory comes two years after BAT was forced to pull out of Burma, under pressure from the British government and human rights campaigners.
The anti-smoking group Ash said: "It seems that there is no regime so awful and no country so repressive that BAT does not want to do business there."
BAT launched its business in North Korea in September 2001 after forming a joint venture company with a state-owned enterprise called the Korea Sogyong Trading Corporation, whose main interest had previously been exporting carpets.
BAT made an initial investment of $7.1 million in the enterprise and owns 60 per cent of the company it formed, which is known as Taesong-BAT. It has since increased its investment, but declines to say by how much.
This company employs 200 people at its factory in Pyongyang, the capital, producing up to two billion cigarettes a year. It initially produced an inexpensive brand called Kumgansan, named after a mountain in the east of the country, and is now producing brands known as Craven A and Viceroy.
It says that it has worked to improve the conditions of its employees in Pyongyang, that it provides workers with free meals and that they are "well paid". When asked how much the employees were paid, however, the company said it did not know. BAT even said it had "no idea" how much its cigarettes cost on the North Korean market as the operation was run by the company's Singapore division.
Questioned about its apparent reluctance to disclose the existence of its North Korean operation, BAT said it listed only its "principal subsidiaries" in its accounts and added that it was not obliged to inform investors about an investment of that size.
Asked about North Korea's human rights record, a company spokeswoman said: "It is not for us to interfere with the way governments run countries."
In launching its North Korean enterprise, however, BAT is quietly doing business in a country which is regarded by some as having the worst human rights record in the world.
Last August, in an excoriating report to the UN General Assembly, Vitit Muntabhorn, special rapporteur on North Korea for the UN's Commission on Human Rights, pointed to the "myriad publications" detailing violence against detainees.
He expressed "deep concern" about reported torture, the killing of political prisoners, the large number of prison camps and use of forced labour. He protested at the "all-pervasive and severe restrictions on the freedom of thought, conscience, religion, opinion and expression, peaceful assembly and association".
In its latest report on the country, Amnesty International highlighted concerns about the torture and execution of detainees, and worries over the lack of basic political freedom.
Amnesty said millions of North Koreans suffered hunger and malnutrition. There had been reports of public executions of people convicted of economic crimes and that Christians, whose churches have been driven underground, were reported to have been executed because of their faith.
According to human rights observers in South Korea, about 200,000 people are held in prison camps in the North. Human Rights Watch describes the regime as being "among the world's most repressive governments", adding that its leader, Kim Jong Il, "has ruled with an iron fist and a bizarre cult of personality".