The paper said BAT in September 2001 set up a joint operation called BAT-Taesong with the state-run Korea Sogyong Trading Corporation, which had until then been exporting carpets. Early on, the company produced the low-priced Kumgangsan cigarettes and is now known to be producing the evocatively named Viceroy and Craven A brands, ostensibly for the North Korean market.

With an initial investment of $7.1 million, BAT owns 60 percent of the joint venture. BAT-Taesong employs around 200 North Koreans.

However, there has been no mention of the North Korean operation in BAT's annual reports, prompting the suspicion the BAT tried to conceal its existence. Asked why, a BAT spokeswoman said, "It is a very small entity within the BAT group and, therefore, does little to justify a mention." She said the company never intentionally concealed its existence. BAT operates 81 factories in 61 countries.

Meanwhile, the disclosure could prove embarrassing to the U.K.’s former chancellor of the exchequer Ken Clarke, who is campaigning for leadership of the Conservative Party. As BAT non-executive director, Clarke is also in charge of overseeing the human rights record of the countries where the company does business.

BAT says it is “not for us to interfere with the way governments run countries.” It earlier had to close a factory in Burma under pressure from the British government and human rights support groups after that country was condemned for human rights violations. The U.K. government also does not support investment in the North.

(englishnews@chosun.com )