British American Tobacco hit by N10.6 trillion lawsuits in Nigeria on smoking-related illnesses
British American Tobacco (BAT) is entangled in major legal proceedings across Nigeria, with five states demanding a total of N10.6 trillion (£9.3 billion) for healthcare costs linked to smoking-related diseases.
These cases have been filed by the federal government alongside the states of Kano, Oyo, Lagos, Ogun, and Gombe, with claims stretching back to 2007. The legal action accuses BAT of negligence, fraud, and several other violations related to the manufacture and marketing of tobacco products.
BAT’s 2023 Annual Report read:
- “British American Tobacco (Nigeria) Limited (BAT Nigeria), the Company and Investments have been named as defendants in a medical reimbursement action by the federal government of Nigeria, filed on 6 November 2007 in the Federal High Court, and in similar actions filed by the Nigerian states of Kano (9 May 2007), Oyo (30 May 2007), Lagos (13 March 2008), Ogun (26 February 2008), and Gombe (17 October 2008) commenced in their respective High Courts. In the five cases that remain active, the plaintiffs seek a total of approximately NGN10.6 trillion (approximately £9.3 billion) in damages, including special, anticipatory and punitive damages, restitution and disgorgement of profits, as well as declaratory and injunctive relief.
- “The suits claim that the state and federal government plaintiffs incurred costs related to the treatment of smoking- related illnesses resulting from allegedly tortious conduct by the defendants in the manufacture, marketing, and sale of tobacco products in Nigeria, and assert that the plaintiffs are entitled to reimbursement for such costs. The plaintiffs assert causes of action for negligence, negligent design, fraud and deceit, fraudulent concealment, breach of express and implied warranty, public nuisance, conspiracy, strict liability, indemnity, restitution, unjust enrichment, voluntary assumption of a special undertaking, and performance of another’s duty to the public.
- “The Company and Investments have made a number of challenges to the jurisdiction of the Nigerian courts. Such challenges are still pending (on appeal) against the federal government and the states of Lagos, Kano, Gombe and Ogun. The underlying cases are stayed or adjourned pending the final outcome of these jurisdictional challenges. In the state of Oyo, on 13 November 2015, and 24 February 2017, respectively, the Company’s and Investments’ jurisdictional challenges were successful in the Court of Appeal and the issuance of the writ of summons was set aside.”
BAT also noted that tobacco-related litigation Outside the U.S. as at 31 December 2023 include medical reimbursement actions are being brought in Angola, Brazil, Canada, Nigeria and South Korea. It also noted that active tobacco product liability claims against the Group’s companies existed in 12 markets outside the U.S.
It added that “the only markets with five or more claims were Argentina, Brazil, Canada, Chile, Nigeria and Italy.”
The outcomes of these suits could set significant precedents affecting global tobacco regulation and corporate responsibility.
Regulatory settlements and future Compliance
BAT’s troubles extend to regulatory issues. In 2022, following an investigation by the Nigerian Federal Competition and Consumer Protection Commission (FCCPC) regarding alleged breaches of local competition and consumer protection laws, BAT was required to pay a penalty equivalent to $110 million.
This settlement, made in 2023, marked a significant financial commitment from BAT to resolve the regulatory disputes.
Additionally, BAT’s Nigerian subsidiaries are now under a two-year monitoring period to ensure compliance with the nation’s tobacco control standards.
The 2023 annual report read:
- “In 2022, following an investigation by the Nigerian Federal Competition and Consumer Protection Commission (FCCPC) into alleged violations of the Nigerian Competition and Consumer Protection Act and National Tobacco Control Act, a consent order was entered into between the FCCPC and British American Tobacco (Holdings) Limited, British American Tobacco (Nigeria) Limited and British American Tobacco Marketing (Nigeria) Limited, terminating the investigation and associated proceedings. A penalty equivalent to US$110 million was accrued for with the resulting payments (equivalent to £59 million) made during 2023, among other measures.”
The annual report also disclosed that the $110 million fine was paid in Naira not dollar.
The report noted:
- “In regards to the previously disclosed investigation by the Nigerian Federal Competition and Consumer Protection Commission (FCCPC) into alleged violations of the Nigerian Competition and Consumer Protection Act and National Tobacco Control Act, a consent order was entered into between the FCCPC and British American Tobacco (Holdings) Limited, British American Tobacco (Nigeria) Limited and British American Tobacco Marketing (Nigeria) Limited in December 2022 terminating the investigation and associated proceedings, replacing the previous final order.
- “Amongst other measures, the final order includes provision for the payment in Naira of a penalty equivalent to US$110 million and the Group’s Nigerian subsidiaries will be subject to a two-year period of monitorship.”
More Insights
- These legal and regulatory challenges likely pose significant financial risks for BAT, potentially affecting its operations and market position.
- The ongoing lawsuits, combined with hefty penalty payments and increased regulatory scrutiny, could influence BAT’s strategic decisions and its operational footprint in Nigeria and beyond.
- In April 2023, the company agreed to a $635 million settlement with US authoritiesto address inquiries related to sanctions violations concerning the sale of products in North Korea. Additionally, the settlement addressed allegations of misleading banks regarding the origin of those sales.
(Nairametrics)
